For Profit Diploma Mills Draining Fed Ed Dollars and Leaving Students Broke

The corporate felons at the Apollo Group were convicted in early 2008 of fraudulently misleading investors. From the NYTimes, 01/17/08:

PHOENIX (AP) — The Apollo Group Inc., the company that owns the University of Phoenix, fraudulently misled investors in 2004 about student recruitment policies, a federal jury decided Wednesday. The panel ordered the company to pay shareholders about $280 million.

Jurors said Apollo officials “knowingly and recklessly” made false statements in a news release, a filing with the Securities and Exchange Commission and four conference calls with market analysts. By doing so, jurors said, Apollo violated federal securities laws. . . .

Since that time, the Apollonoid lawyers have been trying to cut a deal to lower the settlement to somewhere between 45 and 200 million. UPhoenix has nothing really to worry about, however, even if the entire amount has to be paid, for $280 million would be just over a third of what UP hustles in one year from Pell Grant dollars alone. From a story today by AP's Justin Pope on the corporate college corruption that Arne Duncan has enabled by allowing federal grants and loans to be wasted in the virtual learning corporations that are devoid of any discernible virtue:

Phoenix alone had more than 230,000 Pell recipients last year (and received $657 million Pell dollars, roughly its parent company's yearly profit). Its campuses educate nearly four times more low-income students than the entire Big 10, and more than 30 times the Ivy League, the AP found. Unlike proprietary schools, those traditional colleges enjoy tax-free status for supposedly providing a public service, notes Harris Miller, president and CEO of the Career College Association.

And $657 million is just the Pell Grant dough. There are hundreds of millions, too, in low interest federal student loans that go pay millions to UP's CEOs and to pay dozens of dollars at least to adjunct professors, many of whom bought their own degrees at these same pedagogical establishments.

Yes, business is good at Apollo, with a "buy" rating (that was likely bought) on its stock. Bought or not, Apollo is spending almost a billion dollars every year on sales and promotion. That's $1,000,000,000. The corporates control 10 percent of the higher education market. Hey, you can't keep a good casino capitalist down, especially when your lobbyists have made sure there is nothing virtual about the cold hard cash that comes pouring forth from the Federal Treasury, money that was intended to help those who need help to get a college education.

But you can keep keep down Apollo's clientele, those adults and teens left behind, those who comprise the poorest and most desperate college student population, the ones who can't go to the leafy three-dimensional campuses, the real campuses with libraries and labs, football teams and food courts. Meanwhile, the corporate ed reformers in charge of California's public university system are putting real colleges further out of reach with a 30-40 percent tuition increase planned for next year--assuming the students and workers don't burn the whole thing down first. A very effective corporate college feeder strategy that will, no doubt, attract more uninformed and gullible students to the Kaplans and the UPs, students who will never challenge the crap ed they receive. After all, that's what they got in the 12 years prior, right.

What's the graduation rate from these online corporate diploma mills? Try 38%. How much do students owe after their miseducative experiences? Almost 9 percent more than they would if they were enrolled in PRIVATE nonprofit four-year colleges:

Students who don't graduate will be hard pressed to repay their debts. On average, for-profit schools cost five and a half times the price of community colleges. Virtually all students must borrow some money, and even among graduates of for-profit four-year programs, the average borrower ends up owing $33,000, according to the latest government data analyzed by Mark Kantrowitz of the Web site finaid.org. That's about $5,000 higher than even private nonprofit four-year colleges.

Yes, the Federal gravy train just keeps on rolling for the capitalist frauds, crooks, and profiteers who act as if they own the Republic. Here is another clip big clip from Pope's piece:

RALEIGH, N.C. – Students aren't the only ones benefiting from the billions of new dollars Washington is spending on college aid for the poor.

An Associated Press analysis shows surging proportions of both low-income students and the recently boosted government money that follows them are ending up at for-profit schools, from local career colleges to giant publicly traded chains such as the University of Phoenix, Kaplan and Devry.

Last year, the five institutions that received the most federal Pell Grant dollars were all for-profit colleges, collecting over $1 billion among them. That was two and a half times what those schools hauled in just two years prior, the AP found, analyzing Department of Education data on disbursements from the Pell program, Washington's main form of college aid to the poor.

This year, the trend is accelerating: In the first quarter after the maximum Pell Grant was increased last July 1, Washington paid out 45 percent more through the program than during the same period a year ago, the AP found. But the amount of dollars heading to for-profit, or "proprietary," schools is up even more — about 67 percent.

For-profit colleges say the country has little choice but to accept their help to achieve President Obama's goal of getting every American to enroll in some form of education beyond high school. The for-profit schools have space while community colleges are bursting at the seams. Besides, their convenience and career-focused curriculum are clearly winning customers, who are free to use their aid where they choose.

But critics say the increased federal aid has unleashed a new gold rush. They complain the industry has too many incentives simply to enroll students and tap the spigot from Washington — and not enough to make sure students succeed.

The industry is "an aggressive sales operation that has a voracious appetite for recruiting the poorest students," said Barmak Nassirian, associate executive director of AACRAO, a group representing admissions officers and registrars at traditional colleges. "The victims here are the students themselves and the taxpayers, who have to pick up the tab."

Regardless of how AP's findings are interpreted, they underscore the extent to which the United States has ramped up its support for low-income college students in recent years, but increasingly outsourced the job to the private sector.

• Last year, Washington paid out a record $18.3 billion in Pell Grants, which typically go to families earning under $40,000. Proprietary colleges collected about $4.3 billion of that, or about 24 percent — roughly double the proportion a decade ago.

• In the first quarter of the current academic year, for-profit colleges collected $1.65 billion, or 67 percent more than in the same period a year ago. On July 1, the government made more students eligible for Pell grants and increased the maximum award by $600 to $5,350.

• For-profits are also grabbing a growing share of loans subsidized by the government to help low-income students. They collected about $7 billion in subsidized Stafford loans in 2008-2009, up from $4.7 billion two years before. Taxpayers subsidize the interest rate and take the hit when students default. Nearly one-quarter of students at for-profit schools default within four years, more that double the rate of other schools.

Overall, the sector enrolled about 2.7 million students in 2007-2008, the latest year with complete federal data available. That was only about 10 percent of total enrollment in higher education, but it's about 2 million more than a decade before.

The numbers are even more striking for low-income students: The number of Pell recipients enrolled in for-profit schools is 50 percent higher than two years ago. . . .