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New Report Reveals The Extent of For-Profit Colleges’ Corruption

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Roger BybeeCutbacks in public technical school and university programs have created new opportunities for for-profit colleges, which have skillfully used public money to churn displaced workers and other students through their machinery, leaving them worse off than before, according to the findings of a two-year investigation of 30 for-profit colleges released this week by Sen. Tom Harkin (D-Iowa).

The report from Harkin, chair of the Senate’s Health, Education, Labor, and Pensions (HELP) Committee, confirms what Michael Rosen, president of American Federation of Teachers (AFT) Local 212 at Milwaukee Area Technical College, has been witnessing in recent years. Laid-off workers desperate for a new career, Iraq and Afghanistan war veterans hoping to re-start their lives, and recent high school graduates have all been frustrated by long waiting lines for programs at public technical schools and universities. Rosen has been a passionate critic of public technical-college cutbacks, the distortion of technical education as it falls under increasing corporate influence, and the growth of for-profit colleges like the University of Phoenix, Kaplan and others.

“The losers are students who are paying four to five times as much for a public education, but wind up with an inferior education that doesn’t help them in today’s job market,” Rosen says. “In this economy, we are seeing layoffs in every occupation—whether flight attendants or factory workers—so the number of people looking for training has increased, but the funding for technical schools has decreased. This leaves some people out [unable to find the program they want in public institutions], and these people are preyed upon by for-profit colleges.”

And Rosen notes it’s not only the students who are losing out, but also U.S. taxpayers. “The for-profit schools get over $32 billion or 80% of their revenue from federal funds via student loans and grants,” Rosen says. “They cash in on up to 25% of federal financial aid, but account for just 13% of college students.”

The HELP report makes for a thorough indictment of the for–profit college industry, which has expanded exponentially over the last few years. Enrollment more than tripled from 1998 to 2008 to about 2.4 million students. Fully three-quarters are enrolled at colleges owned by huge publicly traded companies with a mission of maximizing profit. Increasingly, private equity firms are buying into the industry.

Among its appalling findings, Harkin’s investigation revealed:

FEDERAL FUNDING THE FOUNT OF PROFITS: Over 80% of the for-profit colleges’ revenue comes from taxpayers. Since veterans’ benefits do not count against a 90% ceiling on federal funding, veterans have become a target for for-profit college recruiters.

PROFITS EXCEED INSTRUCTIONAL COSTS: “Among the 30 companies, an average of 22.4 percent of revenue went to marketing and recruiting, 19.4 percent to profits and 17.7 percent to instruction,” reported Tamar Lewin in an excellent New York Times piece on the report.

FIND ‘EM AND FORGET ‘EM: The for-profit schools also have an extraordinarily miserable record in retaining and educating their students: “the majority of students they enroll leave without a degree, half of those within four months,” Lewin wrote.

And recruiting practices—until some recent reforms—stressed enlisting students without regard to their suitability for the schools, with recruiters formerly paid on a “piecework”-style basis for each student they recruited, Rosen points out. The 30 for-profits studied have roughly a 9-1 ratio between recruiters and support staff to assist the students in planning their careers.

“Enrolling students,” wrote Lewin, “and getting their federal financial aid is the heart of the business, and in 2010, the report found, the colleges studied had a total of 32,496 recruiters, compared with 3,512 career-services staff members.”

Meanwhile, according to the AFT’s Rosen, the quality of teaching in the for-profits is generally abominably low.

“For students in medical fields like nursing, they don’t work under an instructor and actually have direct patient contact,” says Rosen. “The education is just in the classroom environment, and even there, they don’t even have the proper equipment. For the relatively small percentage of students who manage to graduate from for-profit schools, they discover soon that their degree is generally not taken seriously by prospective employers.”

ULTRA-COSTLY FOR STUDENTS: The report found that associate-degree and certificate programs at for-profit colleges averaged about four times the cost of those at community colleges and public universities.

“And tuition decisions seem to be driven more by profit-seeking than instructional costs,” Lewin wrote. An internal memo from the finance director of a Kaplan nursing program in Sacramento, for example, recommended an 8 percent increase in fees, saying that “with the new pricing, we can lose two students and still make the same profit.”

The students who drop out are left to make loan payments without having gained any credentials. It is not surprising, then, that former students of for-profit schools account for 45% of college loan delinquencies.

Despite the overwhelming evidence amassed by the investigation, Republican members of the HELP Committee claimed that the study showed antipathy to the sacrosanct “free market” (as if an industry that gets more than 80% of its funding is part of the “free market”!). They also objected to the inclusion of some testimony and documents damaging to the industry. As Lewin noted:

The Republicans on the Senate committee criticized the Democrats’ investigation for including testimony from Steve Eisman, the hedge fund manager who was one of the first to compare for-profit colleges to the subprime mortgage industry; for making public the internal company documents that the committee gathered; for refusing to broaden the investigation to include abuses by nonprofit colleges; and for being what they said was a hostile partisan effort.

The Republicans’ unwillingness to confront the industry’s corruption—enabled by the clear misuse of taxpayer dollars—is more testimony to the GOP’s slavish servitude to corporate donors and lobbyists. But the for-profit schools’ loyal protectors have been drawn from both parties. As David Halperin pointed out,

There is stalemate in Washington on holding this industry accountable, because the big money that it spends on lobbying, lawyering, and campaign contributions has bought the allegiance of many congressional Republicans and Democrats and has thwarted federal regulations.

And so, for the forseeable future, the for-profit schools’ hustle will continue to squeeze earnings out of America’s most vulnerable citizens—displaced workers, recently discharged veterans, and naive high school graduates—with an assist from U.S. taxpayers.

This blog originally appeared in Working In These Times on August 3, 2012. Reprinted with permission.

About the Author: Roger Bybee is a Milwaukee-based freelance writer and progressive publicity consultant whose work has appeared in numerous national publications, including Z magazine, Dollars & Sense, Yes!, The Progressive, Multinational Monitor, The American Prospect and Foreign Policy in Focus. His e-mail address is [email protected]


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First-Ever Trans Senate Witness: ‘To Be Unemployed Is Very Devastating, Demeaning, And Demoralizing’

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Zack FordThis morning, the Senate Health, Education, Labor & Pensions Committee held a hearing on the Employment Non-Discrimination Act (ENDA), which would extend employment protections based on sexual orientation and gender identity. For the first time in the Senate’s history, a transgender witness testified on behalf of the bill. Kylar Broadus, founder of the Trans People of Color Coalition, discussed his experiences coming out trans, including mistreatment by police, workplace harassment, and employment discrimination:

BROADUS: When I used female restrooms, police would accost me. I would have to strip and then they still told me, “Sir, get out of the bathroom,” when I would use the ladies’ room. It’s just humiliating and dehumanizing to say the least.[…]

Prior also to the physical transition, I was working in the financial industry, which is actually a high-paying industry. But again, when I shifted or transitioned, that’s when all the trouble began. And it’s still emotional to me, because it impacted me emotionally — I suffer from post-traumatic stress as a result of the harassment that I encountered in the workplace from my employer.[…]

To be unemployed is very devastating, also demeaning and demoralizing. And then the recovery time — there is no limit on it. I still have not financially recovered. I’m underemployed. When I do talks, I tell people I’m not employable. I was lucky to be where I am and I’m happy to be where I am, but I’m one of the fortunate people that is employed. There are many more people like me that are not employed as a result of just being who they are — being good workers, but being transgender or transsexual. So I think it’s extremely important that this bill be passed to protect workers like me.

Sen. Tom Harkin (D-IA) expressed pride in the committee for inviting Broadus to speak. Watch his full testimony:

No opponents of the bill attended the hearing, so the panel and questions were mostly positive. One witness, Craig Parshall of the National Religious Broadcasters Association, testified against ENDA, arguing that religious businesses should be able to discriminate against gay and trans employees according to their beliefs. Largely the committee ignored Parshall during the questioning, and when he did express concern, Samuel Bagenstos of the University of Michigan Law School countered the technicalities of his claims, pointing out that ENDA actually has broad religious exemptions.

ENDA has been stalled in Congress for decades. Though Republican control of the House may prevent its advance yet again in 2012, today’s Senate hearing was nonetheless historic. The fact that most of the discussion at today’s hearing was supportive and non-confrontational demonstrates how significantly overdue these employment protections are.

This Blog originally appeared in Think Progress on June 12, 2012. Reprinted with Permission.

About the Author: Zack Ford is an LGBT researcher/blogger for ThinkProgress.org at the Center for American Progress Action Fund. Prior to joining ThinkProgress, Zack blogged for two years at ZackFordBlogs.com with occasional cross-posts at Pam’s House Blend. He also co-hosts a popular LGBT-issues podcast called Queer and Queerer with activist and performance artist Peterson Toscano. Zack has a bachelor’s in Music Education from Ithaca College, where we served as student body president, a Master’s in Higher Education Student Affairs from Iowa State University, and also helped found the Central Pennsylvania LGBT Aging Network. Zack holds a B.M. in music education from Ithaca College and an M.Ed. in higher education (student affairs) from Iowa State University, but he’s originally (and proudly) from rural central Pennsylvania.


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Congress Introduces Age Discrimination Bill To Fix Supreme Court’s Gross Decision

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Age Discrimination Legislation Will Overturn Gross Decision

Last June, the Supreme Court issued the awful and controversial age discrimination opinion in the Gross v. FBL Financial Services case.

I wrote about the case at that time and predicted that it was just a matter of time until Congress fixed it with a bill that would overrule the decision and set the record straight on the fair standard of proof for age discrimination plaintiffs.

Last Tuesday, the Senate and House introduced legislation designed to do just that.

The bill — introduced as H.R. 3721 — and called the Protecting Older Workers Against Discrimation Act, will put age discrimination plaintiffs back where they were before the Gross decision.

The bill will apply to all cases pending on or after June 17, 2009,  the day before the Gross decision.

Senator Patrick Leahy, one of the authors of the bill had this to say (as reported in the New York Times):

What our bill does is restore the intent of Congress, an intent that I believe the Supreme Court negligently ignored.

In Gross, the Court held that the Plaintiff, Jack Gross, was required to prove that age was the “but for” reason he was demoted from his job.

In other words, the plaintiff would have to prove that “but for” his age, he would not have been demoted (fired, hired, etc.).

Most interpret this as a new and more stringent requirement that age be the sole reason for the adverse employment action (though the case has conflicting language on that issue).

What’s fundamentally flawed about the Court’s interpretation of the federal age discrimination statute (ADEA) is that it’s not consistent with all  of the other comparable civil rights statutes.

Simply stated, it makes no sense for an age discrimination plaintiff to be treated differently, and more harshly, than a plaintiff in a race or gender discrimination case. The method of proof and standard of proof has been, and ought to be, the same.

In other discrimination cases a plaintiff must prove that the alleged discrimination was “a motivating factor,” not the sole reason, for the challenged adverse employment decision.

This bill establishes that age discrimination cases are to be interpreted by the same “motivating factor” standard of proof.

The bill also explicitly recognizes the difficulty of proving discrimination cases and makes clear that victims of any kind of prohibited discrimination can prove their cases with direct or circumstantial evidence.

According to Senator Tom Harkin, one of the co-sponsors of the bill — as reported in Workforce Management:

The Court invented a new standard that makes it prohibitively difficult for a victim to prove age discrimination

This extraordinarily high burden radically undermines older workers’ ability to hold employers accountable.

It’s no secret that workers over 55 have been hit hard by the recession. According to the EEOC, 25,000 age discrimination cases were filed last year, a 30%increase from 2000.

The last thing these folks need is a more difficult standard of proof when age discrimination is at play.

Fortunately, Congress has the final say on what its legislation means and how it should be interpreted. That’s why it gets to say that all discrimination plaintiffs should be treated consistently by the courts.

Let’s hope that this important Congressional fix gets passed soon.

image:blog.prospect.org images1.wikia.nocookie.net

This article originally appeared in Employee Rights Post on October 15, 2009. Reprinted with permission from the author.

About the Author: Ellen Simon is recognized as one of the first and foremost employment and civil rights lawyers in the United States. With more than $50* million in verdicts and settlements and over 30 years of experience, Ellen has been listed in Best Lawyers in America and in the National Law Journal as one of the nation’s leading litigators. She has been lauded for her work on landmark cases that established employment law in both state and federal court. Ellen also possesses a wealth of knowledge as a legal analyst discussing high-profile civil cases, employment discrimination and women’s issues. Ms. Simon has been quoted often in local and national news media and is a regular guest on television and radio, including appearances on Court TV. She is the author of the Employee Rights Post, a legal blog devoted to employee and civil rights.

*prior results do not guarantee a similar outcome


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