In the past few months this columnist has authored a pair of
articles (October
6 and
December 1) regarding the assault on career colleges by the
U.S. Department of Education. Unlike state-owned public
institutions and private, not-for-profit colleges, career colleges
operate on a for-profit basis.
It is apparent the current administration has very little
use for career colleges. No doubt there is room for improvement
among career college practices including improved recruiting
policies, increased graduation rates and lower student costs. Of
course, the same argument can be made about public institutions and
private, not-for-profit colleges.
The Dept of Ed has targeted career colleges by proposing
new rules and regulations that would apply only to career colleges
and not all college programs. If uniformly applied, the same rules
would likely have painful consequences for countless collegiate
programs regardless of profit status.
Criticism of career colleges reached a fever pitch during
an August 4, 2010 hearing before the Senate Committee on Health,
Education, Labor and Pensions. Chaired by Senator Tom Harkin
(D-IA), the committee hearing list was stacked with witnesses who
were hostile to the mere existence of for-profit
colleges.
The tone of the committee hearing was set early by the
very critical testimony of the hearing’s first witness,
Gregory Kurtz, the managing director of the Office of
Forensic Audits and Special Investigations in the U.S. Government
Accountability Office. Kurtz buttressed his testimony with a
GAO report
that alleged deceptive marketing practices at 15 career colleges
and accused four of those schools of conducting fraudulent
practices.
The GAO conducted undercover tests at “a nonrepresentative
selection of” colleges by having four individuals pose as
prospective students. These undercover applicants spoke with
college admissions representatives about their degree and/or
certificate programs (e.g. cosmetology).
The report was damning. It alleged “four colleges
encouraged fraudulent practices, such as encouraging students to
submit false information about their financial status.” Further,
the report claimed “all 15 colleges made some type of deceptive or
otherwise questionable statement to undercover
applicants.”
However, the GAO report raised serious questions about its
methodology and its interpretation of conversations. For example,
the report alleged career college representatives encouraged
undercover applicants to enter false information in personal
financial status disclosures; to not disclose personal funds held
by the applicants; or to request subsidized loan amounts larger
than necessary to pay college costs.
The problem with these allegations is that there is no
discernible incentive for college representatives to engage in
these practices. In fact, it would be counter to the best financial
interests of the colleges to engage in some of the practices the
GAO alleged.
For example, one undercover applicant claimed to have
$250,000 in savings. This amount of savings would easily cover the
$15,000 tuition of the sought-after college course of instruction.
Yet, the GAO alleged the admissions representative encouraged the
undercover applicant to not disclose those personal funds and
instead apply for subsidized loans.
Here is the problem with that scenario as presented by the
GAO. Colleges do not receive any remuneration from a federally
subsidized student loan program. There is no finder’s fee, no kick
back, no bonus or any other identifiable financial incentive for a
college to eschew the certainty of a personal tuition check in
favor of the uncertain outcome of a subsidized loan
application.
There are also unconfirmed reports that GAO may have
conducted undercover investigations at numerous colleges but
cherry-picked the results only from schools in which there appeared
to be questionable marketing practices.
Armed with these inconsistencies and other questions, this
columnist queried the GAO about the agency’s investigation and the
report. The GAO is an arm of the Congress and is therefore exempt
from the Freedom of Information Act. Nonetheless, questions can
still be asked. And they were.
The GAO replied to a series of questions and quietly
released a revised version of the original report that answered
many but not all questions. A GAO spokesman stated, “Ultimately
nothing has changed with the overall message of the report, and
nothing has changed with any of our findings.”
In spite of this claim, the changes in the report were
significant enough to call into question either the competence or
the integrity of the GAO. Consider the following comparisons of
original report language versus revised report language (emphasis
added).
Original
“The
representative told the undercover applicant that by the time the
college would be required by [the Department of] Education to
verify any information about the applicant, the applicant would
have already graduated from the 7-month program.”
Revised
“The
undercover applicant suggested to the
representative that by the time the college would be
required by [the Department of] Education to verify any information
about the applicant, the applicant would have already graduated
from the 7-month program. The representative
acknowledged this was true.”
Original
“Financial aid
representative estimated federal aid eligibility without the
undercover applicant’s reported $250,000 in savings to see if
applicant qualified for more financial aid.”
Revised
”Upon
request by applicant, the financial aid
representative estimated federal aid eligibility without the
undercover applicant’s reported $250,000 in savings to see if
applicant qualified for more financial aid.”
Original
“The career
representative told the undercover applicant that getting a job is
a ‘piece of cake’ and then told the applicant that she has
graduates making $120,000-$130,000 a year. This is likely the
exception; according to the BLS 90 percent of architectural and
civil drafters make less than $70,000 per year.”
Revised
“The
career representative told the undercover applicant that getting a
job is a ‘piece of cake’ and then told the applicant that she has
graduates making $120,000 - $130,000 a year. This is likely the
exception; according to the BLS 90 percent of architectural and
civil drafters make less than $70,000 per year.
She also stated that in the
current economic environment, the applicant could expect a job with
a likely starting salary of $13-$14 per hour or $15 if the
applicant was
lucky.”
Original
“Undercover
applicant was told that he could earn up to $100 an hour as a
massage therapist.
Revised
“While one school representative indicated to the undercover
applicant that he could earn up to $30 an hour as a massage
therapist, another representative told the applicant that the
school’s massage instructors and directors can earn $150-$200 an
hour.”
Original
“Admissions representative told our prospective
undercover applicant that student loans were not like car loans
because ‘no one will come after you if you don’t
pay.’”
Revised
“Admissions
representative told our prospective undercover applicant that
student loans were not like car loans
because
student loans could be
deferred in cases of economic hardship, saying ‘It’s not like a car
note where if you don’t pay they’re going to come after you. If
you’re in a hardship and you’re unable to find a job, you can defer
it.’”
In a reply
to written questions, GAO Chief Quality Officer Timothy P. Bowling
gave responses that were sufficiently vague that they could be
interpreted in more than one way. This was true in instances where
a simple “yes” or “no” response would have sufficed. Instead, the
GAO offered wordy explanations. Was the GAO engaging in
bureaucratic babbling? Or was it hiding
something?
It would
not take an act of Congress to discover the answers to these and
other nagging questions. It would only take the questions of a
single member of Congress who would like to get to the truth
because — apparently — no one is auditing the
auditors.
