For-profit colleges generate $20 billion in revenue every year, much of it coming from federal student loans. Now the government is rolling out new regulations on these “career colleges.” We’ll take a look at the financial-and ethical-implications of the pending rules.


  • Goldie Blumenstyk Senior Writer and "Financial Affairs" Columnist, Chronicle of Higher Education


  • 13:06:35

    MR. KOJO NNAMDIFrom WAMU 88.5 at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your neighborhood with the world. There's no such thing as bad publicity or so the old saying goes. Advocates for the for-profit college industry may beg to differ.

  • 13:07:12

    MR. KOJO NNAMDISo-called career colleges are making headlines once again with new regulations, investigations and lawsuits looming. Backers of the $20 billion a year industry claim new regulations capping federal aid will keep needy students out of the classroom. The other side claims for-profit colleges prey on students who cannot afford to repay their loans.

  • 13:07:35

    MR. KOJO NNAMDIWhat do you say? You can call us at 800-433-8850 if you or a loved one has attended a for-profit college, we want to know what that experience was like. 800-433-8850. Joining us in studio is Goldie Blumenstyk, senior writer with "The Chronicle of Higher Education." She's covered for-profit colleges since the mid '90s. Goldie, good to see you again.

  • 13:07:59

    MS. GOLDIE BLUMENSTYKThanks for having me back, Kojo.

  • 13:08:01

    NNAMDIAnd you, too, as we said, can join the conversation with a phone call, 800-433-8850, a tweet at kojoshow an email to or you can simply go to our website,, make your contribution there. Goldie, there's a new rule on the horizon that will cap federal aid for career colleges whose graduates have too much debt and too little income.

  • 13:08:26

    NNAMDIIndustry lobbyists have worked hard against this rule. What exactly would this gainful employment rule do, along with some 13 other regulations, and why are the industry lobbyists so worried?

  • 13:08:40

    BLUMENSTYKWhat exactly it will do, we don't know. This is sort of the, I don't know, maybe it's a several hundred million dollar question out there. The rule has -- there is a first proposal of the rule that came out several months ago. The Education Department has sort of gone back and revised the rule in ways that we don't know yet what they've decided to do with it.

  • 13:09:01

    BLUMENSTYKThey've sent the rule to the Office of Management and Budget, which in Washington-speak is sort of the last stop before it gets published in the Federal Register. In the broadest sense, it will cut off student aid, federal student aid, which means Pell Grants and loans to programs at colleges which are for-profit, and non-profit colleges too by the way, if students have too much relative to the likely income they'll make from the program that they graduate from or if the number of students graduating from those programs, if those students are not repaying their loans at an adequate rate. What that number is, is still to be determined. That's sort of the -- those numbers and those fine points are what's out there.

  • 13:09:47

    BLUMENSTYKThe advocates for the for-profit college industry and the companies themselves say that the Education Department has developed a rule that is too complicated to enforce and based on some faulty logic and will shut down, they say, maybe as many as a third of their programs in colleges and deny access to education to a lot of students.

  • 13:10:11

    BLUMENSTYKProponents of the rule say the number of programs affected would be much smaller. They say more like five percent. And that the programs that would be shut down are programs that probably shouldn’t be getting federal aid to begin with because they don't really necessarily prepare students for good jobs in the workplace and they load students up with too much debt.

  • 13:10:29

    NNAMDIIn other words, if I'm getting an undergraduate degree in one of these colleges that will prepare me for a job whose maximum income is in the vicinity of $50,000 or $60,000 a year, meanwhile, in order to get this degree, I have accumulated $250,000 of debt, the proportion would cause, under the new rule, me to be prohibited from pursuing such a degree or the federal aid from going to that institution?

  • 13:10:53

    BLUMENSTYKDepending -- those numbers are probably a little high...

  • 13:10:55

    NNAMDIYes, I made them up.

  • 13:10:55

    BLUMENSTYK...for the industry, right? And we don't actually know what the numbers are. But, yes, the idea is if, at the end of the day, someone working as a medical assistant can only expect to make $35,000 a year, should the federal student aid program and federal Pell Grants be available for a program that's going to cause the student to go into debt for so much money that it's going to take them a inordinate amount of time to pay back that debt.

  • 13:11:17

    NNAMDIYour colleague, Kelly Field, details allegations that Kaplan instructors lured students to class with pizza parties, ice cream socials and raffles for Ipods. If part of the for-profit industry's argument against regulation is that the regulations hurt students who really want to be there, this sounds like a problem.

  • 13:11:37

    BLUMENSTYKIt sounds like a problem. Those are some allegations and some testimony from some people who are suing College of Kaplan University, not Kaplan University – sorry, there's a distinction. There's Kaplan University and there are these other colleges that are also owned by Kaplan Higher Education, which is, as most of our listeners know or may not know, Kaplan is owned by The Washington Post company.

  • 13:12:01

    BLUMENSTYKThere are issues with getting your student aid. You get your student aid and then the schools can keep a certain amount of student aid once the student has only gotten through, you know, most of the programs. So if you start the class and then you don't finish the class, you've failed to retain your student and you might not be able to keep all the student's tuition and likewise, the student doesn't benefit from the education.

  • 13:12:24

    BLUMENSTYKThe colleges have a very -- just about all the for-profit colleges, frankly, this is one way you can generalize about them. They take a very big interest in what they call retention programs, really making sure students stay on track. These are students who are often working a job, have families and have a lot of other commitments and in some cases, haven't had a lot of success in college before and so they go to extraordinary measures to encourage the students to stay in class.

  • 13:12:52

    BLUMENSTYKOf course, the question is, are they going to measures that are above and beyond? As some people have alleged in some of these lawsuits that Kelly Field wrote about, are they changing grades or are they -- you know, I know that they send out emails to students, we haven't seen you, why don't you come back to class?

  • 13:13:08

    BLUMENSTYKI've heard about other colleges sending out sort of, you know, automated emails in the name of the professor or in the name of a past professor to try to encourage the students to come back. It's part of a -- maybe it's called retention in some context or maybe it's called something else, but the state and intent of this is to keep the students on track for courses.

  • 13:13:29

    BLUMENSTYKThe question always is, at what point does that kind of go over a line and become something a little less savory?

  • 13:13:34

    NNAMDIAt what point do pizza parties, ice cream socials and raffles for Ipods become not mere incentives, but become an act of luring students into this? If you'd like to join the conversation, call us, 800-433-8850. If you went to a career college, what about it appealed to you and what was your experience like? 800-433-8850.

  • 13:13:54

    NNAMDIOur guest is Goldie Blumenstyk. She's a senior writer with "The Chronicle of Higher Education." She's been covering for-profit colleges since the mid 1990s. For-profit Corinthian colleges just raised the tuition by 12 percent. Students at non-profits and public universities across the country will see tuition hikes of up to 40 percent, it's my understanding, this year. But Corinthians' raise isn't about covering rising costs or improving the curriculum. What is it about?

  • 13:14:23

    BLUMENSTYKNow, you're diving into a very sticky area.

  • 13:14:26


  • 13:14:26

    BLUMENSTYKIt relates to this rule that the Education Department, the government, has called the 90/10 rule. For-profit colleges are not allowed to derive more than 90 percent of their revenues from student loan money or from Pell Grants or from grants.

  • 13:14:42

    BLUMENSTYKAnd so since tuition at a college can sometimes be less than the total amount of the Pell Grant or the total amount that a person can borrow. Corinthian quite publicly decided to raise its tuition at many of its colleges, which includes colleges called Everest College, Healed College, I think Brown Mackey. I'm blanking on that for a second. I apologize if I have that one wrong.

  • 13:15:08

    BLUMENSTYKThat so they raised their prices so that to be sure that students have to come with some other source of income to get to the other 10 percent. So some people have called being very stoical for using that policy. The fact is the rule doesn't say each individual student has to provide at least 10 percent of their money.

  • 13:15:28

    BLUMENSTYKThe rule says that, overall, the colleges can't get more than 90 percent of their revenue. So companies like Corinthian could be getting some revenues from other sources. They could be finding other students that could pay their own way. They could be collaborative relations with businesses, as some of the other colleges do, to kind of find some of that other revenue from other sources.

  • 13:15:49

    BLUMENSTYKBut in this case, they've decided to go ahead and raise their tuition to get Congress's attention. And actually, I expect, in the next few weeks, we'll be hearing a lot about that because there's an exemption in the law that's about to run out, which will put a lot of other colleges in the same boat.

  • 13:16:03

    NNAMDILet's start going to the telephones then. Here is Eric, in Shepherd's Town, W. Va. Eric, you're on the air. Go ahead please.

  • 13:16:14

    ERICHi, I wanted to talk about an experience I had taking a single class. I needed a review as a prerequisite and I went to Phoenix because it was convenient and I didn't expect much, honestly. But I didn't -- I figured I should be fair...

  • 13:16:32

    NNAMDIUniversity of Phoenix, the largest for-profit college there is. Go ahead.

  • 13:16:36

    ERICAnd I was shocked, number one, a number of students seemed completely unprepared. They never asked me for any transcripts. There was no admission requirements that I could see and, you know, I just paid the money, I was in the class.

  • 13:16:54

    ERICAnd there was a lot of writing because of it being an online class and just the quality of writing from the other students indicated to me that they didn't seem prepared for a college experience. The class itself really emphasized the writing, but they emphasized content. And it was a chemistry class so there's a lot of basic facts you need to memorize and it was just completely de-emphasized. And students in their writing would get things wrong and the instructor never corrected and it was overall just worse than I could've imagined.

  • 13:17:34

    ERICBut the course really didn't re-enforce anything. I was, you know, everything I did in the course was relying on my previous learning. There was nothing new that came out of it and I just found the standards to be very poor, very low.

  • 13:17:50

    NNAMDIBut this was a course that you said, Eric, that you had to take for the purpose of career enhancement?

  • 13:17:58

    ERICI had to take it to get admitted to a program. The program requires me to have a recent chemistry class and this is at a different institution. And I just needed to fill out the requirements, basically check a box off on the application form.

  • 13:18:14

    NNAMDIDid it work?

  • 13:18:14

    ERICSo Phoenix was -- pardon me?

  • 13:18:17

    NNAMDIDid it work for you? Were you admitted to the program?

  • 13:18:21

    ERICI haven't finished the application process to the other program.

  • 13:18:25

    NNAMDIOkay. Here is Goldie Blumenstyk.

  • 13:18:27

    BLUMENSTYKThat's funny. I actually took a class at the University of Phoenix a few years ago myself under the same – well, not quite under the same circumstance. I was kind of curious to see what it would be like. I took an online class in non-profit accounting since I cover non-profit colleges also in my day job here.

  • 13:18:44

    BLUMENSTYKI also did not have to provide a transcript, but I was not applying as a degreed student and so that was a different admissions experience. I was contacted very quickly by the company when I signed up on the form. I expected to be barraged with emails. Actually, I , but I did -- I thought the class actually had a little bit of rigor to it for an accounting class.

  • 13:19:07

    BLUMENSTYKOf course, maybe that's because I'm a journalist and accounting doesn't come easily to me. At the end of the day, though, the writing essay, I will say, I was corrected on my writing in some cases, which sort of surprised me. I thought that would've been the part I would've aced a little bit better, but I found that -- I don't know how you would know what the other -- I'm not trying to defend Phoenix by any means because your experience may well have been a very difficult one.

  • 13:19:32

    BLUMENSTYKI don't know how you would know what the professors correct and the other students accept if it's what you're seeing on the message boards and the like.

  • 13:19:38

    NNAMDIThank you very much for your call, Eric. Are you now prepared to be doing the tax returns for people with very complicated tax returns?

  • 13:19:45

    BLUMENSTYKDon't do that. I would not suggest you hire me for that. But I can read the 990 forms of non-profit colleges a lot better now.

  • 13:19:53

    NNAMDIThere you go. Here is Paul, in Baltimore, Md. Paul, you're on the air. Go ahead, please.

  • 13:19:58

    PAULYes, I'm taking classes at University of Phoenix as well and I collaborate what the previous caller just said. I saw the same thing in preparation of the students definitely. And I'm working on a doctoral program at the University of Phoenix. Now, the rigor, if the students are willing to put the time in and actually follow through with the whole program is as rigorous as I imagine any other PhD or doctoral program is.

  • 13:20:28

    PAULBut certainly I noticed all along for -- 'cause there was 30 some odd classes -- there were people that made it much further than they clearly should have. If this was a traditional bricks and mortar program, I think they would've been bounced, you know, some time ago. And I think part of that is because they're a for-profit institution.

  • 13:20:47

    PAULBut there was like -- you could see that just by seeing the quality of the writing of some of the other individuals, American-born individuals, that there was no chance they were going to make it through the program, but they were still being propped up somehow.

  • 13:21:03

    NNAMDIBeing propped up somehow, Goldie Blumenstyk.

  • 13:21:06

    BLUMENSTYKWell, University of Phoenix for one -- I can't remember if it was 30 or 40 percent, but a certain percent of your grade at the University of Phoenix comes from the work that you do in your study group. You're assigned three or four people together in a study group and you do assignments as an individual and you do assignments as a group. Frankly, there are ways in that environment for somebody to be carrying somebody else in the course. Presumably someone who's entering this program wouldn't necessarily let that ride out the whole way.

  • 13:21:36

    BLUMENSTYKBut you -- we were supposed to prepare a PowerPoint presentation for my class, in fact. And I gotta tell you, I still don't know how to do PowerPoint because someone else -- I took the assignment to do some of the writing and someone else in the group took the PowerPoint piece. And we didn't break any rules. That was allowed under that format. To be fair, University of Phoenix and some of the other colleges and many non-profit colleges now, too, assign this work in a -- assign this group assignment because they say business works in a collaborative environment. It’s the 21st Century. We have to all know how to work collaboratively and at a distance. But it does kind of create that opportunity for some abuse as well.

  • 13:22:12

    NNAMDIGotta take a short break. When we come back, we will return to this conversation about for-profit colleges and the regulations that they now face, and invite your calls, 800-433-8850. Do you think the scrutiny of for-profit colleges is fair? 800-433-8850 or send us a tweet at kojoshow, email us at or simply go to our website, Make a comment or ask a question there. I'm Kojo Nnamdi.

  • 13:24:40

    NNAMDIWelcome back to our conversation on for-profit colleges. We're talking with Goldie Blumenstyk, senior writer with the Chronicle of Higher Education. Goldie Blumenstyk has been covering for-profit colleges since the mid '90s and as you heard her say, she took a course at the University of Phoenix, the largest online university herself. Again, you can join the conversation at 800-433-8850. There's a lawsuit underway, Goldie, against the nation's second largest chain of for-profit colleges, Education Management. Dozens of lawsuits have been filed against for-profit colleges. So how is this one different?

  • 13:25:15

    BLUMENSTYKThis one is different because in this case, it's like several others. It was filed by whistleblowers, former employees of the company who are now trying to identify instances where the company -- they say the company obtained federal student aid under false pretenses. This one's different because in this case, the Department of Justice has decided to formally intervene in the case along with ten states and the District of Columbia, which will entitle them -- well, they've always been -- they would always be entitled to get a piece of the recovery if the students settled in their favor or the college is found guilty. In this case, the justice department has intervened, which means it'll be working directly with the people who have filed the lawsuit.

  • 13:25:58

    BLUMENSTYKIt's interesting. This lawsuit was actually filed back in 2007 and it's been under seal for four years. It was just unsealed a couple weeks ago and at that point is -- it suggested also that the Department of Justice had been investigating a little bit along the way. And it suggested perhaps they think there's a pretty good case here.

  • 13:26:17

    NNAMDIAnd as you said, former employees are involved in this lawsuit. And it's my understanding that the plaintiffs alleged the company violated local jurisdictions false claims acts by submitting false documents to gain eligibility for state based aid.

  • 13:26:33


  • 13:26:34

    NNAMDIWell, former employees might know about stuff like that. But here we got this email from Jonathan in Washington D.C. who says, "What about companies like EDMC, which is backed by a very credible backer in Goldman Sachs. Are some for-profit education providers more credible? And conversely, are there others we should knowingly avoid?" I find Jonathan's email particularly significant because he associates the backing of Goldman Sachs with the credibility of EDMC in a way I'm sure that a lot of people associate Kaplan with its ownership by the Washington Post.

  • 13:27:05

    BLUMENSTYKRight. And perhaps that Goldman Sachs backing would've had a little more gold plating on it a few years ago than it does today.

  • 13:27:10

    NNAMDIYeah, that's true.

  • 13:27:13

    BLUMENSTYKWell, there's a lot of entity -- and also we should say that the Washington Post also owns -- I think it's about 8 percent of another company called Corinthian College...

  • 13:27:20


  • 13:27:20

    BLUMENSTYK...which you mentioned earlier.

  • 13:27:21


  • 13:27:22

    BLUMENSTYKThere's a lot of big money behind these companies, a lot of -- Warburg Pincus is an investment bank that helped found this company called Bridgepoint Education. And there's -- and when I say big money, there are a lot of pension funds invested in these companies. Probably a lot of people listening today have their IRAs invested in these companies as well and their 401Ks and the like. So it's these -- you know, the big for-profit companies trade on Wall Street and they are certainly -- they're not the greatest investment these days because their stock prices have dropped quite a bit in the last year or so.

  • 13:27:57

    NNAMDIWell, now it's your turn. Call us at 800-433-8850. Have you hired employees who have degrees from career colleges? How has that worked out for you? From for-profit colleges, that is. Let's talk with Michelle in Centerville, Va. Michelle, you're on the air. Go ahead, please.

  • 13:28:13

    MICHELLEHi. I'm just calling from a parents' perspective. I have an awful lot of friends that are pushing their kids into these kind of debts without really asking the question as how much will they make once they get out, including kids who have come out of a traditional BA or BS program, not been able to find jobs for a history major. And then, carrying that student loan debt right into, you know, a piggy-back program of additional student loan debt.

  • 13:28:42

    MICHELLEAnd they come out with just crushing unpayable debt. But by the same token, you know, if these schools are deemed fair and then imposed eventually on not-for-profit colleges, you know, would a medical school pass the rigors? Because the debt that a doctor comes out with is just amazing.

  • 13:29:09

    NNAMDICare to comment on that, Goldie Blumenstyk?

  • 13:29:11

    BLUMENSTYKI've also wondered how law schools would fare under this measure.

  • 13:29:14


  • 13:29:14


  • 13:29:15

    BLUMENSTYKI know a lot of people who are out there right now with a great deal of debt from law schools. The rule only applies to certain colleges -- to certain programs of colleges that prepare students for careers. History majors actually get a pass, I think. I'm a history -- I was a history major in college so that's kind of a nice touch. But there is -- that's a very good question that you ask.

  • 13:29:40

    BLUMENSTYKBecause, you know, kinda bubbling below the surface in there there's a lot of unease about this gainful employment rule because there are a lot of people in the rest of higher education right now who are kind of worried that this sort of approach, whether it be a formal gainful employment rule like the education department is proposing or just that this approach will inform the way legislatures fund education and the way parents think about education and families, there's a lot of concern that this gainful employment mentality will actually seep more broadly into the spectrum right now.

  • 13:30:11

    BLUMENSTYKSo even though the rule itself will only apply to for-profit colleges, a lot of community colleges and a few other kinds of colleges, ultimately this sentiment and this mentality may actually inform a lot of funding decisions in the next few years.

  • 13:30:26

    NNAMDIThank you very much for your call, Michelle. We move on to Katy in Silver Spring, Md. Katy, what's been your experience?

  • 13:30:32

    KATYWell, my boyfriend actually taught a course online. I can't remember which school it was for, but he was in a PhD program at a regular state school and taught there. And he was just saying that the difference in the students was remarkable even though, you know, not all regular college students are particularly prepared for college either. But he was also required to pass a certain percentage of students no matter the quality of work. And so I think that that's really problematic. I even read some of the essays. Like, basic English composition was completely missing. And there's only so much correcting you can do.

  • 13:31:18

    NNAMDIHe's expected to pass a number of students, Goldie Blumenstyk. That seems to me to be...

  • 13:31:25

    BLUMENSTYKThat's problematic.

  • 13:31:25

    NNAMDI...either straddling or crossing an ethical line.

  • 13:31:27

    BLUMENSTYKI think that's -- I think it's safe to say that's crossing the ethical line. That's the issue that Kelly Field's story deals with quite a bit in this week's chronicle. The difference at a for-profit college versus a public university, say, is, to some degree, really relates to how much control the faculty have. And people who are concerned about sort of the rigor of these colleges and also the accountability issues point to the faculty role. Faculty at non-profit colleges generally have a little bit more -- much more autonomy in determining who passes and who fails their class. And, you know, in general, they control the curriculum, even in an environment with many more adjunct professors teaching.

  • 13:32:08

    BLUMENSTYKAt the for-profit colleges, the faculty have much less control over the curriculum. And this kind of creates this environment for some questionable activities, in some cases explicitly. In other cases, it's a little -- it's perhaps a little bit subtle, but it's certainly quite there. One of the colleges Kelly writes about is a company called the American Public University. And their professors -- they have a very creative way to pay professors. They pay them by how many students are enrolled in a class. And you think, well, that's very smart. The class only has two or three students, you only have to pay this much and you can offer a lot of classes. But it turns out that they also penalize the professors and they only -- and they pay them less if the students don't stay for 60 percent of the course.

  • 13:32:50

    NNAMDIWhat was the penalty that your boyfriend would have been subjected to had he not passed a certain number of students, and did he actually do that?

  • 13:32:58

    KATYI think it had something to do with pay and he did comply. But I think he didn't teach after that course 'cause he was really kind of distressed with the whole notion that people that would have never passed in his normal, you know, classroom could get passed there. And he felt like he just didn't know a way to adequately improve them. I don't know the exact consequences. I can't -- you know, I wasn't directly involved with it a lot.

  • 13:33:26

    NNAMDIOkay, Katy. But thank you very much for sharing that with us.

  • 13:33:30

    KATYOkay. Thank you.

  • 13:33:31

    NNAMDIYou, too, can call us, 800-433-8850. If you went to a career college, what about it appealed to you? What about it may have -- or may have turned you off? 800-433-8850. Here is Carlton in the Washington D.C. area. Carlton, you are on the air. Go ahead, please.

  • 13:33:48

    CARLTONHi, Kojo. So I went to a regular four-year college and I participated in a lot of group projects. And I have to say that the same thing happened in a regular four-year institution. There's a lot of people that don't know PowerPoint and don't know how to use some of the tools that are kind of required for business work. And they do go through college latching onto people that are Type A personalities or people that will drive that project work to be successful. And I don't know what they're doing for the career colleges to mitigate that or to handle it, but I would think that something should also be done in a regular four-year college, too, to mitigate that.

  • 13:34:29

    BLUMENSTYKYou're right. One of the things that happens -- and this will actually probably be an issue more broadly in higher education going forward also, is a lot of the growth in the for-profit college industry has been through distance education. Obviously, there's a lot -- it's a lot easier for students to -- let's say to share each other's expertise more easily in a distance education environment than it might be in a face-to-face environment. As more and more colleges go to a distance ed. environment or just into a more disbursed environment, there's going to be a lot more prevalence of that.

  • 13:35:03

    BLUMENSTYKAnd, you know, it's funny. In all these issues, every one of these problems is -- also could be -- you know, could be seen as innovative. Is it innovative or is it a problem that you're having students working in group environments? Is it innovative or is it a problem that you're having faculty really get involved in trying to keep students on track for courses to stay in college when you know that they might have a lot of other family issues going on that would keep them from coming? Is it innovative or is it a problem to call students back who sort of dropped out and see if they want to come back and continue and get their degrees?

  • 13:35:41

    BLUMENSTYKAnd a lot of this is really just to measure a question of scale and scope and intensity. You know, one phone call to somebody to come back is one thing. Ten phone calls to get them to return to your college is quite a different one.

  • 13:35:54

    NNAMDICarlton, thank you very much for your call. In addition to the lawsuit that we just talked about against the Education Management College, there are attorneys general from ten states who have launched a coordinated investigation into fraud allegations at for-profit colleges. What do we know about that investigation?

  • 13:36:11

    BLUMENSTYKWell, we know a little about that. I had an opportunity to talk to Attorney General Conway from Kentucky last week. He's the person who's sort of been instigating this ten-state effort. It began because I think about four or five states, Kentucky included, Florida, Illinois and Iowa, the attorney generals in all those states had begun investigations of colleges. Some of the names that we have all heard today actually in various places, Kaplan, Phoenix, Bridgepoint, a few others. And the attorney general in Kentucky decided that maybe it would make more sense for these states to sort of coordinate their efforts a little bit better and share information.

  • 13:36:51

    BLUMENSTYKThese kinds of multi-state efforts are not unusual for attorneys general, but it does certainly represent a little more heat on the sector right now. Because attorneys general, you know, they have a lot of power. They can do subpoenas and they can -- once they start to share information they may file lawsuits jointly. They may end up coming up with a new, yet another code of conduct out there. Everybody seems to be pushing a code of conduct right now. And the other thing is attorneys general are pretty good at getting publicity for themselves. And so we probably will be hearing a little bit more about these investigations.

  • 13:37:22

    NNAMDIGoldie Blumenstyk is a Senior Writer with the Chronicle of Higher Education. We're talking about regulations being faced now by for-profit colleges. And in some cases non-profit colleges too, but the for-profit colleges depend more extensively on students receiving federal aid. We move on to Westner in Bethesda, Md. Westner, your turn.

  • 13:37:42

    WESTNERYes, Kojo. Thank you for being part of your program. My concern is regarding a university called AIU. I don't know if your guest is familiar with it. It's American International -- Intercontinental University.

  • 13:37:54


  • 13:37:54

    WESTNERIs she familiar with that one? (unintelligible) ...

  • 13:37:57


  • 13:37:57

    NNAMDIGoldie knows all. Go ahead, please.

  • 13:38:00


  • 13:38:00

    NNAMDIYes, she is familiar with it.

  • 13:38:02

    WESTNERYes, Kojo. I don't know if she can tell you a way that I can, because my problem with them is that I started a program about a year ago. I'm trying to complete my bachelor degree since I already got my associates. But we started with $30,000. Before I know it, the fee was up to 40,000 without even telling me why we (word?) that $10,000. Okay. In the process, I'm cut off like I am not continuing. Now, they are (word?) returning my - as a bad credit and asking me to (unintelligible) just one period, you know, about less than a month.

  • 13:38:42

    NNAMDIWell, allow me to share with you, Westner, and with Goldie this comment we got on Facebook from Alyssa. "I attended Kaplan University in 2009 thinking that the mass communications program would give me a foot in the industry's door. Shortly after my mother was diagnosed with cancer, I stepped away from my courses to take care of her and our family eventually went broke. I was officially a dropout within months and began receiving letters demanding that I pay back 3,000 plus dollars.

  • 13:39:12

    NNAMDII later found out that since the federal loan did not go through their system, I owed them another $3,000. I'd like to warn anyone contemplating this school to ask questions and be very skeptical about the loan process, lest the recruiter forget rather important information." It seems to me that this is comparable to the problem that Westner is having in that there is a certain level of uncertainty about exactly how much they would end up owing.

  • 13:39:36

    BLUMENSTYKThe return of tuition and the return of student loans is an issue that we hear about a lot from people who write us at the chronicle as well. It's very complicated. Every one of these cases is a little bit different. There are always student privacy issues involved. So as reporters, it's often difficult to investigate them because the schools generally won't talk to us about a particular student because they don't want to violate federal privacy laws.

  • 13:40:00

    BLUMENSTYKOne wonders whether there ought to be -- you know, I don't know what states these people are in but it seems that particularly now with these attorneys general investigating, perhaps their county or their state attorney generals' offices have consumer complaint lines that they might want to contact to pursue this.

  • 13:40:16

    NNAMDIThank you very much for your call, Westner. We're going to take a short break. When we come back, we'll continue this conversation of for-profit colleges and the regulations that now confront them, with Goldie Blumenstyck, senior writer with the -- Blumenstyk, I should say, senior writer with the Chronicle of Higher Educations. Your calls, 800-433-8850. Have you hired employees who have degrees from career or for-profit colleges? Tell us what your experience was with those employees. 800-433-8850, or simply send us a tweet @kojoshow. I'm Kojo Nnamdi.

  • 13:42:53

    NNAMDIWelcome back. We're talking about for-profit colleges with Goldie Blumenstyk, senior writer with the Chronicle of Higher Education, who's been covering for-profit colleges since the mid-1990s. Inviting your calls at 800-433-8850. If you or a loved one has attended a for-profit college, we'd like to know what experience was like. 800-433-8850. Let's go directly to the phones. Here is Joseph in Atlanta, Ga. Joseph, you're on the air. Go ahead, please.

  • 13:43:21

    JOSEPHYes. Thank you, Kojo. Well, I'm actually -- I guess you would call it an adjunct faculty member for University of Phoenix. And a lot of what I've been hearing on the show today are issues that I've had with that organization as well. And, you know, I think one of the big issues is that a lot of these for-profit colleges are marketing themselves as being more accessible than the traditional brick and mortar institutions. However, I think it's a misnomer in that it has a lot to do with the students out there who are looking for this kind of education being misinformed as well.

  • 13:44:00

    JOSEPHBecause there are so many community colleges out there who offer the same online services, degree programs specifically made for students to do online, to have that access. Yet -- and in a lot of cases, too, you perceive a more involved education. University of Phoenix courses that I teach are five weeks long and they are -- and the students who are going into these courses are largely underprepared. There's no filter, nothing really to aid them in preparing themselves for the classes they have to take that a lot of times you would in the brick and mortar institutions. So, you know...

  • 13:44:37

    BLUMENSTYKDo you -- do...

  • 13:44:38

    JOSEPH...I'm curious to know, you know, your guest's opinion on that aspect of it, that more brick and mortar institutions are offering online degree programs, and how...

  • 13:44:49

    NNAMDIWell, Joseph, first, she has a question for you.

  • 13:44:52

    BLUMENSTYKDo you teach at Axia College, the entry-level college at Phoenix?

  • 13:44:55

    JOSEPHNo. No. I just -- University of Phoenix. I teach technical writing courses.

  • 13:45:00

    BLUMENSTYKThe University of Phoenix introduced this orientation program that they said was intended to screen out students who probably weren't prepared to do the quality of work. They've only had that for a few months. I've always -- I've been very curious to see how that program actually works.

  • 13:45:16

    NNAMDIIndeed the University has apparently been quietly changing its admissions policies to cope with financial and political changes on the horizon. How have those changes affected the bottom line?

  • 13:45:28

    BLUMENSTYKThey've been tough on the bottom line for that college and for Kaplan and for a few others. I don't want to skip over the point that...

  • 13:45:36

    NNAMDIOh, no. Joseph's still on the line...

  • 13:45:37

    BLUMENSTYKOkay, good.

  • 13:45:37

    NNAMDI...and we're gonna answer his question.

  • 13:45:39

    BLUMENSTYKOkay. The -- a lot of the -- whether it's the publicity that's come up in the last year between the Senate hearings and the investigations and the like, or whether it's been a few efforts by companies like Phoenix and Kaplan to institute additional screening, some of these schools have seen really sharp declines in enrollment starts, 40 percent few students starting this year versus last year. That's a pretty bid decline for an industry that used to have 10 and 20 percent increases. So these are giant hits on these companies.

  • 13:46:11

    BLUMENSTYKBut it is interesting to hear the concerns about the student quality. They are open admissions for the most part, open admissions institutions, and I know...

  • 13:46:20

    JOSEPHRight. And I'm actually on -- I am a tenure track faculty member for a brick and mortar institution. I use the -- I do the University of Phoenix, and I think a lot of faculty do this as a means of sort of subsidizing summers a lot of times, because the, you know, you're not necessarily guaranteed summer course work or course loads. But, you know, even in the brick and mortar institution that I teach at, which is an open enrollment institution, you know, there are things, learning support courses and advising and, you know, help centers that are designed to, you know, to aid those students who are coming in, you know, without necessarily the skills necessary to complete a four-year degree.

  • 13:46:59

    JOSEPHAnd so you take this time with the learning support and with these other things to get them ready, and then once they complete that part of the process, then they actually enter into the college, you know. Learning support courses, usually don't even count towards a degree.

  • 13:47:13

    BLUMENSTYKThis is another one of those cases where something might be an innovation, or it might be a coddling or an inappropriate use. I know Phoenix is one of the places that talks about just in time remediation for courses. They don't -- they don't do two semesters remediation up front and then have it -- and then when you wait for your math class two years later for you to have to encounter that problem, they say that they try to do this remediation all the way through. But it sounds like possibly that's not really working, that, in fact, the students are getting kind of pushed along and they're not -- it's a good idea in theory, but in reality doesn't actually work.

  • 13:47:46

    NNAMDIWell, Adrian in Alexander has another view of the students that she has been working with, and Joseph, you might to hear this also in addition to Goldie. Adrian writes, "I'm an ICU nurse and I was very impressed with the nursing students from Medical Careers Institute, a division of ECPI. I had the opportunity to train and educate in southeastern Virginia. They would come to my unit and be thoroughly prepared and ready to learn with a lot of foundational nursing skills, and practice safe care.

  • 13:48:14

    NNAMDIConversely, Hampton University students frequently came to the unit unprepared, chewing gum, sat at the nursing station and talked and had no idea what to do when they got in the room with a patient. It speaks -- and to some extent, it appears that the kinds of people who are applying for these for-profit universities because they're about career advancement, and in the case of the nurses they already had careers that they simply wanted to extend."

  • 13:48:40

    BLUMENSTYKIt's very hard to talk about individual circumstances.

  • 13:48:43


  • 13:48:43

    BLUMENSTYKI wish more people were calling into today with having been employers, because that's really the ultimate test for this industry, whether people are hiring their graduates.

  • 13:48:52

    NNAMDII got an email about that, too. Joseph, go ahead.

  • 13:48:53

    JOSEPHThat's something that I want -- that's something I want to say, too, because on -- you know, it's interesting, the University of Phoenix, so many of their employees are also University of Phoenix graduates. But outside of the University of Phoenix world, I haven't seen or spoken with students who have graduated and gone on out -- outside of that realm and gotten employment. So that's one of the things I was interested in seeing, too.

  • 13:49:15

    BLUMENSTYKAlthough they do have some cool commercial out there right now, so they've found a few graduates to promote in their commercials.

  • 13:49:19

    NNAMDIWell, here's this e-mail we got from Elizabeth. "I'm a tutor and receive frequent requests from students in online courses to complete their homework and even their exams for them. I refuse, but I know that I am an exception. On Craig's List, there are many ads placed by unscrupulous folks willing to do others work for them. Be that as it may, on another note, I've been in the position of hiring and helping to hire employees before. From my experience, an online degree means next to nothing to employers. I'm very glad the federal government is cracking down on the institutions peddling them, though I feel bad for the people who went about earning their online degrees the honest way and now find themselves with a nearly worthless piece of paper."

  • 13:50:01

    NNAMDIAgain, that is only one person's experience however.

  • 13:50:04

    BLUMENSTYKAnd it's also important to distinguish when we're talking about what is an online degree, because anybody...

  • 13:50:09


  • 13:50:10

    BLUMENSTYK...can offer an online degree. You can get an online degree from the University of Maryland. You can get an online degree from University of Phoenix. You can get an online degree from Kaplan. The branding, that is sort of the reputation of institution behind that and ultimately, you know, the quality of the coursework is gonna really determine what the student learned.

  • 13:50:31

    NNAMDIAnd Joseph, thank you very much for your call.

  • 13:50:33

    JOSEPHThank you, Kojo.

  • 13:50:34

    NNAMDIOnto Susan in Manassas, Va. Susan, your turn.

  • 13:50:39

    SUSANHey. I also wanted to broaden the conversation to talk about non-profit, as well as profit institutions and maybe another way that the federal government could help protect students' interests. My son just graduated from a very nice little four-year college, and I talked to a bunch of his friends, some who were graduating, and some who weren't, and a lot of them knew how much they had in student loans, but not one of them was able to tell me what their monthly payments would be over what period of time.

  • 13:51:14

    SUSANAnd my son took out loans, and not very much. I mean, we had other resources, so we were fortunate. But nobody at any time said, okay, if he's taking this loan this semester, in the next four years this will be your total. This is, you know, and gave us any kind of layout of what the payback process would be. There was never any mention of that. And I think, you know, in our case, that doesn’t present a huge problem, but I think there are many students that, you know, that I've met who are going to be paying those off on their own without any family help, for whom it's going to be an enormous shock when they graduate and they find out how much they're gonna be paying for how long.

  • 13:52:01

    SUSANAnd I think for federal government loans, if it was kind of a requirement that somebody sit down with those students, give it to them orally, give it to them in writing as well, so that, you know, because I -- I did hear what you were saying before about not wanting -- you know, my son is an art major. And I'm happy that we were able to get student loans even though, you know, whether he's gonna ever make any money in art, I don't know. But I don't think it should all be about what you're gonna make in the job.

  • 13:52:28

    SUSANBut I think students ought to have some idea of -- you know, there are students who take out loans who don't even realize that they are loans. They're not sure what's a grant, what's a loan, and I think students need more help know what they're...

  • 13:52:42

    NNAMDII'm so glad you brought that up, Susan, because Goldie, parallels between lending to for-profit colleges and the borrowing that led to the burst of the housing bubble, those parallels have been drawn on this broadcast before. Are we looking at comprehensive lending reform that ought to include for-profit colleges and maybe non-profits, too.

  • 13:53:02

    BLUMENSTYKWell, the lending rules are the same for the for-profit colleges and the non-profit colleges. And in theory, the students should be getting those kinds of disclosures and everybody signs the same pieces of paper about what they're borrowing, you know. To be honest, I'm not so sure whether at the end of the day the disclosure is any clearer than it is for when you buy your house or when you buy your car. It may be -- I know people like Elizabeth Warren and the others are pushing at the federal level to have clearer disclosure. I don't think the disclosures are -- people get the paperwork, but I don't know that it's in a very understandable way.

  • 13:53:34

    BLUMENSTYKAnd the caller is right. The -- there's recently, I think within the last year or so, the level of student loan debt has actually exceeded the level of credit card debt in this country. And I don't know if that's because credit card debt has gone done or student loan debt has gone up or some combination thereof. But it's...

  • 13:53:50

    NNAMDIWhatever it is, it doesn't sound good.

  • 13:53:52

    BLUMENSTYKIt's not good, and it means there's a lot of people out there who are going to be owing a lot of money. And as our caller -- our listeners probably know, student loan debt is not dischargeable in bankruptcy. So it really is not something that you want to take on lightly because it will follow you for the rest of your life and hurt your credit rating, and make it hard for you to buy a house or to move on with your life if you have a default.

  • 13:54:14

    NNAMDISusan, thank you very much for your call. Here's David in Washington D.C. David, your turn.

  • 13:54:19

    DAVIDYes. Thank you, Kojo. I want to share my experience with one of those for-profit colleges.

  • 13:54:28

    NNAMDIPlease go ahead. We don't have a lot of time left, but go ahead, please.

  • 13:54:32

    DAVIDWhat I want to say is the way that they hook you up is through their advertisements. Once you make a mistake and answer that commercial, they will just bombard you. They have this system how to bring you in. Once you are in, starting from the books, and then once I started taking classes, I found out the classes was nothing. It was -- the students were high school dropouts maybe. I don't know what it was. It was very comical. So in my case, I was able to withdraw right away.

  • 13:55:12

    NNAMDIWell, Golden Blumenstyk, aggressive salesmanship, if you will, is one of the things that these colleges stand accused of.

  • 13:55:18

    BLUMENSTYKVery definitely. They are -- there are some new rules coming down the pike which will go into effect the next few months actually, that will restrict what colleges can say and make sure that they -- well, it doesn't -- they're restricted now, but the penalties for this will be a lot greater about representing what their graduation rates, representing what their job placement rates are. Right now, if you got on the Internet today and searched for criminal justice degree, and you might get a few forms from -- you might put down your name and put down, you know, Kojo Nnamdi and your e-mail address.

  • 13:55:48

    BLUMENSTYKYou'll find yourself bombarded with e-mails from companies -- from colleges looking to see if they'll want to -- if they'll -- if you could be interested in their programs, if you'd like to learn more. An instant window might pop up on your screen even as you're still typing the message. I find that sometimes when I'm just Googling around trying to research a college for my reporting, I get one of those instant windows with a sales person, a telemarketer, getting ready to talk to me.

  • 13:56:12

    BLUMENSTYKAnd if you gave your phone number, well, you might get even more phone calls. Some of that's gonna be possibly curtailed a little bit under these new rules.

  • 13:56:21

    NNAMDIThank you very much for your call, David. The Coalition for Educational Success, an industry group, recently announced that it will be adopting a voluntary code of conduct in effort to improve the industry image. Do we know what sorts of penalties members schools will face if they don't comply with this code?

  • 13:56:36

    BLUMENSTYKWell, it's a voluntary code, so I don't know that there will be any penalties or anything. Of course, this was announced in an environment of a great deal of politicking and effort of self policing in an attempt to probably self-police, but also in an attempt to show members of Congress and others that the industry is responding. I should point out that the effort was immediately criticized because they said they had gotten former governors, Ed Rendell from Pennsylvania, and Tom Kean of New Jersey to advise the group.

  • 13:57:07

    BLUMENSTYKTom Kean is actually a partner in an investment firm that owners for-profit colleges, and he's a very nice man. He ran Drew University also. But he's not disinterested, and Ed Rendell is the former employer of the person from the organization that announced the code. So this was met with some skepticism, although at the end of the day, I guess you can't argue with an effort for people who are trying to declare a little bit more good conduct.

  • 13:57:31

    NNAMDIAnd finally, this comment on our website from Toby in Vienna, Va. "For-profits are mounting a very indignant campaign claiming the government does not respect students who study at for-profits. If for-profits are truly competitive in preparing students for vocations, you know, what's coming next, why not reject taxpayer funded loans, and let the market decide?"

  • 13:57:54

    BLUMENSTYKThat's a great question. In fairness to the industry, many of the students who go to these colleges, and to go to most colleges, frankly, can't afford to go to college without the loans and without the grants. And they -- our education, our Congress has decided early on that federal grants would be available to a wide range of institutions, including for-profit colleges. And that's the bottom line of that.

  • 13:58:16

    NNAMDIGoldie Blumenstyk is a senior writer with the Chronicle of Higher Education. She's been covering for-profit colleges since the mid '90s. Goldie, good to see you again.

  • 13:58:24

    BLUMENSTYKThank you very much for having me, Kojo.

  • 13:58:25

    NNAMDIAnd thank you all for listening. I'm Kojo Nnamdi.

Related Links

Topics + Tags

Most Recent Shows