And of course they're making a ton of money from the business, even as students who attend these schools are left with tons of debt and worthless diplomas:
Carrianne Howard dreamed of designing video games, so she enrolled in a program at the Art Institute of Fort Lauderdale, a for-profit college part-owned by Goldman Sachs Group Inc. Her bachelor’s degree in game art and design cost $70,000 in tuition and fees. After she graduated in December 2007, she found a job that paid $12 an hour recruiting employees for video game companies. She lost that job a year later when her department was shuttered.
These days, Howard, 26, makes her living in a way that doesn’t require a college diploma: by stripping at the Lido Cabaret, a topless club in Cocoa Beach, Florida. “I didn’t know what else to do,” she says. “I’ve got a worthless degree. It’s like I didn’t attend school at all.”
Like many investors, Goldman, owner of 38 percent of the Art Institute’s parent, Education Management Corp., was drawn to for-profit colleges by their rapid growth and soaring stock prices, reports Bloomberg Businessweek in its Aug. 9 issue. Now Goldman, which recently agreed to pay $550 million to settle U.S. civil-fraud charges related to the subprime mortgage meltdown, is invested in an industry under attack from Congress, the Obama Administration and dissatisfied students.
The Senate held a hearing Aug. 4 featuring a Government Accountability Office undercover probe that found recruiters at EDMC’s Argosy University in Chicago and 14 other for-profit colleges misled investigators posing as potential students about the cost and quality of their programs.
Government grants and loans to students, combined with booming enrollment, have made for-profit colleges a rewarding investment. Federal aid to for-profit colleges jumped to $26.5 billion in 2009 from $4.6 billion in 2000, according to the Education Dept. EDMC currently receives almost 82 percent of its revenue from federal financial aid programs.
EDMC also faces complaints from its own graduates and employees. A lawsuit filed in Texas state court by 18 students alleges they were misled about the accreditation status of their program, diminishing their degrees’ value and leaving them with debts they can’t repay. In another suit a former admissions officer claims the company engaged in high-pressure sales tactics, paying staff to sign up students. In July, dozens of faculty who tried, unsuccessfully, to form a union at one Art Institute campus complained that unqualified students were being let into their classes.
I'll tell you a quick story about the Art Institute.
I got excessed to Art and Design for one semester where I taught three sophomore classes. In one class was a very nice fellow from the support services program who read and wrote maybe at a fourth grade level. Very personable, very nice, but in need of a lot of academic assistance.
A few years after I taught at Art & Design, I saw this student, now 20, working as a security guard in a record story. He told me that he had signed up to go the Art Institute to study art but dropped out after two weeks because he couldn't keep up with the work. He owed thousands of dollars in loans just from that one semester and was trying to pay that off by working as a security guard. His mother (a single parent who lived in the projects and was herself trying to finish an associate's degree at BCC) was helping him pay the loan off but he thought he had years to go before it was done. The loan payments were close $400 a month.
It was at that point in time that I began to pay very close attention to the for-profit college industry and came to notice that almost EVERY student who attended one of these colleges left with a lot of debt and either no degree (because they were not given the academic and personal support necessary to do well in school) or with a worthless one like the woman from the Bloomberg.com story.
I have since made it my mission to give students the very devastating truths about schools like the Art Institute, Berkeley College, University of Phoenix, Laboratory Institute of Merchandising, Devry Institute, Technical Career Institute, Katherine Gibbs et. al.
Given the story above about the Art Institute and this story here about how the GAO investigated 15 for profit colleges and found fraudulent financial aid activity in ALL 15 as well as staff who gave students misleading information about costs and benefits of attending the school, I think it is very wise to warn students to steer clear of these predators.
As Senator Tom Harkin said about this industry:
"GAO's findings make it disturbingly clear that abuses in for-profit recruiting are not limited to a few rogue recruiters or even a few schools with lax oversight. To the contrary, the evidence points to a problem that is systemic to the for-profit industry," the Democratic chairman said.
Indeed. And when you see that corporations like Goldman Sachs have a 38% stake in for-profit schools like the Art Institute, you can see why the evidence points to systemic abuse and crime in the for-profit industry.