The struggle to protect students from potentially harmful for-profit college chains continued today as Illinois Senator Dick Durbin urged the Department of Education to investigate the business practices of three of the country’s largest propriety education companies – ITT Educational Services, Career Education Corporation, and Education Management Corporation.
In a letter [PDF] to Education Secretary Arne Duncan, Durbin pushed the Dept. to increase its oversight of the companies, hold them accountable for their actions and put restrictions on any campus sales in order to protect students and taxpayers.
The companies are three of the largest for-profit players in the country; ITT Education Services owns the ITT Technical chain, EDMC operates a number of small colleges including The Arts Institutes and Argosy schools and CEC owns several career colleges and universities including Colorado Technical and American InterContinental.
Durbin asks the Secretary Duncan to provide information related to any steps the Dept. has taken to address allegations that the three schools have engaged in harmful practices such as inflating job placement rates, perpetrating deceptive recruitment tactics, pushing students into high-cost private loans and failure to provide required financial documents to regulators.
ITT Educational Services was recently charged with fraud by the Securities and Exchange Commission.
CEC has faced a number of lawsuits and investigations stemming from accusations it inflated job placement rates for its graduates.
Likewise, EDMC – which is partially owned by Goldman Sachs – has faced its share of issues in recent years, from falling enrollments and financial difficulties and increased scrutiny from state and federal regulators.
Back in 2011, the company was sued by the U.S. Department of Justice and four states. That lawsuit accused the company of violating a federal law against paying recruiters based on the number of students they manage to enroll.
“For each of these companies, what steps has the Department taken to ensure that current and prospective students are informed of ongoing investigations and lawsuits?” the letter asks.
Durbin warned that the Department’s failure to fully scrutinize ITT Tech, EDMC and CEC would be akin to risking “another Corinthian-style debacle.”
Now-bankrupt Corinthian Colleges Inc. – the operator of chains Everest University, Heald College and WyoTech – endured a slow downfall after finding itself under investigation from several state and federal agencies beginning in 2012.
The school entered into an agreement with the Department of Education last July to sell or close a majority of its campuses. Prior to the agreement CCI enrolled 72,000 students and received $1.4 billion in federal student aid. The company closed all of its campuses last month.
“The collapse of Corinthian Colleges, Inc. should be a wake-up call for the Department of Education and lead to earlier and more aggressive oversight of for-profit colleges,” the letter states. “Unfortunately, Corinthian is not unique in the for-profit industry. Other major for-profit education companies, including CEC, EDMC, and ITT Tech, face a litany of investigations and lawsuits similar to Corinthian and are all on the Department’s own Heightened Cash Monitoring list. The Department must investigate these companies and aggressively hold them accountable for wrongdoing in order to protect students and taxpayers.”
In the letter, Durbin argues that the Dept. allowed CCI to continue receiving billions of dollars in federal funds despite a litany of investigations and lawsuits levied against the company.
“Those mistakes must not be repeated,” Durbin writes. “Failure to act now with respect to wrongdoing by other for-profit colleges will harm a large population of student borrowers and subject the Department to a new wave of legitimate claims for loan relief.”
In addition to requesting information about steps to oversee the companies, Durbin urged the Dept. to put conditions on any sale of CEC, EDMC and ITT Tech campuses.
Both CEC and EDMC have recently announced they would sell or close a number of schools in the wake of falling enrollment and decreased revenue.
“In August 2014, with respect to the sale of Corinthian campuses, you assured me in writing that ‘the Department will not approve a sale to another entity if that entity is currently under State and/or Federal investigation,'” Durbin writes. “Today, I ask you to make that same commitment with respect to the potential sale of brands or campuses owned by CEC, EDMC, and ITT Tech.”
by Ashlee Kieler via Consumerist
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