Go Lean…Caribbean

The ‘Evil Empire‘ – For-Profit Educational firms and institutions – is finally facing resistance from governmental authorities. Companies in this industry have come under fire for their bad practices and abuse of their customers: young students.

… and now, today, ITT Educational Services, one of the largest operators of for-profit technical schools, ended operations at all of its ITT Technical Institutes. See a summary of the story here:

Title: ITT Technical Institutes shuts down after 50 years in operation
ITT Educational Services … ended operations at all of its ITT Technical Institutes on Tuesday, citing government action to curtail the company’s access to millions of dollars in federal loans and grants, a critical source of revenue.

The move to shut down the chain of career schools after 50 years arrives two weeks after the Education Department said ITT would no longer be allowed to enroll new students who rely on federal loans and grants, award raises, pay bonuses or make severance payments to its executives without government approval. The department’s unprecedented move sent shares of the publicly traded company tumbling to an all-time low and raised questions about the future of the company.
…
See the full  article here at: https://www.washingtonpost.com/news/grade-point/wp/2016/09/06/itt-technical-institutes-shut-down-after-50-years-in-operations/ posted & retrieved September 6, 2016.

Previously, on June 8, 2015, this commentary detailed the similar case against Corinthian Colleges; see an ENCORE of that commentary here:

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Go Lean Commentary

Follow the money…

This is a familiar plot-line in Hollywood Police dramas. Its “life imitating art” because this is the same eventuality for the American For-Profit education industry. There is a lot of money available in the US for post-secondary education of American students. Federal Student Loans are available to any American citizen regardless of credit or income. This constitutes a fertile ground for abuse.

According to the following news article, this one education company Corinthian College – see Appendix A below – is a bad example of For-Profit schools making a lot of profit but providing very little education to its customers: students.

“Scratch a liar, catch a thief”.

The article is presented here:

1. Title: My college degree is worthless

Sub-title: Students across the country are shelling out tens of thousands of dollars for degrees that end up being completely worthless.

Rosalyn Harris, an unemployed single mother who had never gone to college, thought getting a degree would be the ticket to a new life. So at age 23, she enrolled in a two-year criminal justice program at for-profit Everest College in Chesapeake, Va.

But the wealth of job opportunities the school had touted never transpired, and all she ended up with was more than $22,000 in student loan debt. She said classes were terrible, she didn’t receive any of the training she needed, and as a result, she spent months after graduation searching for criminal justice jobs without ever getting a call back.

Desperate to start paying some of her bills, Harris eventually applied for any entry-level job she could find. A full year after she graduated, she finally found a minimum wage job stocking shelves at Victoria’s Secret.

“My sole purpose of going to school was bettering my life for me and my son,” she said. “But now I wish I had never gone.”

Everest is a member of for-profit behemoth Corinthian Colleges, which has been accused by federal agencies of operating a predatory lending scheme, preying on low-income students and falsely inflating job placement numbers. Corinthian is currently closing and selling its schools, leaving thousands of graduates on the hook for loans they took out.

A Corinthian spokesman confirmed that Harris graduated in good standing, but it was unable to place her in a job. He said the school did provide her with career assistance and claims the criminal justice program has a 75% job placement rate, which he said is “a strong outcome for any educational program.”

He also disputed the allegations against the school, noting that Corinthian’s student loan default rate (of up to 27% for its EverestCollege campuses) is lower than other community colleges and its graduation and job placement rates are higher.

And while Corinthian has a particularly bad reputation, the for-profit college industry as a whole is often criticized for luring low-income students with false promises and failing to provide educations that qualify students for jobs.

Not only that but for-profit schools are generally double or triple the cost of public institutions like community colleges, and the default rate (19% last year) was the highest of all sectors.

Vantrell Echols, a 36-year-old from Georgia, wishes he never received a phone call from for-profit Lincoln College of Technology back in 2008. He said the school spent six months convincing him to enroll — promising to provide all the training and help he needed to find a high-paying computer science job. He had been unemployed for more than a year and he was desperate, so he gave it a shot.

But upon enrolling in the computer science program, he said the quality of education “was a complete joke” and job assistance was nonexistent.

“They sold many of us dreams about helping us, getting us qualified to work, to help us with jobs, [but] I had to ask fellow students to help me because the teachers wouldn’t. Many of us graduated with honors but didn’t learn anything in our fields,” he said.

Lincoln Educational Services president Scott Shaw defended the school’s reputation to CNNMoney, touting its 75% job placement rate and pointing to examples of successful graduates like the CEO of VMWare (who graduated in 1979).

But Echols said that after accumulating more than $20,000 in debt to attend the one-year program, he wasn’t able to find a single job in computer science. He’s still unemployed, is now homeless — and he is convinced he’d be better off without the degree even listed on his resume.

He says multiple employers have told him that they don’t view his degree as credible because of the for-profit industry’s reputation and because other people they’ve hired from the school haven’t had the necessary skills for the job.

“They’ve ruined my life and the lives of many of my classmates,” he said.

Shaw said extensive career assistance was provided to Echols and that he isn’t sure why Echols couldn’t find a job. “There’s only so much we can do — at some point the student has to partake,” he said.

But these kinds of stories are popping up so often that even the Obama Administration took action this week. Going forward, for-profit colleges will risk losing federal student aid if average loan payments of graduates exceed 20% of discretionary income or 8% of total earnings.

“Too many hard-working students find themselves buried in debt with little to show for it,” Secretary of Education Arne Duncan said in a statement.

Senators Jeff Merkley of Oregon and Tom Harkin of Iowa are pushing for legislation that goes a step further. They argue that a loophole in federal laws allow some institutions to offer programs that aren’t licensed or accredited at the state or federal level. That means graduates end up with degrees that may sound legitimate but are meaningless to many employers.

The two senators introduced legislation last month aimed at cracking down on these “worthless degrees.” The legislation would require courses to be licensed before allowing schools to accept federal money like student loan dollars or financial aid.

“Passing this bill will ensure that a college can no longer charge thousands of dollars for a degree that does not prepare them to work in the field they were promised‎,” according to a statement about the bill.

Related: U.S. sues Corinthian Colleges
2. Title: Embattled for-profit education behemoth Corinthian Colleges is facing yet another legal fight: This time, from the Consumer Financial Protection Bureau.

The consumer agency announced Tuesday it is suing Corinthian for “illegal predatory lending” and is demanding that the school forgive more than $500 million in private loans it has given to students since July of 2011.

According to the CFPB’s complaint, Corinthian convinced students to enroll in the school by inflating its job placement rates. It even paid employers to hire graduates for at least one day in order to boost its numbers.

Meanwhile, Corinthian’s tuition and fees — which can climb to as high as $75,000 for a bachelor’s degree — are higher than what federal loans generally cover, forcing many students to take out private loans from the school. These loans, called “Genesis loans,” came with origination fees of 6% and interest rates of around 15% as of 2011 — much higher than the 3% and 7% charged on federal loans.
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CNNMoney (New York); posted September 16, 2014 from: http://money.cnn.com/2014/09/16/pf/college/cfpb-corinthian-lawsuit/index.html?iid=EL

The references to “low-income students” in the foregoing article are most commonly the “Black and Brown” of the American population. This is a frequent demographic for victimization in American life.

This issue in the article is just another example of Crony-Capitalism and institutional racism. The book Go Lean…Caribbean and subsequent blogs posit that the Caribbean must not be vulnerable to these negative American forces.

The dread of Crony-Capitalism and institutional racism have been highlighted and detailed in many previous blog commentaries; see the many Crony-Capitalism models in Appendix B below. Now we have to add the reality of Big Education to the discussion. The issue underpinning this dilemma is the easy availability of guaranteed student loans from the US federal government. Unfortunately this is not just an issue for For-Profit institutions, many not-for-profit colleges and university also exploit the federal student loan funds to garner revenues at the expense of innocent students. The Crony in this case is a direct consequence of a rich pool of federal monies.

Rich pool? This brings to mind the visual of an isolated pool/pond on the African Plain, a watering hole on the Serengeti where many animals seek hydration and refuge, but the terrain is endangered with predators: lions, crocodiles, hyenas, cheetahs, etc.. Yes, in the American commercial eco-system, “follow the money”, and you will find many “bad actors” looking to exploit the situation for unfair gain and quick profits.

VIDEO – Is the cost of college crippling? – http://money.cnn.com/video/news/2013/09/03/n-cost-of-college-rising-education-middle-class-jobs.cnnmoney/

The Caribbean must do better! We must also dissuade our citizens from emigrating to this American eco-system.

The consideration of Crony-Capitalism in the For-Profit Education industry aligns with the book Go Lean…Caribbean, a roadmap to elevate the economic, security and governing engines of the Caribbean. The Caribbean wants to model many of the good examples of the United States, and learn from the many bad models. Education is one such model. While optimization of education can systemically raise a country’s economy, the Caribbean experience has been more negative than positive. Too many of our students have left … to study abroad; then refused to return home, taking with them the return on community investments and repayment of their student loans. The Go Lean book has reported in detail on how traditional college career paths have been disastrous policies for the Caribbean in whole, and each specific country in particular.

This Go Lean book serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU). The CU has a complete education agenda, applying lessons learned from the consideration of the American models. This roadmap represents a big change for the region. The CU/Go Lean roadmap has 3 prime directives:

• Optimization of the economic engines in order to grow the regional economy to $800 Billion & create 2.2 million new jobs..
• Establishment of a security apparatus to police “bad actors” and protect the resultant economic engines.
• Improvement of Caribbean governance, including a separation-of-powers, to support these engines.

The Go Lean roadmap provides turn-by-turn directions on how to reform the Caribbean tertiary education systems, economy, governance and Caribbean society as a whole. There is a plan for a regional student loan pool, where we mitigate the dangers that are so evident in the American eco-system. Our primary threat now is the constant abandonment rate among the college-educated populations. So as a planning tool, the roadmap commences with a Declaration of Interdependence, pronouncing the dread of societal threats and the Caribbean brain drain (Page 12):

xvi.  Whereas security of our homeland is inextricably linked to prosperity of the homeland, the economic and security interest of the region needs to be aligned under the same governance. Since economic crimes … can imperil the functioning of the wheels of commerce for all the citizenry, the accedence of this Federation must equip the security apparatus with the tools and techniques for predictive and proactive interdictions.

xix.  Whereas our legacy in recent times is one of societal abandonment, it is imperative that incentives and encouragement be put in place to first dissuade the human flight, and then entice and welcome the return of our Diaspora back to our shores …

xxi.  Whereas the preparation of our labor force can foster opportunities and dictate economic progress for current and future generations, the Federation must ensure that educational and job training opportunities are fully optimized for all residents of all member-states, with no partiality towards any gender or ethnic group… This responsibility should be executed without incurring the risks of further human flight, as has been the past history.

The Go Lean book posits that education is a vital consideration for Caribbean economic empowerment. The vision of the CU is a confederation of the 30 member-states of the Caribbean to do the heavy-lifting of championing better educational policies.  The book details those policies; and other ethos to adopt, plus the executions of the following strategies, tactics, implementations and advocacies to impact tertiary education in the region:

The American Tertiary Education Student Loan eco-system is badly broken; (tuition has increased 500% since 1985). The large pools of money has attracted “bad actors” or predators. The party in the foregoing news article – Corinthian Colleges – has been charged and adjudicated with predatory lending violations. Their victims: poor students who would have to repay these non-dischargeable federally-insured student loans. How sad? All of that time, talent and treasury and nothing to show for it. No wonder the economic effects of this affected population are now showing in other aspects of the economy, such as retarded home-buying output among the younger generations.

The Caribbean is urged to do better.

The people, educational and governing institutions in the region are urged to lean-in for the empowerments described in the book Go Lean … Caribbean. Education reform can suceed in elevating Caribbean society; we can make our Caribbean homeland a better place to live, work, learn and play. 🙂

Download the free e-Book of Go Lean … Caribbean – now!

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Appendix A – Corinthian Colleges, Inc.
(Source: http://en.wikipedia.org/wiki/Corinthian_Colleges)

Corinthian Colleges, Inc. (CCi) was a large for-profit post-secondary education company in North America. Its subsidiaries offered career-oriented diploma and degree programs in health care, business, criminal justice, transportation technology and maintenance, construction trades, and information technology.^[1]

At its largest, CCi had over 100 Everest, Heald and WyoTech campuses throughout the United States and Canada.^[2]

Corinthian’s campuses in Canada closed on February 19, 2015 after the Ontario government suspended their operation license. After a series of legal challenges by state and federal agencies, on April 26, 2015 Corinthian Colleges announced that they would cease operations at all remaining US locations effective April 27, 2015. The closure affected more than 16,000 students and employees.

Corinthian Colleges was founded in February 1995.^[3] The five founders — David Moore, Paul   St. Pierre, Frank McCord, Dennis Devereux, and Lloyd Holland — were executives at National Education Centers, Inc. (NECI), a for-profit operator of vocational schools based in Irvine, California. The founders planned to acquire schools that were fundamentally sound, but which for one reason or another were performing below their potential.^[4]

Historically, CCi grew rapidly through acquisitions and through organic growth, including opening new branch campuses, remodeling, expanding or relocating existing campuses, and adopting curricula into existing colleges.^[3]

Acquired Schools
The following institutes and colleges were acquired [through the years]:^[5]

• American Motorcycle Institute
• AshmeadCollege
• Blair College
• Bryman College
• Bryman Institute
• Duff’s Business Institute
• Florida Metropolitan University
• Georgia Medical Institute
• Kee Business College
• Las Vegas College
• National Institute of Technology
• National School of Technology
• Olympia Career Training Institute
• Olympia College
• Parks College
• Rochester Business Institute
• Tampa College
• Western Business College

Corinthian Colleges faced numerous investigations and lawsuits, including a federal criminal investigation.^[6]

Financial Aid Financing
The Higher Education Act provides that a private, for-profit institution, such as CCi’s institutions, may derive no more than 90% of its revenue from the Title IV federal student aid programs.^[39] In 2010, CCi reported that it received 81.9% of revenue from Title IV federal student aid programs. ^[40] Corinthian Colleges (CCI) acquired QuickStart Intelligence in summer 2012, an Irvine, California-based, privately held technology training company. As a B2B revenue stream; CCI acquired QuickStart Intelligence to leverage the 10%, non-government funding essential to back the additional student loans for CCi’s core adult learning programs.

Student Loan Default Rate
A significant requirement imposed by Congress is a limitation on participation in Title IV programs by institutions whose former students default on the repayment of federal student loans in excess of specified rates (“Cohort Default Rates”).^[41] On March 25, 2013, CCi received a draft three-year Cohort Default Rates from the U.S. Department of Education for students who entered repayment during the federal fiscal year ending September 30, 2010 (the “2010 Cohort”), measured over three federal fiscal years of borrower repayment. The weighted average of CCi’s institutions was 19.0%, a 9.0 percentage point decrease from the 28.0% weighted average for the three-year cohort default rate for students who entered repayment during the prior fiscal year.^[42] For the 2010 Cohort, none of CCi’s institutions exceeded the default threshold set by the U.S. Department of Education.^[42]

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Appendix B – Models of American Crony-Capitalism