Laureate IPO still pending amid political flap, industry crackdown

Laureate IPO still pending amid political flap, industry crackdown

Douglas L. Becker, chairman and CEO of Laureate Education, takes part on a panel during the second day of Latin America Clinton Global Initiative in Rio de Janeiro in 2013. MUST CREDIT: Photo by Dado Galdieri, Bloomberg ** Usable by BS, CT, DP, FL, HC, MC, OS, SD, CGT and CCT ** (Dado Galdieri / Bloomberg)

John Fritze and Natalie ShermanContact ReportersThe Baltimore Sun

Arrangement with Bill Clinton put Laureate in middle of presidential election.
When Baltimore-based Laureate Education decided to go public last fall, the for-profit university system had just finished a rapid expansion and was preparing to reap the benefits of its newfound global reach.

A year later, the company still hasn’t listed its stock on the market and has become ensnared in the divisive presidential contest between Hillary Clinton and Donald Trump.

The company and founder Douglas L. Becker made news this summer when tax returns released by the Clinton campaign showed that Laureate had paid former President Bill Clinton millions of dollars to serve as its honorary chairman while it was acquiring schools around the globe and Hillary Clinton was secretary of state. Continue reading


The Clinton For-Profit College Standard ITT’s biggest mistake was not putting Bill Clinton on the payroll.

The Clinton For-Profit College Standard
ITT’s biggest mistake was not putting Bill Clinton on the payroll.

Sept. 6, 2016


ITT Technical Institute folded on cue Tuesday after the Obama Administration issued a regulatory death warrant last month. ITT investors must be wishing they had ponied up for political protection like Laureate International Universities, the for-profit college that paid Bill Clinton $17.6 million to serve as its “honorary chancellor.”

ITT’s decision to close all of its 130 some campuses—stranding 40,000 students and 8,000 employees—comes after the Education Department barred new enrollees from tapping federal aid, delayed loan reimbursements and raised its collateral by $153 million. ITT had a mere $78 million on hand at the end of June and no way of meeting the Administration’s cash demand. Continue reading

ITT Technical Institute’s Closing Leaves For-Profit College Industry Struggling To Survive

ITT Technical Institute’s Closing Leaves For-Profit College Industry Struggling To Survive

SEP 7, 2016


The announcement yesterday that ITT Technical Institute, with some 130 campuses and 40,000 students, was abruptly closing made page one in leading newspapers across the country, and is a major milestone in the Obama Administration’s war on for-profit colleges and universities. The ITT closure joins that of Corinthian Colleges last year, leaving a once vital and important segment of American higher education struggling to survive. Can the remainder of the industry last the 135 days or so until this administration is out of office? If Hillary Clinton is elected, will she continue to try to wipe out the vestiges of a once vibrant contributor to innovation in higher education? After all, husband Bill allegedly collected $17.6 million from a for-profit provider to serve as its bogus “chancellor”—will the potential of some future kleptomania keep the Clintons from doing to the for-profits what Attila the Hun did to the Roman Empire? Try to finish it off? Or, will Trump save the day? Continue reading

The ITT Fraud: For-Profit Education and the Crisis of the Commons

The ITT Fraud: For-Profit Education and the Crisis of the Commons



The rapid decline of the ITT for profit-college may represent a pivotal moment in modern history, as seen in rising challenges to predatory capitalism. ITT is in deep trouble, subject to numerous lawsuits, from the Securities and Exchange Commission and Consumer Finance and Protection Bureau (CFPB) for defrauding students. The con that is for-profit education is finally being exposed, and these “higher learning” institutions are increasingly recognized for their rapacious treatment of students. Within this context, the Wall Street Journal seeks to reframe the attack on ITT as the work of the big, bad government, which is committed to stifling the liberties inherent in private enterprise. Contrary to the paper’s propaganda, however, the narrative of for-profit colleges as a beleaguered David facing the onslaught of a brutal government Goliath bears little resemblance to reality. Continue reading

WATCH: At For-Profit Colleges, Large Loans and Broken Promises

WATCH: At For-Profit Colleges, Large Loans and Broken Promises

SEPTEMBER 13, 2016



FRONTLINE’s “A Subprime Education,” part of PBS’s “Spotlight Education” week of programming, investigates the troubled for-profit college industry. (Shutterstock)

Last week, the for-profit college chain ITT Technical Institute abruptly closed its doors, leaving around 35,000 students in the lurch.

It was among the largest college shutdowns in history — and it followed years of increased federal scrutiny of for-profit schools’ recruitment techniques and job placement claims.

As correspondent Martin Smith explores in tonight’s new FRONTLINE documentary, A Subprime Education, for-profit colleges have often been advertised as the best option for low-income students who can’t afford a more traditional four-year degree. But for years, for-profits had charged students nearly five times as much as community colleges, while getting the bulk of their revenue, up to 90 percent, from student loans and grants — often from the federal government.

“This is the most heavily subsidized private business sector in America,” U.S. Senator Dick Durbin (D-Ill.) tells Smith in the below excerpt from tonight’s documentary. “No one compares. Defense industry, agriculture don’t hold a candle to these boys.”

And yet, Smith finds, some of these colleges have been collecting money and leaving students in debt, without degrees, and unprepared to face the job market — despite aggressive recruitment pitches promising the contrary.

“The problem is, is that for many of these students, they think they’re talking to an admissions adviser,” Elizabeth Baylor of the Center for American Progress tells FRONTLINE. “They think they’re talking to someone with some sort of ethical standards. And they don’t realize that they’re talking to a person who is selling them something and that they might be better off to just walk away.”

With the for-profit sector in the hot seat, Smith tonight returns to the story of for-profit colleges — which FRONTLINE first examined in the 2010 documentary College, Inc. — to investigate allegations of fraud and predatory behavior in the troubled industry.

“In an effort to get students in the door, and federal student loan money flowing their way, many for-profit colleges have acted like banks did during the subprime mortgage bubble: signing up virtually anyone, including homeless people and drug addicts,” says Smith. 

Drawing on interviews with regulators, executives, and former students, the film asks tough questions about the government’s role in this troubled industry. A Subprime Education also examines the collapse of the for-profit Corinthian Colleges chain in 2015.

Produced by Marcela Gaviria, A Subprime Education airs tonight at a special time — 9 p.m. EST/8 p.m. CST — as part of PBS’s “Spotlight Education”, a week of primetime programming focused on the challenges facing America’s education system. A second FRONTLINE segment, The Education of Omarina, will follow A Subprime Education, tracing how a unique program aimed at stemming the high school dropout crisis has impacted one girl’s journey. Check your local PBS listings for exact airtimes.


Student Loan Debt Clock





Student Loan Debt Clock

This clock reports an estimate of current student loan debt outstanding, including both federal and private student loans.

Total student loan debt outstanding exceeded total credit card debt outstanding for the first time in June 2010. The seasonally adjusted figure for revolving credit in the Federal Reserve’s G.19 report (current reporthistorical data) was $826.5 billion in June 2010. (Credit card debt represents as much as 98% of revolving credit.) Revolving credit started declining in September 2008 when it reached a peak of $975.7 billion. The decrease is probably due a combination of higher minimum payments on credit cards, which were increased to 4% from 2%, lower credit card limits and tighter credit underwriting. Student loan debt, on the other hand, as been growing steadily because need-based grants have not been keeping pace with increases in college costs. Federal student loan debt outstanding reached approximately $665 billion and private student loan debt reached approximately $168 billion in June 2010, for a total student loan debt outstanding of $833 billion. Total student loan debt is increasing at a rate of about $2,853.88 per second.

Note that these figures do not include capitalized interest on the total outstanding for federal education loans. When federal agencies publish debt figures, those figures usually include only the portion of the original principal balance remaining. This might not matter much for credit cards, auto loans and mortgages, but it has a much greater impact on education loans. Students routinely defer repaying student loans during the in-school and grace periods by capitalizing the interest. This increases the total federal student loan debt outstanding by about 6% to 7%, or about $50 billion.

If one were to include capitalized interest, total federal and private student loan debt probably hit the $1 trillion milestone in late 2011. But since there is not a reliable source of data concerning capitalized interest, the student loan debt clock does not include it. The student loan debt clock reached the $1 trillion milestone on May 8, 2012 at about 6:40 am ET.

Practical tips for minimizing debt and reducing the cost of education financing include:

  • Borrow federal first. Federal loans are cheaper, more available and have better repayment terms than private student loans. The unsubsidized Stafford and PLUS loans are available without regard to financial need, so you don’t have to be poor to qualify.
  • Live like a student while you are in school so you don’t have to live like a student after you graduate.
  • Do not borrow more for your entire education than your expected starting salary after you graduate. Otherwise you will find it difficult to repay the debt and will be at higher risk of default.
  • If you are borrowing more than $10,000 per year for college, switch to a less expensive school.
  • Submit the Free Application for Federal Student Aid (FAFSA) to apply for federal and state grants and search the Fastweb scholarships database to find scholarships for which you are eligible. Every dollar you get in grants and scholarships is a dollar less you will need to borrow.

See also Fastweb’s article on How to Minimize Student Loan Debt for additional advice on reducing the need to borrow to pay for college costs.

This student loan debt clock is intended for entertainment purposes only. The actual total debt outstanding demonstrates more volatility at the beginning of each semester, when most student loans are disbursed. (Most colleges are required to disburse federal education loans in two installments per period of enrollment.)

To add the student loan debt clock to your site, just cut and paste the following HTML

New Type of College to Beware Of: ‘Covert For-Profit’

New Type of College to Beware Of: ‘Covert For-Profit’

Katy Osborn @whtkatydid Oct. 7, 2015

livroTooga Productions—Getty Images


For-profit colleges have long been the target of government ire, starting with then-Education Secretary William J. Bennett’s criticism of their “shameful and tragic” financial-aid abuses in the 1980s and marked most recently by President Obama’s proposal to close a loophole that allows for-profit colleges to cash in on GI Bill benefits. Continue reading

For-profit colleges transform into nonprofits to evade rules, report suggests

For-profit colleges transform into nonprofits to evade rules, report suggests

By Jillian Berman

Published: Oct 7, 2015 2:46 p.m. ET 13

Arne Duncun Obama.png

U.S. Secretary of Education Arne Duncan (L) with President Barack Obama on March 16, 2015.

For-profit colleges may have found a loophole to evade the Obama administration’s crackdown on the industry: Transform into nonprofit institutions.

Four college chains, which account for a total of about 50 campuses nationwide, converted to nonprofit entities over the last several years, but still act in many ways like profit-seeking enterprises, a new report suggests.

Continue reading

For-Profit Colleges Get Rich by Sinking Students Into Debt — and Their Scam Is Financed by Our Tax Dollars

For-Profit Colleges Get Rich by Sinking Students Into Debt — and Their Scam Is Financed by Our Tax Dollars

Let’s make higher education free to all.

By Jim Hightower / Hightower Lowdown

July 14, 2015

Butch Hancock, one of Austin’s finest singer-songwriters, grew up in the Texas Panhandle, out among dryland farmers and strict fundamentalist Christians. Butch once told me that he felt he’d been permanently scarred in his vulnerable teen years by the local culture’s puritanical preachings on sexual propriety: “They told us that sex is filthy, obscene, wicked, and beastly– and that we should save it for someone we love.”

Today, America’s higher education complex approaches students with the same sort of convoluted logic that guided Butch’s sex education: “A college degree is the key to prosperity for both you and your country, so it’s essential,” lectures the hierarchy to the neophytes. “But we’ll make it hard to get, and often not worth the getting.” Touted as a necessity, but priced like a luxury, many degree programs are mediocre or worse–predatory loan scams that hustle aspiring students into deep debt and poverty.

On both a human level and in terms of our national interest, that is seriously twisted. Nonetheless, it’s our nation’s de facto educational policy, promulgated and enforced by a cabal of ideologues and profiteers, including Washington politicos, most state governments, college CEOs, Wall Street financiers, and debt collection corporations. What we have is a shameful ethical collapse. These self-serving interests have intentionally devalued education from an essential public investment in the common good to just another commodity. Caveat emptor and adios, chump.

A little ancient history. Back in the olden days of 1961, I enrolled in the University of North Texas. At this public school, I was blessed with good teachers, a student body of working-class kids (most, like me, were the first in their families to go to college), and an educational culture focused on enabling us to become socially useful citizens. All of this cost me under $800 a year (about $6,250 in today’s dollars)–including living expenses! With close-to-free tuition and a part-time job, I could afford to get a good basic education, gain experience in everything from work to civic activism, make useful connections, graduate in four years, and obtain a debt-free start in life. We just assumed that’s what college was supposed to be. It still ought to be, but for most students today, it’s not even close.

Screw U

The nation’s fastest growing provider of higher education is, unfortunately, the worst: private, for-profit schools. Unlike community colleges, non-profit private, and four-year public institutions, the for-profits are in the learning game–as their name states– for profit. While a few deliver an honest educational product and still make money, honesty is not the business model embraced by most of these sprawling, predatory chains, largely owned by Wall Street.

More than 40 years ago, John Sperling–a college professor-turned-entrepreneur–noticed that many local, independent trade schools provided a useful public service: They trained and certified auto mechanics, bookkeepers, therapists, and such. “Eureka!” shouted the professor/entrepreneur, spotting an opportunity for big bucks: He would consolidate the scattered, local, privately owned trade schools into a nationwide corporate-run chain of colleges selling a variety of degree programs–a McDonaldization of higher education.

Today, mass-market college conglomerates suck in millions of U.S. students, generate huge profits, and draw Wall Street speculators and hedge funds to finance their expansion. The company Sperling founded, Apollo Education Group, owns the University of Phoenix and other chains, and has subsidiaries in Chile, India, South Africa, Mexico, and Australia. In 2014, the year Sperling died, Apollo took more than $200 million in profit.

This corporatization has been a disaster for education. After all, corporations are managed and governed not to benefit consumers (in this case, students and society), but to please investors by goosing up stock prices and maximizing profits.

To achieve that Wall Street imperative, this educational sector routinely applies the full toolkit of corporate thievery: fraudulent advertising, high-pressure sales tactics, bait-and-switch scams, loan sharking, PR shams, legal dodges, political protection, and outright lying and cheating. Instead of spreading enlightenment and broadening life’s possibilities, the for-profit industry has bilked and bankrupted hundreds of thousands of students. Its rap sheet is endless: 37 state attorneys general have formed a joint working group to investigate illegalities; 24 states are pursuing legal violations by specific colleges within their borders; the usually phlegmatic U.S. Department of Education has begun tentative actions against five notoriously abusive student debt collectors; and students, parents, staff, and others have launched a slew of private lawsuits.

The industry’s record of criminality is made more disgraceful by: 1) preying on struggling, low-income workers (especially single moms, people of color, and veterans) desperately hoping a degree will provide a toehold in the middle-class; and 2) financing the scam with your and my tax dollars.

Yes, what we have here is a “free-enterprise” industry that’s wholly sustained by federal dollars. The for-profit house-of-cards could not exist without being allowed to siphon into its private coffers the billions of dollars in student aid the government makes available annually to low-income students and veterans. “Get on our upward-mobility escalator,” blare the come-ons, “and we’ll enroll you in government loan programs that’ll pay for it all–plus, you’ll get a degree qualifying you for well-paying jobs, and we’ll even help place you in them!” What’s not to like? That it’s a scam, of course. The for-profits drastically overcharge, knowingly piling on intolerable levels of debt; they deliver such poor education that students can’t get jobs that pay enough to make loan payments; they divert precious education dollars from better and much more affordable degrees at community colleges… and they laugh all the way to the bank.

Meanwhile, the $1.3 trillion mountain of debt rung up by students at all types of U.S. colleges is endangering our entire economy. It is more than people owe on credit cards or auto loans, and second only to home-related borrowing. Student debt will soon surpass the subprime home mortgage debt that crashed the economy in 2008.

For-profit college corporations are the biggest creator of this looming danger.David Halperin, an excellent public interest watch-dog and author of Stealing America’s Future: How For-Profit Colleges Scam Taxpayers and Ruin Students’ Lives, sums up the industry as “an immoral enterprise.”

To say there are lots of horror stories about private, for-profit colleges gouging students is like saying there are lots of ouchies in a bramble patch. A profusion of books, articles, reports, investigations, and lawsuits, as well as social media websites such as MyITT, documents the toll.

But, you might ask, if they’re so awful, how do they stay in business? The old-fashioned way: By lavishly spreading money around to the right people. And since most of their revenue comes from taxpayers, it’s actually your money they’re spreading.

LOBBYISTS. Growing student anger about the industry’s nasties and demands for basic reforms have reached Washington and forced the colleges to respond. Not by altering their ways, mind you, but by hiring more lobbyists. To keep government funds gushing into their poorly performing schools, the industry has quadrupled its lobbying budget during the past decade. Reforms are almost impossible, Sen. Dick Durbin (D-Ill.) explained, because for-profit colleges “own every lobbyist in town.

Well, not all, but a bevy of the best-connected–from former GOP Senate Majority Leader Trent Lott to former Democratic House Majority Leader Dick Gephardt. And in 2013, a former eight-term congressman, Steve Gunderson of Wisconsin, swung through Washington’s revolving door to became head honcho of the industry’s chief lobbying front, the Association of Private Sector Colleges and Universities (APSCU).

As the industry drew public ire, scathing press, and sagging enrollment, the APSCU launched a save-our-bacon political “reform” plan. Gunderson’s fellow for-profit college booster John Boehner (R-Ohio) fit perfectly into the scheme, which essentially became the House speaker’s protectorate. As outlined in a six-page internal memo (leaked to Halperin), the APSCU bluntly said it would follow a strategy “as directed by House Republican leadership.”

Sure enough, GOP representatives have aggressively (and usually unanimously) formed a solid wall blocking a modest regulatory proposal by Obama to hold the industry’s worst performers accountable. Under the proposed “gainful employment rule,” colleges that have a high percentage of students who don’t graduate, accrue heavy debts, or are so poorly educated that they can’t earn enough to repay their loans would be cut off from the federal trough.

But being reasonable and fiscally prudent is in the interest of students and taxpayers, not of for-profit colleges. So Gunderson threw a histrionic hissy-fit last year, wailing that Obama’s proposal was “an ideological declaration of war against the private sector’s involvement in the delivery of post-secondary education.” The gainful employment rule remains bottled up.

CANDIDATES. Campaign dollars are what grease the lobbying skids, and for-profit colleges have become major grease monkeys. As the industry’s reputation with the public has sunk, its political donations have soared–to nearly $3 million in last year’s congressional races and $4.4 million in the 2012 presidential and congressional campaigns. Reflecting their strategic reliance on Boehner (and their anger at Obama for daring to cross them), donors allocated 70% in both 2012 and 2014 to GOP campaigns. Indeed, Boehner himself is among the top five recipients of the colleges’ electioneering largesse.

The numero uno beneficiary, at $183,000, is chairman of the House Education Committee, Rep. John Kline–a faithful mule for carrying legislation to prevent new constraints and undo old rules that impede greed. The industry’s third-and fourth-place money winners in the 2014 House races were Democrats Alcee Hastings and Robert Andrews: Those two pushed fellow Dems hard to pressure Obama to drop the gainful employment rule. There’s a word for corporate money in, public money out, Halperin says: Corruption.

CREDIBILITY. Having destroyed their own integrity and reputations, the colleges have become bulk buyers of others’ credibility. APSCU parades an A-list of political sparklies onto the stage of its lavish annual conventions: former Sec. of State Colin Powell in 2011, George W himself in 2012, ex-NATO Commander Gen. Wesley Clark in 2013, and Jeb Bush last year.

Television personalities also lend their celebrity to the schools’ scams. Ubiquitous, self-promoting financial “expert,” Suze Orman, has been on the payroll of the giant University of Phoenix for-profit chain, promoting its educational rip-offs on Capitol Hill and online. Comedian and TV host Steve Harvey has hyped Strayer University in TV ads. And U of Phoenix also sponsored an uplifting TV special by Al Sharpton–the MSNBC host subsequently ran a segment about the school that was panned by critics as “an infomercial.”


Majoring in exploitation.

Photo Credit: 

Hightower Lowdown


The colleges also seek alliances with prestigious institutions. The staid Chronicle of Higher Education let the Career Education Corporation, a for-profit with one of the industry’s worst default records, sponsor a Chronicle confab on student loan defaults and–get this–select all the speakers. More scandalous yet is the liaison with Marc Morial, former mayor of New Orleans and now president of the National Urban League. After writing an op-ed opposing Obama’s gainful employment rule, Morial accepted a $1 million donation to the Urban League from Corinthian College, a chain so bad that the Department of Education forced it to disband and sell off its schools last year.

And let’s not forget Mitt. In his 2012 run for president, Romney praised the private, for-profit model, singling out Florida’s Full Sail University for “hold[ing] down the cost of their education.” Actually, no. As Halperin disclosed, “Full Sail is the third-most expensive college in America.” It’s owned by TA Associates, whose executives funneled more than half a million bucks into Mitt’s presidential run, a detail he failed to mention. Nor did Romney mention that his own private equity empire is financially linked to TA/Full Sail–he makes money if the for-profit school profits.

Tinkerers vs. changers

Among the many duct-tape-and-bailing-wire repairs proposed to reform the student loan programs are a stricter gainful employment rule, transparency on graduation employment rates, and income-contingent repayments. Fine, but why not go for a fundamental fix: Let’s make higher education free.

Sure, it would be a big cost for taxpayers, but we already spend more than $120 billion a year, mostly for Pell grants and loans. Redirect that money–eliminating the corporate profiteers, the extensive lending bureaucracy, and brutish debt collection corporations–and we have most of the funding needed.

Remember the old bumper sticker: If you think education is expensive, try ignorance. We’ve invested for 150 years in free education through high school because we know that a broadly educated citizenry is vital to democratic, economic, and social well-being. And that investment has paid off–in productivity, middle-class expansion, and self-governing possibilities. Now’s the time to double down. Today, college degrees and advanced skills are the new high school diplomas, so they must be made as universally available.

But rather than expanding educational opportunity to meet the future, America’s lawmakers, Koch-headed governors, and higher-education chieftains are shrinking it. Think about it: The guardians of our country’s essential system for advancing and spreading knowledge have instead unleashed predatory corporate “schools” to prey on students, sinking them into a swamp of debt instead of lifting them up and America with them. The stupidity is dazzling.

Obama at least sees the need to do better, but his proposed reforms–including a limited program of tuition-free, two-year community-college degrees–are typical of his small-steps style.

Students themselves offer our best hope for bold, fundamental change. A student rebellion of “debt disobedience” is rolling across the country, standing for the democratic principle that education is a human right and social necessity–not a product.

Coming out of Occupy Wall Street in 2012, a creative group, Rolling Jubilee, has used crowdfunding to erase more than $30 million in student debt. The Debt Collective, a much broader effort by students, organizers and lawyers, is using myriad forums and innovative strategies to challenge the very legitimacy of any student debt and demanding a return to the kind of public, tuition-free college education the University of California and other schools used to provide.

And now, the spark of direct action is enlivening the student revolt. In late February, a gutsy group called the Corinthian 15 sprang out of the Collective. Corinthian Colleges, Inc., was a huge for-profit chain with a record of lying, bullying, and such poor performance that it was denied access to the federal funds last year and shuttered. Good riddance, but Corinthian graduates are still expected to pay back the federal loans for a worthless degree.

No, say the former students, who are risking personal financial ruin. “We can’t and won’t pay any longer,” they declared in a letter to the Education Department. Calling their generation the first “made poor by the business of education,” they called for “the end of a higher education system that profits from all our dreams.” As one rightly put it: “Without dissonance, there will be no change.”


Jim Hightower is a national radio commentator, writer, public speaker and author of the book Swim Against the Current: Even a Dead Fish Can Go With the Flow (Wiley, March 2008). He publishes the monthly Hightower Lowdown, co-edited by Phillip Frazer.

For-profit college must give $103 million back to students

For-profit college must give $103 million back to students

by Katie Lobosco  November 16, 2015: 5:53 PM ET

Education Secretary: We need to do better on student loan defaults
The nation’s second largest for-profit college will forgive nearly $103 million worth of student loan debt to settle claims that it violated consumer protection laws.
At issue are the recruiting tactics used by Education Management Corporation. It allegedly misled students about the benefits of a degree from its schools, and misrepresented job placement numbers. Continue reading