California's situation has become so notorious that Robert Shireman, federal deputy undersecretary of education, has made the issue of "state authorization" of these schools the subject of discussions about new possible rules to be applied to federal financial aid.
Schwarzenegger has voiced his support for a bill that would create a post-secondary-school division in the Department of Consumer Affairs. But consumer advocates are calling it a sop to the private school industry.
Paul Trapani
Ted Soqui
Martine Leveque says she paid $30,000 for a “crappy education” at a Corinthian school in Southern California.
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"It's kind of a license to operate without any oversight," said Betsy Imholz, senior projects director for Consumers Union. "Something dangerous is happening here."
Liu is sponsoring another bill designed to more stringently monitor these schools. Even though vocational students are receiving government grants, she says, "the state of California can't assure any of them they are receiving the kind of education they need."
I asked Laura Chick, California inspector general overseeing recovery spending, whether she would scrutinize the amazing windfall that for-profit schools have obtained through the stimulus. "The FBI states that we could lose seven to 10 percent to fraud in the stimulus spending," she said in a prepared response delivered by a spokesman. "That is just not acceptable. I am putting all recipients of stimulus spending on notice that not only am I going to be watching closely, but so will the US attorney, district attorney, FBI, and federal inspectors general. We are working as an integrated oversight team to first, deter any fraud; and if it occurs, to find it quickly and bring them to justice. I assure you any agency that is high risk for fraud will be at the top of our watch list."
For the time being, Corinthian grads Leveque and Francis are consulting with Southern California consumer rights attorney Elena Ackel about taking the company to court. Ackel says this is a lonely cause: "I can count on one hand the people who give a shit about the students in those schools."
Corinthian spokesman Jaffe said Leveque's nursing program placed 71 percent of its students in relevant jobs. But consumer advocates say lax state regulations allow even her low-paying part-time job to be considered a "placement" for purposes of convincing prospective students their tuition payments will ultimately result in jobs.
As for the company at large, executive chairman Massimino said the stimulus millions, combined with Democratic support for relaxed consumer protection rules, will help boost company revenue. And rather than serve a vehicle for greater government accountability, as President Obama promised, Massimino suggested the federal stimulus could actually help dismantle the 90/10 rule, originally designed to protect taxpayers.
"Nearly 70 percent of our students, U.S. students, received Pell Grants in fiscal 2009," he said during the Aug. 25 call with analysts. "Congress has also recognized that increases in federal student aid make it more difficult for institutions serving low-income students to meet the 90/10 rule. Just a few weeks ago, the House Education and Labor Committee passed a measure to provide 90/10 relief and the strong bipartisan vote itself, 42-5, was a positive indication about the for-profit sector's standing with Congress."
That's little solace for Francis. "I'm paying back a loan," she said, "and I don't have anything to show for it."
