For-Profit Colleges: Predators in the Ivory Tower

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Illustration by Vlad  Alvarez.


Bobby Ruffin Jr. was only 14 when a recruiter from Ashford University called. The Birmingham, Mich., boy thought he'd clicked on a link promising help finding money for college. It was actually a lead generator for the for-profit, online school's sales staff.

At the time, Bobby was an A student. His parents had pulled him from the troubled Detroit schools, hoping that home-schooling would deliver something better for their son. He told the recruiter that he wanted to be a doctor. She assured him that Ashford could be a stepping stone to that dream.

Barmak Nassirian, former AACRAO official: “They found a system where the pitch goes to one guy and the bill to someone else.”
courtesy Barmak Nassirian
Barmak Nassirian, former AACRAO official: “They found a system where the pitch goes to one guy and the bill to someone else.”
Iraq War veteran Chris Pantzke ran up $26,000 in debt at the Art Institute of Pittsburgh.
courtesy Chris Pantzke
Iraq War veteran Chris Pantzke ran up $26,000 in debt at the Art Institute of Pittsburgh.

Never mind that he was only in the eighth grade.

"She said, 'You'll be working toward a degree as a medical doctor, so when you do graduate high school you're almost there,'" Bobby says today. "I'm like, 'This is great, I'm going to talk to my mom.' And she's like, 'No, I wouldn't tell your parents because that would take away from the shock when it happens. If I were you I'd complete the program and when graduation comes around let them know. Mom and Dad will be super excited.'"

Admission to Ashford requires a high school diploma or an equivalent. So when it came time to fill out the financial aid forms, the recruiter told Bobby to claim that he'd already graduated. He objected, but she insisted "the loan processing company will go back and correct everything." Still, he left the graduation date blank. Someone filled it in, because Ashford was soon receiving federal student loan money on his behalf.

Of course, it's illegal for kids Bobby's age to receive financial aid. But for-profit colleges haven't always been scrupulous when it comes to raiding the federal treasury. Between student aid and G.I. Bill programs, most schools receive 90 percent of their revenue from the American taxpayer. And the recruiters — often little more than salesmen paid largely by how many people they enroll — are driven mercilessly to keep those cash registers ringing.

Students don't get much in return. Though tuition rates can run as high as America's most esteemed universities, the education is generally substandard. In the end, most kids wind up walking away with a questionable degree bought at top dollar — and a mountain of debt to accompany it.

Bobby took online classes for almost a year. But when he wouldn't endorse Ashford's lies on his financial aid forms, administrators miraculously discovered that he was under 18. Since this left him ineligible for federal aid, Ashford was forced to return his loan money to the feds.

The school wouldn't be eating those costs. Bobby would. Ashford, which declined interview requests for this story, sent him a bill for $13,000.

Last fall, Bobby was finally able to enroll at a real university, Eastern Michigan, where he was named a National Collegiate Scholar. Yet he still owes Ashford. Because it's a private debt, he isn't eligible for deferments while he's in school, and any future wages could be garnished.

Unfortunately, this isn't a scam that only targets the young and naïve. The for-profit industry is so rife with deceit, it's been billed as the second coming of the mortgage loan debacle. And the same people are behind it. Three-quarters of all for-profit students are enrolled at schools owned by Wall Street banks and private equity firms.

All told, they soak $30 billion a year from American taxpayers. But even in the age of slash-and-burn government, Congress has shown no interest in stopping it.

"The problem with the subprime [housing] scam was that it got so big it almost brought down the entire world's economy," says Barmak Nassirian, a former official with the American Association of Collegiate Registrars and Admissions Officers. "This one's wisely limited to $30 billion a year, which is highly sustainable. In the context of a multi-trillion federal budget, that's not even a rounding error."


CONSUMER FRAUD AS A BUSINESS MODEL
You may not know it, but you're sitting on $117,000. That's basically how much every American is potentially worth in government student aid. Want to attend grad school? Throw in another $114,000.

As for-profit colleges have discovered, an 18-year-old with 100 large makes for a very easy mark.

In order to get in on the gravy train, a school only needs accreditation from some supposedly neutral body. But Congress neglected to say who should do that accrediting, resulting in a system loaded with charlatans. Some agencies have built sturdy reputations over decades. Others are little more than rubber-stampers, more geared toward gobbling up members' dues than safeguarding kids.

"It never occurred to [Congress] that as billions of dollars get attached to the recognition process, the process would get corrupted," says Nassirian. "When you say yes, you gain membership dues. After all, you're living off these dues."

Yet even bargain bin accreditation takes several years. So the titans of Wall Street found a way around this, purchasing small, failing schools to snatch up pre-owned accreditation.

Take Bridgepoint Education. Its majority stockholder is Warburg Pincus, a New York private equity firm. When it needed accreditation for Ashford University, it bought the 85-year-old Franciscan University of the Prairies, a struggling, 300-student religious college in Clinton, Iowa. Overnight, it was transformed into the online powerhouse Ashford.

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12 comments
argosywhistleblower
argosywhistleblower

TO my Attorney: Before we go any further, I wanted to make sure you both know a little about me and how vital my experience was with Argosy. I wanted to take a moment today to clarify something about my case. Something I neglected to mention. I wanted to mention the true victims of this fraud. I want to spend a moment telling you about my Patients. I want to tell you both how much they meant to me and how deeply wounded I am as their Doctor to no longer be able to reach out my hand and offer hope. I can't express in words how life giving it was to be a Therapist and Evaluator. Every day of my life since departing my field I have wondered how they faired. I wondered if anything or anyone came along and gave them the tools they needed to move forward with their lives. I wondered if anybody stopped to make sure they were being cared for. I sat at home and wondered. I said goodbye to psychology in 2009. I wanted to try to reach people with my words. I chose writing and have nine bestselling Kindle books. But, I always wondered what might have been. I left my field reluctantly. I left because I felt like my voice had been silenced. I felt like I could never escape the clutches of my graduate school and the insurmountable debt it left me in. I thought the only way I could ever hope to reach out to help those in need was through my writing. I thought maybe I could help that way instead. I am happy to report success as I have sold thousands of books (3,284 last year). But, I always dreamed of what might have been had I stayed. I began therapy in 2007 and go once a week. I have tried to practice what I preached to those in pain. And, I am happy to report success. I have moved on to other ventures. I have been developing a Carcinoid cancer charity since 2011. I have posted 360 videos to raise awareness for this rare cancer which my Aunt suffers from. I plan on transitioning to this endeavor permanently. But, I always wondered what might have been had I stayed. I wondered about them. My Patients. And, to find out the school I trusted to guide me to helping those people in pain was a fraud is the most shameful, humiliating, and painful revelation as one could ever imagine. I want to tell you that no matter what happens with this case, I will never let them have the joy, hope, and promise I tried my best to impart to those under my care. They may hide behind clauses and laws but they can never touch that part of me. They may ruin me financially and shame me to my colleagues. But, at least, I will retain that joy from reaching out with hope to those in need. Respectfully, ArgosyWhistleBlower

argosywhistleblower
argosywhistleblower

Update: launched facebook page today. Less than four hours later, I have spoken to seven students. One from Maine, one from Arkansas, one from Arizona. All online students. Seems like they have it worse than those of us who had a campus to go to. They are given the run around. Confirms my resolve. Get at us on facebook: "Argosy Whistleblower" or twitter @AUfraud or email me argosywhistleblower@gmail.com We also need former professors/staff/recruiters willing to testify.

argosywhistleblower
argosywhistleblower

Correction- In lieu of being deemed uneducated, I hereby correct my typo. I am a Neuropsychologist, former Neuropsychology Fellow. Okay, now that I've clarified my training, let me tell you about my chat with Argosy President Dr. Garrison. I informed Dr. Garrison that I will be pursuing my legal rights to which he replied, "Can I confirm your mailing address to send the copy you requested of your student file?" In other words, he bypassed discussing my tenure at Argosy. I also spoke with Rep. Kriseman of Florida for over an hour. I then spoke with two local Consumer Fraud lawyers. I am happy to report my decision to find and assist ALL Argosy victims. If we can join forces, we can do something. So, if you know anyone who got duped, have them contact me.

argosywhistleblower
argosywhistleblower

Attention ALL Argosy students/grads: if you would like to discuss your eligibility for a class action suit contact me at argosywhistleblower(at)gmail(dot)com I am a former Neuropsycholgy Fellow & grad determined to recoup our costs. For all others, please know the Bay Area campus wears the crown in terms of ripping people off. I was a clinic Supervisor at Argosy for four years. I was made to complete THREE practicums! The lady profiled in the article only had to do two & she is headline news? Look no further than Alameda if you want to see corruption in action.

trubluamerican
trubluamerican

It's so disturbing, that these vicious schemes to defraud hardworking citizens, are being created by members of society's elite, who have powerful political and economic connections at the highest level,  of both political persuasions.

wakeup
wakeup

Wake up Kiddos!  It's time to put down your electronic toys and push out those in Congress who made it illegal for you to walk away from student debt, while protecting the degenerates profiting from your basic right to an education. 

If a student agrees to pay the price for an education, then at the very least, demand that educational institutions provide, a quality education that meets industry standards.

notstupid
notstupid

 @wakeup Are you proposing that taxpayers bail out students who did not practice due diligence in deciding to what school to send their money to?

argosywhistleblower
argosywhistleblower

@hollymarieperry On facebook "argosy whistleblower" on twitter @AUfraud by email argosywhistleblower@gmail.com

 
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