Wretched of the Earth Now Include Student Debtors

Student loan debtors now have less rights that persons who have fallen out of favor with the Internal Revenue Service. Our society has certainly come to naught when this kind of behavior is sanctioned by our own government. Actually, its much more than sanctioned, it was part of the 1997 reauthorization of the Higher Education Act. Provisions in that act made it much easier for the government to collect on defaulted loans and also made them harder to discharge in bankruptcy. A Wall Street Journal article explains the crushing effect of this legislation on students on defaulted loans. These provisions were put into place at the behest of John Boehner, Howard "Buck" Mckeon (pictured), and Senator Mike Enzi according to Student Loan Justice and Sally Mae and many debt collectors have reaped the benefit. Fortunately, the light of the media has exposed the symbiotic relationship between these newfangled robber barons and their corporate Repug enablers. Hopefully the astonishing greed of these lending institutions and the injustice visited about the hapless debtors who stumble into their web will be exposed next.

Bush Administration Stopped Loan Reforms...Irregulation Again!

So we didn't have to have this student loan scandal after all according to the Washington Post. Back in 2001 the Bush Administration killed a proposal to clamp down on the student loan industry. Not particularly surprising since inasmuch as there is no money making endeavor that the Bush Administration can stomach regulating. They prefer irregulation. Mr. Bush entrusts regulation to veterans of the industries that would -- or should be -- regulated which results in irregulation. Think killer whales regulating seals, cheetahs regulating antelope, crocodiles regulating wildebeests, you get the picture. There is something extraordinarily pernicious about this practice so reminiscent of Reagan. It can be far worse than no regulation at all.

In keeping with this theme, the esteemed Theresa S. Shaw (pictured), is "Chief Operating Officer of the Office of Federal Aid." Wow, C00 sounds so like a private industry title wouldn't you think? Well a kind of pubic/private partnership! Not surprising that she spent 20 years at Sally Mae honing her talents until they became suitable to regulating the student loan industry for the DOE. Yep the same Ms. Mae that is the biggest student lender. She brought some of her ilk from Sally Mae and other student loan lenders according to the New York Times and the Herald Tribune Hey networking works so well for private industry, it should do well for public service also! And surely an intimate knowledge of what you're irregulating is helpful. Ms. Shaw and her band of irregulators are now being investigated for conflict of interest as part of the burgeoning student loan scandal. Well, that's ironic, because there are no conflicts of interest in irregulation. Everyone is on the same side!

Another one of DOE irregulators, Sara Martinez Tucker, the under secretary of education, brought the meaning of term irregulation into sharp focus when she decided that Nelnet, a student lender, could keep the $278 million dollars they overcharged the government according to a DOE Inspector General audit. Ms. Tucker, of course has some ties -- actually many ties, think bondage -- to the loan industry and even Nelnet as the New York Times illustrates. Irregulators need to be in touch with the industry they are iregulating. That's what makes them such good irregulators!

In fact, another irregulator, Sally Stroup, an assistant secretary of education, spent much of her formative years in for-profit education which is complete dependent on student loans. Ironically enough she received a memo in August 2003 from the DOE inspector general urging her to curb any "illegal inducements" to lenders. Well, the DOE inspector general obviously doesn't understand irregulation so Ms. Stroup paid the memo little mind. According to the College Journal:

"At least eight top officials in the Education Department during the Bush administration either came from student-loan or related organizations or have taken lucrative jobs in that arena since leaving the agency. Former Education Department staffers say a revolving door between the department and industry has led to lax oversight of federal financial aid."

I'm thinking you are starting to understand how and why irregulators are chosen!
Secretary of Education Spellings asserts its an asset having administrators who have
so much experience in the student loan and other related industries.

Well according to the Washington Post and New York Times, Ms. Shaw will be leaving her post at the rudder of the student loan department having done all the irregulation college students and the nation can stand for now. The following is what she said in an email per the aforementioned Washington Post article:

"The recent attention on our programs and our work only confirms how very important our programs are to the students and families we serve, I am confident that together we established a solid foundation for Federal Student Aid's continued success."

Now that's irregulation and it is indeed a success . . . for the loan industry. But that's the goal of irregulation, benefiting the industry that's being irregulated.

Crown College Lies

Crown College, in Tacoma, Washington, is the biggest reason not to choose for-profit education. Crown College is a vocational, mostly on-line school which holds itself to be an academic institution because it issues issues bachelor and associate degrees as if that's all it needed to do. However, its still just a vocational, "career" school and its credits and degrees generally don't transfer to academic aka "real" schools. It has managed to deceive many customers, oh students, into believing that its degrees and credits do transfer. This has resulted in it being sued three times by eleven different students! Crown settled two of these Lola Jackson v. Killebrew/Dalton, Inc. and Joanne Black v. Killebrew/Dalton, Inc. lawsuits were settled and Crown College lost the Latesha Gonzalez v. Killebrew/Dalton, Inc. case at trial. IF YOU WANT YOUR CREDITS TO TRANSFER TO A REGIONALLY ACCREDITED SCHOOL DON'T GO TO CROWN COLLEGE.

Incidentally, the logo states that they were founded in 1969, well Crown College of Hair Design was founded in 1969. However, that school was purchased 1990 by John Wabel and now bears little resemblance to a beauty school ... actually it might, at least in quality. Mr. Wabel, who despite the fact that he does not possess even a nationally accredited college degree, has come across a fantastic way to make money: having students borrow it from the federal government and then turning it over to him for an online, inferior education. In fact, Mr. Wabel has been providing a sub par education for students for over 10 years now. As far back as 1997, complaints show that Crown College has been misleading students regarding the quality or lack there of its educational programs much like a used car salesman might mislead you about the facts concerning several mechanical occupants of his lot. More importantly, he and his staff have misrepresented (lied) about the nature of their accreditation and the transferability of their credits for the same amount of time. Crown College is accredited by the American Commission of Career Schools and Colleges of Technology (ACCSCT) and is on probation yet again.

A former admissions representative came forward and filed a complaint against Crown College alleging that she was instructed to mislead (lie) and misrepresent (lie) and deceive (lie) prospective students about many pertinent facts including Crown College's accreditation (national accreditation is better than regional accreditation), whether Crown College was being sued (Oh, its not this Crown College that's being sued), whether or not Crown College's credits transfered to other schools (well we educate students all over the nation so our credits are transferable to all schools). Why, why would they lie to prospective students? Well the bottom line. This school is a money making enterprise and let's say they are highly motivated when it comes to generating revenue ... ummm, recruiting students though not as motivated when it comes to educating their students but then education is a mere by-product of making money. It's a great scam, an unlimited supply of money from the federal government. This student is a conduit, a middle man, a funnel, through which loan money flows into the school's bank account. Thus education is not the end, its a means to the end. The end is making money.

For-Profit Education's Admission "Standards"...

Well, they don't have any because they are businesses. If you are running a car dealership and a customer comes in wanting to buy a car and has a driver's license you are going to sell him one! If one comes in vaguely thinking about buying a car you're going to try to sell him (or her) one. If one comes in because he wants to use the bathroom, you're going to try to sell him a car. If they need a loan you will do everything within your power to arrange one. You are not concerned with his driving record or if its the right car for him. The first problem belongs to his insurance agency, the second one to him. That's how businesses operate, that's what they do, they sell things that's the only way they can profit.

Well for-profit educational institutions are like car businesses, and they don't operate much differently. If a student comes in with a GED and wants an education they will sell him one and if he's not sure he wants one from them they will do everything they can to convince him that their education suits him. If ultimately it doesn't suit him that's not their problem.

Ohhh, but for-profit education has a huge advantage over car dealers and other like businesses. They have no worries about customer's credit records, don't need to have a service department and no pesky warranties. The customer always gets the loan regardless of his credit record and the for-profit educational institution always gets their money ... well as long as the customer stays in school. If the customer doesn't like the education and it doesn't end up suiting their needs, well that's too bad, its non-returnable and non-refundable!

Now, under those circumstances, do you really expect for-profit educational institutions to turn customers, ummmm.... students away!!!


Crown College is like that. Students came in wanting an education which they could transfer to a traditional school. What did the admission representatives do, tell them that they could transfer Crown College's credits to a traditional school? Why, because the Crown College makes a profit from each student it enrolls and profit is what concerns them. There has been amble evidence that this is the policy of other for-profit educational institutions. The Chronicle of Higher Education published an article concerning an investigation of Career Education Corporation which revealed that they were very reluctant to turn anyone away. "If you can breathe and walk, you can get into the school," says a professor who wished to remain anonymous."

The Chronicle has talked to credible sources and reviewed documents that strongly suggest that, over the last several years, administrators at the campus here have:

* Regularly admitted students who had not graduated from high school or earned a General Educational Development certificate, and directed many of those students to unaccredited high schools where they could obtain high-school diplomas the very same day.

* Improperly counted as "starts" students who never showed up for class or dropped out before they had completed their first week of courses.

* Encouraged admissions officers to sign up themselves, as well as family members and friends, and counted them as "starts" even if they never actually attended.

* Routinely misled prospective students about the college's classes and programs, as well as about the nature of the institution itself.

University of Phoenix paid a $9 million to the Department of Education to settle charges that it gave admission representatives incentives to enroll students regardless of whether they were academically suited to for the program of study. Moreover, University of Phoenix, still faces a false claims lawsuit which the Supreme Court refused to throw out according to the Los Angeles Times.

A report issued by the department said the company promoted an intense sales culture that rewarded recruiters who encouraged large numbers of students to enroll, even if they were not qualified.

For-profit educational institutions are business regardless of what they might want you to believe and its extremely hard for them not to conduct themselves accordingly. They simply cannot help themselves.

Court Reporting Institute (CRI) and Irregulation!

CRI aka Court Reporting Institute was a corporation incorporated in Washington state which ran four court reporting schools in Seattle, Tacoma, Idaho and San Diego. CRI is is a failure that rivals BCTI and it employed many of BCTI's tactics and some of Crown College. As in the BCTI case, lax oversite by the Washington State Workforce Training and Education Coordinating Board allowed CRI to continue to perpetuate its fraud when perhaps it should have been shut down earlier. Ultimately, the decision by the Workforce Board to revoke its license led to its demise and its entry into the bankruptcy court.

However, in its dealings with CRI, the Workforce Board appeared to be more interested in chiding a beloved but wayward child rather than enforcing the law and addressing the real concerns of students. Time and time again, it brandished its mighty ruler and brought it down softly on the naughty palms of CRI, then offered it a cookie. CRI took the cookie, savored it, appeared mollified then did it all again. According to the Seattle Times CRI was ordered to refund tuition to students in 1999 and 2003 because the Workforce Board found CRI used deceptive practices. Then it did it again. Finally, 2005, the Workforce Board pulled their license. CRI appealed the decision was hit with a lawsuit by its former students. The lawsuit named the sole shareholder of now defunct CRI, Alen Janisch, and also its director, Mike Girgus. Mike Girgus was so good at recruiting students with false promises that Gene Juarez Academy is now utilizing his skills as the supervisor of their recruiters. After adverse publicity from the Seattle Times newspaper article CRI dropped its appeal of the Workforce Board's decision and closed its schools. Here are articles in the Seattle Times, the San Diego Union Tribune and the Idaho Statesman covering the closure.

Subsequently, it declared bankruptcy in Western District of the U.S. Bankruptcy court in Seattle. The former students some of which owe as much as $50,000 in student loans have not given up. They have filed proof of claims in the bankruptcy court and are hoping to get the sole shareholder of the CRI, Alen Janisch, indicted in federal court for frauds they allege he has committed against the Department of Education. They also allege that he has kept thousands of dollars of federal aid that should have been returned to the Department of Education, the lenders or the students.

What's the Difference Between Vocational and Academic Education? Campaign Contributions!

Well obviously there are other differences, most notably quality! Regional accreditation conferred on academic, mainly non-profit institutions is far superior to national accreditation which is generally conferred on vocational, technical and career colleges. However if you put enough money in the pockets of the powers that be -- in this case politicians -- you can bend reality to suit what you think it should be, or more specifically the version that you can profit from. Of course, in the phrase "for-profit education" the inflection is on profit!

Speaking of phrases, remember the phrase, history is written by the victors? Well reality can be written by those who contribute the most (lobbyists) to those who shape it, (politicians). Remember the Bush Administration's Clear Sky's Act which, in a rather Orwellian sense, would produce more pollution. It can be difficult to dodge the subterfuge in the title of some legislature. The key to ascertaining the truth is to examine the what politician is sponsoring it, or better yet, the party sponsoring the sponsor! Well the coal, oil and gas industry sponsored Bush so that indicates that the Clear Skys Initiative, regardless of its title, would help the energy industry and thus not lead to clear skies at all, quite the opposite. Got it now?

So, let's apply that lesson to the bill College Access and Opportunity Act which was sponsored by the Hon. John Boehner who is pictured above. That bill, fortunately, languished at the end of the 109th Congress. However, like any cinematic monstrosity, there will be a sequel. Anyway, let's look past the benign title of the bill and see who sponsors its sponsor John Boehner. According to Campus-Progress Mr. Boehner receives tens of thousands of dollars from the for-profits educational industry (He receives lots of money from banks that make federally guaranteed loans to students too, but that is another blog entry). So considering the sponsorship of the bill, well the dual sponsors, John Boehner and well his sponsors, the for-profit education industry, one has to think this bill might have to do more with for-profit education's access and opportunity rather than anyone else! Hmmm, ironically enough, the bill may be appropriated named! Well, the lesson worked! This bill is a great boon or investment return for the sponsors aka the for profit education industry, an industry worth at least $26 billion and funded mostly by the federal government student aid programs. They win big if it passes.

Let's take one provision, language that would state that no regionally accredited school could reject a nationally accredited school's (most of which are for-profits) credits just because they are nationally accredited schools. We visited this topic briefly in a previous entry. This would mean that regionally accredited schools would have to evaluate every single credit in order to justify its rejection. To fully understand exactly what some of these nationally accredited schools teach, let's look at the schools the ACCSCT (American Commission of Career Schools and Colleges of Technology) accredits.

The ACCSCT is the national accreditor which accredits Crown College and is a major force behind the transfer of credits legislation that would favor the schools it accredits. They are one of the largest national accreditors. According to their Accreditation Standards and the schools they accredit it becomes clear why regionally accredited schools are very reluctant to take nationally accredited schools credits. ACCSCT only accredits schools, as defined in I.A.11 of their Standards of Accreditation, which are "postsecondary institution with trade, occupational, or career-oriented educational objectives" not academic educational objectives! This fact becomes even more clear when one looks at the 802 schools they accredit, only a small percentage of which even offer degrees and a smaller amount still that offer bachelors degrees. Looking at a directory of schools they accredit. They accredit schools that teach massage therapy, refrigeration, helicopter aviation, pet grooming, cosmetology, and culinary arts just too name a few. The majority of the schools they accredit offer diplomas or certificates in trades and are obviously not academically oriented. It is also obvious why a regionally accredited school, academically oriented college or university would not want to accept their credits for transfer. To make these schools evaluate each credit is rather ridiculous. What cosmetology or pet grooming credits are going to transfer to the University of Washington or Yale University and how much money should they have to spend to "evaluate" them????

BCTI, CRI, Bryman and Crown College? Something in the Putrid Sound area? Yes, irregulation!

All in around a year or so, all these schools fell off the tightrope, between profiting and educating, the dilemma faced by all for-profit schools. Well in these cases the tightrope was between deceiving students and deceiving students so blatantly that they get caught! Remember its a business first and a school last. We have already covered Crown, let's look at Business Career Technical Institute aka BCTI, now there is a spectacular failure which is still being unraveled though the school has closed up shop. There is a huge class action lawsuit. BCTI seems to be the scam school of all scam schools and that's saying a lot considering its most worthy competition! BCTI amassed huge sums of money by sucking at the Department of Education and the State of Washington's teats not that either agency seems to care that much.

Bryman College, a component of the Corinthian Group which is one of the largest for-profit education companies, is being sued in Tacoma because the school allegedly misrepresented its medical program.

Regulation or lack thereof is certainly part of the problem here! Let's say that it is a "friendly regulatory market" for for-profit schools. Well its a friendly market for any thing that is for-profit. Regulatory agencies are lax, overworked or unduly influenced, or some combination of both.

Remember the savings and loan debacle and what caused it? The Reagan administration unregulated the S&L industry but continued to insure the deposits. So the S&L's got to gamble with the house's money. That's what we have here. These schools would not exist but for federal and state loans and grants and this situation is even more pernicious because of the victims. BCTI preyed on poor and unsophisticated people who will never escape the yolk of the loans that only BCTI benefited from.

I will quote from an article in the Tacoma News Tribune about BCTI by Dave Wickert of the Tacoma News Tribune:

"Its finances were shaky. Its graduation and job-placement rates were substandard. Its students filed lawsuits and complained.

Regulators saw the warning signs. But the Business Computer Training Institute remained open for years, and taxpayers continued to pay millions of dollars to support a school that hundreds of students say defrauded them.

BCTI, a Gig Harbor-based for-profit vocational school, closed last year amid government investigations and a student lawsuit. But government records show the school had a history of run-ins with regulators stretching back more than 20 years.

In the 1990s, federal officials twice threatened to stop funding BCTI, citing financial problems and high default rates on student loans.

A private accrediting agency doubted the quality of BCTI programs as far back as 2001.

Washington state officials dismissed student complaints similar to those now made by more than 400 students in a lawsuit in Pierce County Superior Court.

In each case, BCTI and its co-presidents, Tom Jonez and Morrie Pigott, evaded serious consequences – sometimes with the help of elected officials."

"These people were pros at skirting the law and skirting the ethics,” said Phil Rockefeller, a former U.S. Department of Education supervisor and now a state senator from Bainbridge Island. He oversaw one federal investigation of BCTI.

Irregulation, yes I made the word up but it should have been in the dictionary! State and federal regulators and accreditors had evidence of the fact that this school was failing financially and educationally, yet they gave it the benefit of the doubt or deferred to pressure from elected officials.

I have some knowledge of the Washington State Training and Education Workforce Board and this is not the first case where they were conned, or lured to sleep or overworked or [insert variable excuse]. The schools they were supposed to police got off, survived and kept receiving taxpayer money. Actually, that's a redundant statement since, survival for these schools is receiving taxpayer money.!

If the these regulators were police, I wouldn't even break a sweat if I saw one of them in the rear view mirror, because they'd let me off with a warning each time. Hmmm, maybe the state patrol and the Workforce Board should switch places...