For-profit schools blasted for fraudulent practices

The abrupt closing earlier this week of two well-known area for-profit colleges were just the latest in a string of campus shutdowns in the industry after years of declining revenue and enrollment, stemming from the often exploitative and fraudulent practices of the schools, experts say.

Over the past decade, accusations of fraud, financial irregularities and deceptive recruiting practices have resulted in unflattering headlines and intense government scrutiny of what was once the nation’s fastest-growing educational sector.

Enrollment at private for-profit institutions quadrupled from 0.4 million to 1.7 million students from 2000 to 2010, according to the National Center for Education Statistics, but declined by 26 percent to 1.3 million between 2010 and 2014.

The numbers fell even further Tuesday when Carousel Beauty Colleges announced it was closing all five of its area locations, displacing more than 90 students, many of whom are still in the dark about what will happen to their credits and tuition fees. The same day, ITT Technical Institute said it was closing 137 campuses in 39 states, shutting out more than 40,000 students, including about 2,000 in Ohio.

The ITT closure came on the heels of several state and federal investigations centered around allegations that the career college pushed students into high-risk student loans that were likely to default.

Other schools under investigation

Brookings Institution reported in June that ITT was among 28 for-profit colleges that had been under government investigation in the past decade. Other schools on the list with local campuses included National College in Kettering, Devry University in Beavercreek and Brightwood College (formerly Kaplan College) in Dayton.

All of the schools have denied any wrongdoing, including allegations that some schools forged signatures to enroll students who hadn’t even graduated from high school, or made deceptive or unsubstantiated claims of guaranteed job placement after graduation.

But the investigations continue to raise red flags, not just about individual institutions but the entire for-profit sector, according to Barmak Nassirian, the director of federal relations and policy analysis at the American Association of State Colleges and Universities.

Nassirian said such negative publicity, combined with word-of-mouth reviews of for-profit schools by students who feel they’ve been duped, has been largely responsible for the precipitous decline in enrollment.

“The for-profit business was very lucrative as long as they (schools) could lie to people and get them to enroll,” he said. “But the lies have ceased to be effective, ceased to be persuasive, because everybody knows somebody who has been ripped off. It’s sort of like the Ebola virus; at some point, you run out of victims.”

Victims of school closings

Many of the victims of the recent rash of school closings in the local area are residents who can least afford to be robbed of the time and resources they’ve already invested in their educations. They’re working adults, parents, first-generation students, veterans and others who have been overlooked by traditional colleges.

Francina Carr, a 25-year-old Dayton resident who attended classes at Carousel’s Springfield campus, also works at the Waffle House restaurant on Needmore Road to support her family.

“I have two kids that I have to take care of while I try to go to school,” Carr said. “I ride the bus, so it takes me two hours to get to school and get back home. I had to take some time off and go back to school to try to finish up my certificate because I just didn’t have enough time in the day. Now I have to find another school. I just wish they (Carousel) would have told us about the closing a lot earlier so I could already be enrolled in another school.”

The shutdown of the two-year beauty school owned and operated by Don Yearwood, who did not return calls for comment, surprised most students, many of whom said they learned about the closing through their social media connections on Facebook over the Labor Day weekend.

Carr said she has received no communication from school officials but was informed by the Ohio Board of Cosmetology that the classroom credits she has already earned would transfer to another beauty school.

Schools recruiting

A number of local schools have already lined up to recruit displaced Carousel and ITT students — and their federal financial aid — including Sinclair Community College and Wright State University.

But transferring to another school isn’t their only option.

Under the law, former Carousel and ITT students will be eligible for a refund of their tuition fees and may qualify to have their student loans forgiven because they attended schools that shutdown suddenly and no longer offer instruction.

Criticism of for-profits

U.S. Sen. Sherrod Brown, D-Ohio, applauded the U.S. Department of Education rules creating strong protections for student loan borrowers. And in an interview Thursday, Brown was highly critical of the for-profit industry and lamented the prospects of students relying on for-profit schools.

He said many for-profit colleges simply can’t be trusted to put the needs of their students ahead of profits.

“We’ve seen in Ohio what’s happened with for-profit charter schools, where companies have made a lot of money, taxpayers are left holding the bag and students are short-changed,” Brown said. “It’s the same thing with this ITT for-profit college.”

Brown also pointed to statistics show the vast majority of people who enroll in a for-profit college will leave without a degree, and they are far more likely to default on their loans than students at other types of colleges.

“Only 12 percent of students are in for-profit colleges in this country, but 40 percent of defaults on loans are in these for-profit colleges,” he said. “They (for-profit schools) aren’t taking care of their students. They’re more interested in the bottom line.”

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