The way-classiest online for-profit tax-siphon, Phoenix U…

… (insignia here) keeps getting its siphoning system disrupted. In the good old days, government-money-funneling enabled its academic officers to make salaries in the tens of millions, but now – after destroying the lives of scores of dupes – the well is drying up. Things will be fine again once President Trump (himself a university president) takes office; but for now, Phoenix is enduring an “endless stream of bad news” (UD thanks Wendy for the link) in the form of business practice investigations, new rules about how you can’t take student money and say thanks fuck off, etc.

And that’s Phoenix. That’s the classiest of the for-profit ed tax-siphon lot. You can imagine how the rats are deserting at, say, DeVry, where, for instance, after collecting hundreds of thousands of dollars for trading on his reputable past, the disgraced Harold Shapiro got his ass out while the getting was good.

“‘We’ve come to expect these unjust assaults,’ said Gene Feichtner, president and chief operating officer of the huge for-profit chain ITT Technical Institute, which has been sued by CFPB, faces fraud charges from SEC and is under investigation by 16 state attorneys general. “

Ah. With each clause, UD’s smile widens.

***************

Very good brief backgrounder here.

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The next big change, they say, came in 2006, when Congress passed legislation backed by the Bush administration that erased a requirement that colleges deliver at least half their courses on a campus.
The top regulator on higher education at the Education Department during this time was Sally Stroup, now general counsel for the for-profit’s chief lobbying arm, the Association of Private Sector Colleges and Universities.

“That’s when these guys took off,” said Tom Harkin, a former Democratic senator from Iowa who led a 2012 investigation into the for-profit industry. He said moving everything online made it easier for private investors to snap up failing schools and hide from regulators. Meanwhile, the schools invested heavily in lobbyists and making political connections that guaranteed access to federal student aid would be protected, he said.

“These schools went out and ran wild with government money,” Harkin said.

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A fed’ral official named Stroup
Did the ol’ gov-to-biz loop de loop:
She made our schools trash
And sucked in the cash
But now it is time to regroup.

As our native tax syphons – the for-profit ed scams – are forced to shut down…

… their ex-employees can always find work in Pakistan.

“[N]one of this is unexpected. Rather, we refused to heed the warning signs, especially in the form of disproportionate rates of student loan defaults in the for-profit sector.”

Well. Now that the tax syphons have syphoned up our taxes and subjected a population used to exploitation to yet more exploitation, what’s next? Goldman Sachs has made its money on the for-profit ed scam and will no doubt soon be getting the hell out while the getting’s good. Goldman Sachs stands at the opposite end of the social spectrum from the exploited masses. Goldman Sachs knows what’s what, and is unhampered by morality.

As for the suckers left holding the bag (you, me, and the students of for-profit schools): I’m sure Lloyd Blankfein has a little lecture to give us all on how markets operate.

“[T]he once wildly profitable for-profit education sector is for the birds.”

Good and totally predictable news. But meanwhile a lot of people got hurt (those paying back pointless loans continue to get hurt), and a lot of taxpayers got taken.

Of course the industry continues to take our taxes and put suckers in debt. But it’s definitely, finally, going south.

For-Profit Education in America: It’s exactly like a sausage.

Bridgepoint Education, a for-profit online school that has been under scrutiny for what Mr. Miller, the Iowa attorney general, called “unconscionable sales practices,” turned to [a lobbying firm] to set up meetings with [Florida Attorney General Pam] Bondi’s staff, to urge her not to join in the inquiries underway in several states. Again, her office decided not to take up the matter, citing the small number of complaints about Bridgepoint it has received.

You do not want to know what goes into it.

“While none of the major predatory for-profit college companies — University of Phoenix, EDMC, Corinthian, Kaplan, CEC, etc. — have a frontman as publicly odious as Donald Trump, their abuses and harms go much deeper than those of Trump University.”

Predatory, odious, our next president, and currently dealing with his namesake university being dragged through the mud, first by the New York Attorney General, and now by a judge:

This week, a judge found Donald Trump liable for operating a get-rich-quick school, the erstwhile Trump University, without a license. The case was originally brought against Trump by New York State Attorney General Eric Schneiderman’s office, which, according to the Daily News, alleged that Trump University had “ripped off 5,000 students nationwide by promising to make them rich when instead they were steered into costly and mostly useless seminars.”

While he’s already been held liable for the university’s operation, Trump will now go to trial to see if he’s also liable for defrauding the students.

Can’t wait for the trial.

For-Profit Online University…

… a grand new American tradition.

Two former professors who are suing the for-profit Phoenix School of Law claim that administrators “propos[ed] curriculum changes that would make it more difficult for students to transfer to another law school and retain their credits, a change that …

Dean Shirley Mays allegedly described as ‘building a better mousetrap.'”

Wow. If true, Dean Mays certainly has a way with words.

Chilean students have done a better job than American students of noticing how cheesy for-profit universities…

… are taking their money and leaving them uneducated and unemployable. Chile’s totally filthy for-profit university sector has now been outed; and though I’m sure – as with all diploma mills – the owners will lie low for a bit and come back again filthier than ever, the forced resignation of Chile’s justice minister is certainly good news.

The resignation of Teodoro Ribera on Monday was the latest in an unfolding saga that has prompted massive street demonstrations, criminal investigations and the jailing of a dean suspected of money laundering and a former government official accused of selling university accreditations.

Same deal as in the States: Pay bribes to get your website accredited as a school and instantly start stashing away state cash. If you have a physical campus:

[Structure] deals with property developers who … build the educational institutions then rent them back to the university. The monthly rent – often paid to members of the same university management team – [is] used to strip money from the institution.

And – hey look! It’s the guys who own the University of Phoenix!

Further revelations … led the Chilean government to announce on Tuesday an investigation into possible violations of regulations by two more universities including UNIACC University, owned by Apollo Global, which according to the company website is “a $1bn joint venture formed in 2007, 80.1% owned by Apollo Group Inc and 19.9% owned by a private equity firm, the Carlyle Group”.

“[As] the truth catches up with the major for-profit colleges, it appears these companies are doubling down on a Mitt Romney victory as their last best hope to retain unquestioned access to a torrent of taxpayer money.”

To be sure, a few cynical Democratic lawmakers still support the government-funded for-profit college scam (put for-profit in my search engine for background). But as the industry’s greed, and criminal neglect of students’ educations, becomes common knowledge, it’s mainly Republicans – famously contemptuous of financial dependency on the government – who continue to whomp themselves up for an industry almost wholly bankrolled by federal dollars.

As David Halperin notes, a Republican victory in November is probably the industry’s last chance to salvage its basic model (enroll everyone; use their federal education money for your executives’ salaries; watch everyone drop out and spend the rest of their lives trying to pay back loans; find new suckers). Even with Republicans running the country, the for-profits may be unable to reverse the collapse of their sickening sector, one of the few surviving instances of pure exploitation of the weak by the strong, the masses by the elites.

Gawker Gawks at the Collapse of the For-Profit College Scam…

and so does UD. As Phoenix falls from its ashes, and as even scuzzier outfits make their way through the courts, it truly begins to look as though Americans have figured out how the tax-syphons work, and refused to play along.

A comic strip reduces America’s for-profit-education tax-syphon …

… to its most basic moving parts.

****************

Transcript:

Two academic men in suits chat. Looks like Harvard Yard in the background.

So the for-profits mop up $32 billion in taxpayer money a year, even though a majority of students quickly drop out!

And for presiding over these empires of failure, the average for-profit CEO is paid over $7 million!

— 7 million? Seriously?

Seriously.

— Does it come with balloons and a 4-foot check?

No, I imagine it’s a discreet transfer of wealth.


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UD thanks Dirk.

For-profit online universities. Why are there so many?

Because anyone can do it!

At a For-Profit College, a Reward…

… for a job well done.

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