… the ever-quotable Barmak Nassirian speaks.

… “This is now a sector in which the vast majority of participants are actually engaged in what I view as counterfeiting of degrees and consumer fraud,” said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers. “Consumer fraud defined as over-advertised, over-promised, overcharged and under-delivered.

“For a group that reports to be market-based,” he went on to a room of education insiders at the New America Foundation, “what is a better measure of market failure than apparently nobody but the idiot federal government puts their money into these institutions? That is the single best indication that the product has no intrinsic value. People who spend their own money don’t spend it there.” …

There’s almost nothing good to say about the for-profit education industry, as this pithy account makes clear. Senate hearings on the government shakedown scheme are ongoing.

From its symbiotic relationship with shady online for-profit colleges [Background on the for-profit scandal here.] to its plan to make itself an online school, the University of California at Berkeley is moving smartly along the path to self-prostitution.

Step One:

University Regent Richard Blum has an investment firm.

… Blum Capital Partners has been the dominant shareholder in two of the nation’s largest for-profit universities, Career Education Corporation and ITT Educational Services, Inc. The San Francisco-based firm’s combined holdings in the two chain schools is currently $923 million—nearly a billion dollars. As Blum’s ownership stake enlarged, UC investment managers shadowed him, ultimately investing $53 million of public funds into the two educational corporations.

… John M. Simpson of Consumer Watchdog, a nonprofit education and advocacy organization in Santa Monica, Calif., comments: “It is hugely inappropriate for the University of California to invest in for-profit colleges when it should be promoting public education. And something stinks when university investments end up in companies largely controlled by a regent. To the average fellow on the street, this would seem to be a conflict of interest. It is up to Mr. Blum and the UC treasurer to explain how it could not be a conflict of interest.”…

Blum’s not talking. He’s not talking to this guy, from Sacramento News and Review, and he’s sure as hell not talking to this guy, from the Los Angeles Times.

Should an important official of what is arguably the most prestigious system of public higher education in the world also be a leading financial backer of an industry that has been coming under intense regulatory scrutiny because of persistent allegations of fraud?

Or put another way: If the chairman of the World Wildlife Fund held significant investments in, say, BP, wouldn’t people wonder exactly what he thought about how to balance environmental protection and oil industry regulation?

Step Two:

Berkeley’s not only investing public money in the for-profits; it’s modeling itself after them. Put everything online; hire whoever to teach the stuff; advertise the Berkeley brand all over town.

Its professors are rightly worried. Some of them have written a worried opinion piece for the San Francisco Chronicle.

The UC Board of Regents will discuss this week a proposal by the University of California president’s office for an ambitious plan to market UC online. The proposal entertains the vision of an eventual online bachelor’s degree that could tap new students throughout the world, from “Sheboygan to Shanghai.”

In fact, the track record for online higher education is very uneven.

Uneven? UD, as readers know, is less diplomatic. She has long called online classes the poor white trash of education. If you want to know why, click on my poor white trash category.

The Berkeley professors can see what’s coming.

[T]he university runs the risk of destroying its reputation and excellence in the name of marketing a brand.

But hey. When a major big time regent has been kissing up to the for-profits for years — when, in a way, your university has become financially dependent on the kindness of the for-profits — you shouldn’t be surprised when administrators start suggesting that Berkeley should make them its model.

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UD thanks her friend – once her student – James Elias for the initial link about Berkeley’s online venture.

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Update: “[W]hat do these investments say about Blum’s vision for higher education?” asks Michael Hiltzik, author of a long article in the Los Angeles Times about University of California Regent and zealous investor in for-profit education Richard Blum.

Let’s think about that one.

Blum represents just about the most selective undergraduate institution in the world, Berkeley. Berkeley is simply the pinnacle of higher education — and it’s public. It’s one thing for small, insanely rich Princeton to offer a great education. I mean, Princeton does, it does offer this, and it deserves all the praise it gets. But Berkeley, to the enormous credit of California taxpayers, offers something similar. And it doesn’t have the legacy profile of the Ivies. It doesn’t make lots of special room for the children of the rich and well-connected. It doesn’t create the sort of culture Walter Kirn describes here.

Berkeley is, if you ask UD, inspirational. It’s probably the closest thing we have in this country to an admissions meritocracy.

What is the investment philosophy of Berkeley’s highest-profile regent? What does that philosophy tell us about what the LA Times reporter calls his vision for higher education?

Well, I’d say it’s a vision profoundly at odds with what Berkeley has long stood for. It’s elitist and cynical. Blum’s investment strategy says the following to UD:

I’m going to generate lots of money for a few of the most highly selected students in the country on the backs of millions of ordinary citizens being ripped off by substandard institutions. It’s a winner-take-all-the-education world. Let the losers pay the price.

A business school dean can’t help but notice the scandalous business model at the for-profits.

… Annually, about 25 percent of for-profit colleges’ government-subsidized tuition revenue is spent on aggressive student recruitment programs. Taxpayers are thus financing not just educational expenditures but expensive advertising campaigns and sophisticated call centers.

The University of Phoenix spends nearly $1 billion annually on promotion. It used its federally subsidized profits to purchase naming rights to a sports stadium. Bridgepoint Education reported spending 28 percent of this year’s first-quarter revenue on promotion, compared with only 25 percent spent on instruction costs and services.

There are many lessons traditional colleges can learn from the successes of the for-profits. But imagine taxpayers’ reactions if traditional schools decided to divert a quarter of their already constrained budgets away from the classroom to carry out massive self-promotion campaigns.

Steven Eisman, a hedge-fund manager known for having anticipated the housing market crash… [says that] [w]ithout tighter government regulation, … students at for-profit colleges will default on $275 billion of student loans over the next decade.

The New York Times explains why the federal government is now proposing new rules under which “for-profit colleges would not be eligible to receive federal student aid if their graduates’ debt load was too high to be repaid, over 10 years, with 8 percent of their starting salary.”

“These programs overpromise, underdeliver and load vulnerable students up with way too much debt,” said Chris Lindstrom, higher education program director at the U.S. Public Interest Research Group, part of a coalition of education, consumer, student and public interest groups supporting the regulations.

In 2007, coalition members said, students at for-profit colleges made up only 7 percent of those in higher education but 44 percent of those defaulting on federal student loans.

Socially destructive? Morally bankrupt? The industry will tell you it’s taking the poorest Americans and giving them livelihoods. What the for-profits do is really more of a charitable vocation than a bottom-line business. Who else is going to care enough to drag homeless people off the streets and load them up with debt?

A surprising number of the people enrolled by these companies are homeless. According to Bloomberg, homeless people account for almost 5% of the students in the Newark, N.J., branch of Drake College of Business, a trainer of medical and dental assistants. In late 2008, Drake started offering $350 every two weeks to students who showed up for 80% of classes and held onto a C average. Carmella Hutson, a case manager at the Goodwill Rescue Mission in Newark told Bloomberg, “It’s basically known in the community: If you’re homeless, and you need some money, go to Drake.”

As someone once employed by one of these schools says, “The level of deception is disgusting — and wrong. When someone who can barely afford to live and feed kids as it is, and doesn’t even have the time or education to be able to email [enrolls], they drop out. Then what? Add $20,000 of debt to their problems — what are they gonna do now. They are officially screwed. We know most of these people will drop out, but again, we have quotas and we have no choice.”

And not only that, but almost all the money the companies pass on to these people as personal debt comes from us! It’s our taxes helping these people add tens of thousands of debt to their burdens!

A win-win situation…

… runs the headline at Business Week, and this one’s worth unpacking a bit.

Almost all of the colleges and universities University Diaries writes about are non-profits. They exist not to generate money for investors, but to educate people. They need enough funds, of course, to operate on as high a level as possible; but because their primary function involves a public good – enhancing the knowledge and skills of people – they receive various and significant state and federal government subsidies and tax exemptions.

Public institutions, like Berkeley, some of whose students and faculties have taken to the streets in protest against
state cutbacks (today, March 4, is a Day of Action, and a number of large rallies representing many public schools are expected), and private institutions (even insanely rich ones like Harvard), both receive all sorts of tax breaks along with government financial support.

The furloughs Mr UD and his colleagues at the University of Maryland have experienced, and the many other signs of institutional strain that this blog has noted at virtually all American universities, have of course to do with varying degrees of withdrawal of government funds from schools under the pressure of a bad economy.

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Because our taxes support non-profit universities, we have a stake in making sure these places don’t use our money to give their presidents millions of dollars, or, like Harvard, to hoard massive endowments. Likewise, we have an obligation to keep an eye on the tax-exempt NCAA and tax-exempt universities with Division I-A football and basketball programs (indeed, many people now argue that the NCAA and these sorts of campus sports programs should lose their tax exemption).

My point is that all sorts of goodies, subsidized by the American taxpayer, come to universities, and universities expect (should expect) some level of government scrutiny (think too of Senator Charles Grassley’s many letters of inquiry to universities about possible conflicts of interest in their medical schools) and citizen scrutiny because of this.

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Things start to get muddy when we turn to America’s burgeoning for-profit university industry.

For-profits aren’t bound by the non-profit ethos which says that our primary goal is to enhance the public good. For-profits are for profits. They’re doing what they do primarily to yield as much money as they can for investors. Because of this, the for-profit story, as UD has chronicled it over the course of this blog, has featured the sort of scandals you’d expect: Brazen recruitment of any student with a pulse, almost exclusively online curricula, and a practice of lying to recruits about graduation rates and job placements. One firm “paid a $6.5 million settlement in July 2007 to the California attorney general’s office, over allegedly misrepresenting graduates’ job placement rates and salaries. It also agreed to cease enrolling students in 11 programs at nine campuses.”

Now keep in mind that for-profits get massive federal support too. Typically over eighty percent of their revenue comes from you and from me.

So let’s go back to the headline on the Business Week article: Your Taxes Supporting For-Profit Firms as they Acquire Colleges.

How does that work?

Let’s start here:

A 2006 regulatory change fostered online growth and made takeovers more attractive… That year, Congress eliminated a rule prohibiting colleges that offered more than half of their courses online from receiving federal financial aid.

Well, this blog ain’t keen on online – UD calls it the poor white trash of education – but, you know, that’s just me. Congress loves it, and has made it easier for you to make an entirely online university. (I know. Diploma mills have been at this for years. Whole other subject.)

Anyway. Okay. So you can now make a really low-cost, really profitable university. Zillions of students all over the world, a few professors doing a lot of typing (How many students does each online class contain? I dunno. A thousand?), very little physical campus to maintain… You get the picture.

But – Did I say diploma mills were a whole other subject? They’re not really. You need to differentiate yourself from them, and that means real accreditation. Which is where we reenter the Business Week story:

ITT Educational Services Inc. paid $20.8 million for debt-ridden Daniel Webster College in June. In return, the company obtained an academic credential that may generate a taxpayer-funded bonanza worth as much as $1 billion.

ITT Educational, the U.S.’s third-biggest higher education company with a market value of $3.8 billion, may increase it by 26 percent, or $1 billion, within five years because of the purchase of 1,200-student Daniel Webster in Nashua, New Hampshire, according to Michael Clifford, an investor in Del Mar, California, who has participated in the acquisitions of four nonprofit colleges. At least 75 percent of new revenue would come from access to the more than $100 billion a year in financial aid the U.S. hands out to college students, he said.

Key to tapping that money is Webster’s regional accreditation, which is the same gold standard of academic quality enjoyed by Harvard University and helps students transfer course credits from one college to another. Daniel Webster’s accreditation was its “most attractive” feature to ITT, said Michael Goldstein, an attorney at Dow Lohnes, a Washington law firm that has long represented the company.

“Companies are buying accreditation,” said Kevin Kinser, an associate professor at the State University of New York at Albany, who studies for-profit higher education. “You can get accreditation a lot of ways, but all of the others take time. They don’t have time. They want to boost enrollment 100 percent in two years.”

Let’s look more closely at what you’re getting as a student here:

The cost of attending an ITT Technical Institute, including tuition, fees and off-campus room and board, was $26,775 in 2008-09, according to the National Center for Education Statistics. Of students who entered ITT’s two-year schools in 2004, 29 percent graduated. ITT derived 70 percent of its 2009 revenue from federal financial aid, according to a company filing.

Wow. Where do I sign up? You get to pay Harvard rates for flunking out of a little-known academic institution. Plus, our taxes are paying for seventy percent of the school’s revenue!

Is our government watching out for us here?

The scrutiny these new for-profits get

“doesn’t remotely satisfy the sloppiest of due-diligence requirements,” said [Barmak] Nassirian of the American Association of Collegiate Registrars & Admissions Officers. “There is no methodical review of who has bought the college. If the Cosa Nostra applied, you would think you’d take a look.”

But the Department of Education is on it, man!

The U.S. Department of Education, which doled out $129 billion in federal financial aid to students at accredited postsecondary schools in the year ended Sept. 30, is examining whether these kinds of acquisitions circumvent a federal law that new for-profit colleges can’t qualify for assistance for two years, Deputy Undersecretary of Education Robert Shireman said in a telephone interview.

Under federal regulations taking effect July 1, accrediting bodies may also have to notify the secretary of education if enrollment at a college with online courses increases more than 50 percent in one year.

“It’s an area that we are watching closely,” Shireman said. “It certainly has been a challenge both for accreditors and the Department of Education to keep up with the new creative arrangements that have been developing.”

Kind of reminds you of the SEC when it was run by Bernie Madoff, doesn’t it?

LOL. For-profit Ponce med school isn’t at all into full disclosure. Its CEO boasts of his Cambridge U. MBA, but what he got was one of those flimsy dippy give us all your money Executive MBAs where you show up once a month for a couple of years and then get to put Cambridge on your resume.

Guy says Ponce is all about social justice – helping non-traditional students get into medicine – but hello it’s for profit and charges big bucks…

At least Ponce has a sense of humor, what with choosing a woman convicted of Medicare fraud to teach its students medical ethics. She’s on probation at the moment, and has been barred forever from practicing in Illinois.

There’s a popular children’s book called Everyone Poops; UD has one in mind called Everyone Steals. Seriously, do you know anyone (yourself included) who hasn’t stolen? If I didn’t already know that almost everyone steals, sometimes at a high level, the keeping of this blog over many years has certainly drummed it into me.

And my focus hasn’t even been billionaires (“Whenever people say, “Oh he earned his money himself,” I always say the same thing: “No one earns a billion dollars. People earn $10 an hour; people steal a billion dollars.”), but rather universities and university people. Universities, where you might think rates of simple theft – much less systematic looting – might be less impressive than in corporate, for-profit, settings.

And I mean, for all I know they are. But I also know that alongside academic institutions historically laced with larceny (Yeshiva University; the University of Louisville; several others), there are zillions of institutions — especially those blessed with this nation’s biggest sports programs — thick with thieves. To really see the depth of embezzlement, though, look beyond the wowza money corruption of big-time school sports and consider the sweet li’l Varsity Blues scandal, full of people like the crisply outfitted tennis coach at Georgetown University, who in his pre-carceral days taught the Obama girls how to play. Relentlessly, over many years, with the help of various co-conspirators, he shook down parents desperate to get their dim spawn into Georgetown. Gordon Ernst made millions in this way.

Or like the soccer coach at UCLA who, with a years-long, mob-like persistence identical to the Georgetown tennis coach, charged rich desperadoes $100,000 a pop to sleaze their kids in. He explained to the judge that, you know, he bought a house he couldn’t afford.

Mark Baum’s discovery of ratings agency fraud – a small but important part of the comprehensive fraud that was America’s mortgage business fourteen years ago – is one of many great scenes from the film The Big Short. But the dirty for-profit ed business (this blog has spent years covering it – click on the categories at the bottom of this post) goes ratings fraud one step further: It issues glowing accreditations/ratings for entities that don’t even exist.

Group that approved South Dakota

College without students rebuked,

May lose access to federal money

goes the headline; and it’s like that old saying: A School Without Students is Like a Day Without Federal Money… Except that with the love and support of the Trump presidency, this agency is still in business.

I mean, the Biden Ed Dept seems to have voted to shut it down, but there are appeals aplenty available to the accreditor, and meanwhile its bright golden approval insignia continues to emblazon the web pages of sixty other fly by nights.

In its defense, this outfit protested that just because Reagan National University lacked not only students but instructional materials, the place (a closed office in a strip mall) was highly approvable because any school can lack the administrative staff to show a visitor a textbook or a student.

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Interestingly, there are also some non-profit universities whose student populations are dwindling to nothing. Chicago State University, a perennial object of fascination on this blog, “has lost nearly 60 percent of its enrollment since 2010, plummeting from 7,354 students to 2,964.” Assuming its basic approach of staggering financial scandal, constant leadership turnover, and a quality of instruction you’d expect from a school where no one in her right mind would teach, remains stable, CSU can expect to be pretty much where Reagan National is in a few years.

… is a for-profit college (and if you read University Diaries, you know about those skeezy joints) whose founder – a Tennessee state senator – seems to have stolen gobs of federal grant money in order to pay for every stage of the beautiful cycle of life (wedding, honeymoon, divorce). In a heavily religious press event (no questions, please!), Robinson and her spokeswoman describe a martyr for whom we are asked to pray and pray and pray. Pray away the Hey did you really use $600,000 of taxpayer money to buy a Louis Vuitton handbag, a Jeep Renegade, a Jamaican vacation, and an end to your personal debt? Pray it away! Give God the burden!

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* More on the Center for the Absorption of Federal Funds here.

UD‘s been telling you and telling you that most online classes are trash, trash, trash. Easy to cheat in SO many ways. You can of course pay someone to take them for you. If you do take them, you pretty much learn nothing. It’s a big ol’ ripoff, but no one cares. Students obviously love them; universities make bundles off of them at very small cost. It’s win/win/win/win/win! — if you’re a cynical nihilist, which I guess a lot of people are.

The shabby absurdity of online reveals itself, most recently and most amusingly, in the latest chapter of the endless college admissions scam, which is rapidly filling America’s luxury lockups with our wealthiest amoralists. Karen Littlefair (there’s something wonderfully eighteenth-century-drama about that last name) bought her Georgetown University son out of the bother of actually taking courses by handing Rick Singer thousands of dollars to hire someone to pretend to be the little shit.

Littlefair paid Singer’s college counseling business, known as “The Key,” to have an employee complete online classes in her son’s name, the criminal information states. She ultimately paid Singer’s company about $9,000 in exchange for an employee taking four classes, and Littlefair’s son graduated from Georgetown in May 2018, prosecutors said.

It’s seems so … little fair that sonny boy could be said to have… graduated from Georgetown, a university far too busy dealing with its naughty basketball team, a lawsuit from another Varsity Blues bogus degree holder (Georgetown revoked the degree, but the dude sees no reason why he shouldn’t hit them up with a zillion dollar lawsuit to get it back; and UD is certain wee fair Littlefair Jr. will feel the same way) , fallout from their AMAZING tennis coach, Gordie Ernst, and – UD predicts – their royal-heads-of-Europe scandal) to worry about the legitimacy of some scamster pipsqueak’s degree… But it gets better. I promised some laughs.

One of the classes required video conferences with the professor. Littlefair wrote that her son would be out of the country and that Singer’s employee “should have a stand in for [my son] that is highly briefed.” The Key associate confirmed she would “take care of the meeting” if the son was unavailable by using a “fellow male colleague” to stand in for Littlefair’s son, the documents state.

Littlefair also sent an email asking Singer to do “one more online course” in spring 2018 for credit at Georgetown, and the Key associate then secretly took an online class in her son’s name offered by Arizona State University. The credits were then sent to Georgetown and credited to Littlefair’s son on his academic transcript, the court documents say, helping him graduate.

In April 2018, Singer’s company sent her an invoice for $3,000. She responded that she thought she’d be given a “discount” because the “grade [Key associate 1 earned] was a C and the experience was a nightmare!” according to the criminal information.

Singer replied that he would not discount the invoice because the “process was a nightmare for all.”

Those fucking online courses! Their pathetic efforts to insure that highly paid fakes aren’t taking them for scuzzy people otherwise engaged overseas make them a nightmare for all. And… mes petites! … You gotta admit that when it comes to Thrifty Little Mama Littlefair… Well, allow me to quote Albee’s George: There isn’t an abomination award going that she hasn’t won.

For the next four months, Inmate Littlefair will follow in the footsteps of Martha Stewart and shed sweetness and light upon the meth heads in the next cell.

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UPDATE: “[Georgetown officials] are now implementing measures to prevent cheating and plagiarism in online courses…” Good luck with that, Jesuit fathers! Why do you think there’s a nationwide industry in online college scams like this one? Tell me how you’re going to prevent cheating and plagiarism? Do you realize that not only students taking online courses, but people hired to give them, cheat? It’s just as easy for some disembodied entity, hired by some school to present a series of screens to students, to fake her identity, ja? Pocket the money – give ten percent of it to some high school grad drudge who’ll actually handle 200 online humanoids for you – and head for Cozumel.

I’m telling you, the whole thing’s trashy. Ask Arizona State University, which specializes in the con and happily passed along one of Littlefair’s bogus courses to Georgetown.

But although it’s a national scandal, it’s far too useful and lucrative for schools and students to give up the racket. Entire football and basketball rosters would be gutted if it weren’t for bogus online courses! Instead, universities will implement all sorts of expensive, real free-thought-enhancing security measures: Mandatory fingerprinting; pinchy devices on the fingers to check your pulse or sweat glands or something … And please stick your head in this facial recognition machine, after which Mr Ness from the FBI wants to ask you a few questions. Breathalyzer, sperm sample, and inner-cheek swab go here.

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UPDATE on the Big Daddies of online education, which most universities emulate in their own online programs: the for-profit companies:

“People just laugh in my face.”

Eastern Michigan. A national sports joke. It has spent itself into the gutter on games. It thinks for-profit online courses are going to save its sports-dead ass. What absolute total idiots.

Trump University or another for-profit school?

Trump University had one major difference with all these other for-profit colleges. Because it was unlicensed and unaccredited, it was not eligible for federal student grants and loans. The for-profit college industry has been taking as much as $32 billion a year in this funding. So while the cost of Trump University’s abuses came down only on its students, the other colleges have spread this misery among students, many of them lower-income than the typical Trump enrollee, but also on taxpayers.

Once you start paying attention to what schools – high schools and universities – will do to win basketball and football games, you’re in for a treat. School officials will do anything, it turns out, to attract and retain tacklers and dribblers.

There’s the almost thirty year old recently arrived Sudanese gentleman who has been winning games like crazy for Catholic Central High School in Ontario. Everyone – the coach, the recruiters – is shocked right down to the ground that a 6’10” adult male isn’t fifteen, but twice that.

“At 6’10 he was pretty dominant, he was dunking on everybody, it was pretty hard,” said Fazar Yousif, 15, who attends Kennedy Collegiate high school.

Now, for us, for the States, he decided to tell the truth:

When he entered [Canada] his passport and visa application listed his birth date as November 1998. But when he applied for a U.S visitor visa in April, his fingerprints matched an individual who’d already applied for a [US] visa with a birth date in November 1986…

Closer to home, there’s Bellevue High School in Washington, where they just go ahead and break every goddamn rule in the book, baby!

The report focused on excessive payments to coaches from the Wolverines booster club that were never approved by the school board. Investigators say tax records show during a 10-year period, the club paid coaches more than $500,000, with the majority of that money going to the head coach.

Investigators also found players used false addresses, the district and coaches failed to monitor player addresses, and that the head coach directed and encouraged players to attend The Academic Institute — a small private for-profit school in Bellevue.

The report says coaches coordinated tuition payments for some athletes paid by the booster club or its members so they could attend the private school, where investigators claim some players were able to pass classes they failed in public schools.

I think it’s safe to say that for these lads the transition to university football will be a smooth – even unnoticeable – one. Steady as she goes!

… to remain on the board of for-profit Devry. And a reminder of one of the many benefits of big-money university sports.

DeVry wants [Ann Weaver] Hart for the U of Arizona name and prestige, not for Hart herself. She brings nothing to the table, certainly nothing worth $170,000 a year. The University of Arizona name and its international distinction belong to all of Arizona, not to her for her private benefit or for the benefit of a private entity. (Alas, any moral force the Board of Regents may have had is long gone since coaches regularly appear on local TV as hucksters for businesses wearing their Arizona logos and even with the student Wildcat mascot in the background of commercials).