The Everest Institute is closing its Cross Lanes campus and phasing out 125 students — after a federal crackdown accused the Institute’s parent, Corinthian Colleges Inc., of dubious practices. Federal loan money to the chain was suspended. To settle U.S. claims, Corinthian agreed to sell 85 campuses and close 12 others.
This episode spotlights the for-profit college industry, which has been accused repeatedly of enticing marginal students to obtain large loans, then pocketing money from the loans and leaving the students to flounder with little education and large debts.
A U.S. Senate investigation issued these disturbing findings:
n For-profit schools employ thousands of fast-talking recruiters “in a boiler-room atmosphere” to persuade low-income students to enroll and obtain loans. Most schools spend much more on recruiting than on teaching (which is done mostly by part-time instructors). Recruiter promises of future good-paying jobs usually are exaggerated.
n Costs at for-profit schools are sky-high, around four times more than at public community colleges.
n Almost two-thirds of for-profit students fail to graduate, thus they’re stuck with painful loans they can’t repay. Their default rate is much worse than for students at public schools.
n CEOs at for-profit college chains averaged $7.3 million salaries in 2009, while most American college and university presidents got $1 million.
The Los Angeles Times quoted a former Corinthian marketer: “It just made you feel dirty after a while. ... They take money from the taxpayers. That’s their whole business model.” It quoted a former U.S. education official as saying for-profit schools focus on “finding warm bodies that could tap into federal funds.”
An attorney general lawsuit accused Corinthian of placing students in “fake businesses” to create an appearance of successful career attainment. Corinthian paid $6.5 million to settle the case.
Here’s the bottom line, we think: Advanced education is crucial in today’s snowballing Information Age — but students should obtain it from low-cost community colleges or other more reliable schools.