An Expensive Education

A company called Education Management Corporation just got sued by the Justice Department. EDMC operates more than a hundred schools for young designers, photographers, and other creative types. What dastardly misdeeds has EDMC committed? According to Photo District News (PDN),

The government says EDMC violated federal rules against paying recruiters based on the number of students enrolled. Those rules are designed to prevent colleges from recruiting unqualified students just to collect student aid money.

I can appreciate the surface appeal of such rules, although their existence points to a bit of a disconnect between how the government works versus how the real world works. In the real world — in this case, the business world — sales people are given short-term targets and long-term goals by their managers. Cold, hard numbers. The sales folks do well for themselves if they meet those targets and goals, and not so well if they don’t. That kind of quantifiability and personal accountability is largely unknown — and, I’d wager, terribly unpopular — in the government sphere, but it’s pretty much the backbone of corporate America.

 According to former recruiters and photography students contacted by PDN, many Art Institute graduates [Art Institute is one of the EDMC "brands"] leave with tens of thousands of dollars in student loan debt, and insufficient professional qualifications or job prospects to pay the money back.

Um…OK… And?

Let’s say the EDMC’s colleges were gung-ho, even aggressive, about pushing their “product.” They dared paint an overall rosy picture of their degrees’ economic usefulness. Shocking! Unconscionable! We ought to sue the bastards!

Except that pushing low- to medium-value degrees is something that law schoolsincluding some of the best in the country — do habitually, every day.  All of higher education does, with no exceptions I’m aware of. When’s the last time you heard college deans advise students to ditch the pursuit of a particular degree, because employers aren’t really looking for more philosophy majors with a specialization in Hegelian hermeneutics? There are pretty stone buildings to keep up, and tenured-faculty salaries to pay. The show must go on.

If you believe that the vast majority of young people with a degree in English or the humanities find a well-paying, satisfying job in their chosen field, I have a lightly used Nikon D1 I’d be willing to sell you for only $10,000 — totally a collector’s item!

When you read the whole PDN piece, it seems clear that the photography students and their parents acted with startling gullibility, and did very little to get informed. Does anyone hold their feet to the fire at all? Maybe we should. Most of them, it seems, didn’t do the loan repayment math beforehand. They didn’t care enough to distinguish between the cost of earning a credit versus the cost of completing a class, and also didn’t bother to question how a medium-sized city can absorb 600 new photographers over just a few years’ time. And so on.

Oh, and in the culpability department, how about we spare a thought for a government that blithely gives away billions in student aid without applying much in the way of checks, balances, or common sense? That’s despite the fact that Goldman freaking Sachs owns a huge chunk of the schools. Hey, if these students’ futures are paved with gold, guaranteed, why not let private industry make the investment in their careers? And if private industry declines to do just that, shouldn’t that tell you something if you’re one of the fine Washington folks disbursing veritable mountains of taxpayer money? You offer a school a lot of cash (OK, you offer it to the students but it clearly ends up in the school’s coffers), you attach few or no strings, impose no oversight to speak of, and then you’re all butthurt after the schools say “thank you so very much” and take your billions?

I’m thinking maybe the Department of Education is run by the same people who ran Freddie and Fannie — almost into the ground.

Admittedly, I don’t know all the facts of the EDMC case beyond what I learned from the lengthy PDN article. Maybe there’s more to this than meets the eye. But if what the piece describes is the extent of the alleged wrongdoing, and if I were on that jury, I’d vote to acquit in about 2.3 seconds.

About Rogier:
Rogier is a Dutch-born, New-England-dwelling multi-media maven (OK, a writer and photographer) whose dead-tree publishing credits include the New York Times, Wired, Rolling Stone, Playboy, and Reason.
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13 Comments

  1. Benno Groeneveld
    Posted September 7, 2011 at 8:29 pm | Permalink

    People who send you an email from Burkina Faso that they want to share $10 million with you also prey on gullible people. And they ARE prosecuted (when the Department of Justice can get their hands on them). As are organizers of pyramid games, ponzi schemes and other nogoodniks.

    Isn’t that one of the roles the government SHOULD play? Protect and serve its citizens as it were?

    • Posted September 8, 2011 at 3:54 am | Permalink

      We can only have a discussion if you’d be kind enough to address one or (preferably) more of the three central arguments I make in the post. Anything else is either broad ideological grandstanding or strawman palaver, I’m afraid.

  2. Posted September 8, 2011 at 6:52 am | Permalink

    The best and most worthy education is learning that education is in fact a business first. Creative careers specifically should be placed on the map for scam. I’m a self taught artist and photographer and that degree in court reporting got me 3 months of anxiety in the real world of law and courtroom drama before I quit the field and started my own self education which included the bookstore, library, volunteer and on the job training to learn because I didn’t want a loan. From my time in Ft. Lauderdale and Savannah, both of which have The Art Institute, local businesses didn’t hire those graduates because they weren’t qualified and only used them for apprentice work because that’s all they’re worth. An old school veteran photographer I worked for after high school told me I’d be wasting my time attending The Art Institute to become a photographer. “Volunteer as an assistant and you’ll learn more in a year than what these schools teach you in 4″, he said. I followed his advice and never had a student loan to pay and look, damn good artist and photographer am I. ;)

  3. Posted September 8, 2011 at 10:36 pm | Permalink

    What about the military recruiters, who are paid for successful sales and who woo people with stories about how lucrative their careers will be once they’re discharged?

    • mike
      Posted September 13, 2011 at 12:13 pm | Permalink

      As far as I know Military Recruiters are not given bonuses. They’re just paid based on E5/E6/E7 rank.

  4. bobl
    Posted September 11, 2011 at 6:10 pm | Permalink

    Somewhat pertinent, from Billy Beck’s site:
    “If cigarette packs are required to have pictures of diseased lungs, college brochures should be required to have pictures of graduates working at Starbucks.”

    (attributed to Daniel Lin, posted to Facebook by Jim Davidson)

  5. Posted September 13, 2011 at 12:27 pm | Permalink

    There is a LOT more to this than what is in the PDN article. When I started at AI Pittsburgh in 1998 there was clearly a focus on profit. In the summer of 2000 the school’s president stood on the steps of the student entrance and addressed some negative press and possible new government regulations. He said that they would find their way around them. He didn’t say that they understand that laws are written to help protect students from predatory acts and that they would work within the bounds of said new laws, he said that they would work tirelessly to violate the spirit of the law in order to stay in business.

    When I returned in 2003 after Goldman Sachs took over the school had changed, gotten far more aggressive, and became even less focused on quality as they were transitioning to quantity via their new online program.

    Was a gun put to my head to make me go to the Art Institute? No but that doesn’t mean that I was not lied to. It doesn’t mean that they don’t use questionable practices. It doesn’t mean they don’t admit students who in some cases honestly cannot read or write. I have to admit my own stupidity and gullibility and I have. I also am slowly paying off the mound of debt that I have all by myself.

    What you must understand is that these are feral profiteers, they are more ruthless and greed driven than Henry Morgan or any pirate that ever stalked the Barbary coast could dream of being. These monsters eat their young and would take the last crumb of bread from the mouth of their starving grandmother just to watch her suffer. They are savage, sadistic, degenerate, and sociopathic.

    Don’t let the institutionalized greed and desire or tenured professors to keep their no longer needed jobs in outdated or over-stocked fields be confused with their kind of barbarism and unquenchable lust for money and power.

    They are using their power and influence to fill their pockets at the expense of not just these students but of tax payers and the economy at large. They’ve paid for legislation that allows them to commit their crimes legally. They use well tested psychological tricks to confuse and manipulate potential students, they hound people day after day with slick marketing tools and outright lies. When they are caught they fire a handful of expendable recruiters that they use as scapegoats.

    The students they are strapping with this debt are unable to pay their rent so they move in with their parents, they are unable to consume and add to the economy. Rather than them spending money on rent, buying houses, buying cars, having children, buying more durable goods, and saving for retirement the money they would otherwise spread around is going into the pockets of already ultra-wealthy investors and executives who are not spending that money because they are not being forced to through taxation.

    You mentioned that law schools and other colleges do the same – true. The lenders are also culpable. They’ve all conspired to offer high priced worthless degrees and used their power and influence to remove consumer protection. The difference with these schools use rabid recruiting practices and target low income or otherwise vulnerable students – people that already have no public voice, people that their cohorts on Fox News continuously frames as lazy, stupid, and conniving. They’ve set the playing field and written the rules then they tease the other team for not being able to score a single run.

  6. Kathleen Bittel
    Posted September 13, 2011 at 2:40 pm | Permalink

    Rogier – you are absolutely correct…you don’t know all the facts pertaining to the EDMC case. You argue that the government shouldn’t hold them accountable, then go on to blame the government for NOT holding them accountable!

    EDMC/Argosy University purposefully over-enrolls in their clinical psychology doctoral program (PsyD) knowing full well that they cannot get all their enrollees through the program due to a severe shortage of internship sites for completion of degree requirements. In order to keep their accreditation they must have at least 85% placement so they bogusly fail students in order to reduce the number of applicants for internships. It’s quite a clever, and profitable scheme for the school but it comes at a very dear price to the students who are victimized. Before they are flushed out, most students have paid in the neighborhood of $100,000 in tuition. And they have no degree to show for it.

    Additionally, EDMC targets individuals who are isolated from the realities of college life. Preying on the underprivileged and uninformed, candidates are fast-tracked into the system, starting classes within mere days of their first conversation. Some are started without proof of graduation from high school; many are thrown into “classes” before they can think twice about it. Salespeople do this to students, not academic advisors. Salespeople are precluded by law from preying on students.

    There are laws in place now that precisely prohibit salespeople from recruiting students rather than qualified academic counselors. One expects to encounter a sales person when one is purchasing a car, or a house, or a large appliance…most do not expect to be dealing with high pressure salesmen when considering their education paths. The laws currently on the books are intended to protect consumer students from being beguiled into any program they choose to study. This law was broken, many times.

    I’m really getting tired of the “blame the victim” strategy. You have no understanding of what it is like to be in the clutches of this devious corporation.

    Admissions forms are completed hurriedly, lest the prey change their mind. They are done online, and signed electronically without first being offered a copy. They are emailed a copy after they have signed. Then they are rushed into the financial aid department where they are again rushed to complete and return all documents. Loan documents are emailed to students with not much more advice than “sign here”. The source (Federal or Private, and if Private, who?), the interest rates, and the total expenditure to date are glossed over and not given unless asked for. All done with a sense of urgency to “get you into class right away!” EDMC’s salespeople are taught how to build a sense of urgency. Have you ever read one of those documents? Every word? Not exactly light reading is it? Many of the students hoodwinked into their classes have trouble with basic English…how well do you think they could possibly understand the legalese in an admissions or loan document?

    Obviously they are not fully understanding the documents because there is a clause in the enrollment agreement that nullifies all rights to sue EDMC for any reason. It used to be that these arbitration clauses weren’t worth the ink to print them…but “coincidentally” there have been recent rulings all the way to the Supreme Court that uphold them as law. Sweet deal for EDMC, don’t you think?

    There are many valid reasons why the Department of Justice has decided to charge EDMC with 11 Billion dollars in fraud. Just because other schools produce less than favorable degrees does not mean that EDMC should not be held responsible for their breaking of the law. Just because it is popular does not make it right.

  7. Navin Johnson
    Posted September 19, 2011 at 5:14 pm | Permalink

    I don’t care a whit for the graduates of these crap for-profit schools who graduate or not with tens of thousands in debt. It enrages me that the taxpayers are out more tens of thousands of dollars in grants and low-odds-of-repay loans for a useless degree. The Dept of Ed has woken up to this, finally.

  8. Posted March 10, 2012 at 3:38 am | Permalink

    I do agree that most schools probably do push the value of their degrees. However, some degree of regulation can be good in order to ensure that students don’t get taken advantage of. All businesses have some type of regulation. Also, there is a difference between medium-value and hardly any value.

  9. Posted May 4, 2012 at 3:35 am | Permalink

    I have attended both Art Institute of Houston and its North sister campus. I was lored in with false promises and false statistcs. I was told AiH has a graduate success rate of 97%. After researching I found it less than 30%. I was told I would immediately find job because AiH partnerships with 200 companies, in which they place AiH graduates. This is a complete lie. I am $70,000 in debt and this degree has yet to help me with emplyoment. I have been graduated for over a year now. I have also BEEN BANNED from all Ai campuses and events for speaking out this topic. PLEASE if you live in houston and would like to start an OCCUPY AI MOVEMENT and start a lawsuit please contact me at : [email protected]. In 1999 over 25 students suied AiH for this exact reason and won their case. Ai settled reimbursing them their education cost. TOGETHER we can stop this company from ruining the live of students trying to come up in the world. Again my email is [email protected]

  10. Posted May 4, 2012 at 5:04 pm | Permalink

    http://www.facebook.com/#!/profile.php?id=100003805722390 – a new facebook page to rally students against Ai & EDMC in Houston!!

  11. Posted May 4, 2012 at 5:29 pm | Permalink

    facebook.com/sueaiandedmc – a new facebook page to rally students against Ai & EDMC in Houston!!

One Trackback

  • By Qui tam suits against for-profit colleges on September 16, 2011 at 11:20 am

    [...] coordinating with the private False Claims Act bar. Meanwhile, Rogier at Nobody’s Business spots some ironies in the Justice Department’s suit against Education Management Corp.: “pushing low- to [...]