Education Only a Con Man (or Congressman) Could Love

Bobby Ruffin Jr. was only 14 when a recruiter from Ashford University called. The boy from Birmingham, Michigan, thought he'd clicked on a link promising help finding money for college. It was actually just a lead generator for the for-profit online school's sales staff.

At the time, Bobby was an A student. His parents had pulled him from the troubled Detroit schools, hoping that home-schooling would deliver something better for their son. He told the recruiter that he wanted to be a doctor. She assured him that Ashford could be a stepping stone to that dream.

Never mind that he was in eighth grade.

According to Suzannne Lawrence, who worked as a recruiter at Argosy University's online division, the pressure to recruit students prompted all sorts of illicit actions, including falsifying documents.
Courtesy of Suzanne Lawrence
According to Suzannne Lawrence, who worked as a recruiter at Argosy University's online division, the pressure to recruit students prompted all sorts of illicit actions, including falsifying documents.
Barmak Nassirian, former official with the American Association of Collegiate Registrars and Admissions Officers: "Over-advertise, oversell, overcharge, and under-deliver. They found a system where the pitch goes to one guy and the bill to someone else."
Courtesy of Barmak Nassirian
Barmak Nassirian, former official with the American Association of Collegiate Registrars and Admissions Officers: "Over-advertise, oversell, overcharge, and under-deliver. They found a system where the pitch goes to one guy and the bill to someone else."

"She said, 'You'll be working toward a degree as a medical doctor, so when you do graduate high school, you're almost there,'" Bobby says today. "I'm like, 'This is great, I'm going to talk to my mom.' And she's like, 'No, I wouldn't tell your parents, because that would take away from the shock when it happens. If I were you, I'd complete the program and, when graduation comes around, let them know. Mom and Dad will be super-excited.'"

Admission to Ashford requires a high school diploma or the equivalent. So when it came time to fill out the financial-aid forms, the recruiter told Bobby to claim that he'd already graduated. He objected, but she insisted "the loan-processing company will go back and correct everything." Still, he left the graduation date blank. Someone filled it in, because Ashford soon was receiving federal student loan money on his behalf.

Of course, it's illegal for kids Bobby's age to receive financial aid. But for-profit colleges always haven't been scrupulous when it comes to raiding the federal treasury. Between student aid and G.I. Bill programs, most such schools receive 90 percent of their revenue from the American taxpayer. And the recruiters — often little more than salespeople paid largely by how many students they enroll — are driven mercilessly to keep those cash registers ringing.

Students don't get much in return. Though for-profit schools' tuition rates can run as high as America's most esteemed universities, the education's generally substandard. In the end, most kids wind up walking away with a questionable degree bought at top dollar — and a mountain of debt to accompany it.

Bobby took online classes for almost a year. But when he wouldn't endorse Ashford's lying on his financial-aid forms, administrators miraculously discovered that he was under 18. Since this left him ineligible for federal aid, Ashford was forced to return his loan money to the feds.

The school wouldn't be eating those costs. Bobby would. Ashford, which declined interview requests for this story, sent him a bill for $13,000.

Last fall, Bobby finally was able to enroll at a real university, Eastern Michigan, where he was named a National Collegiate Scholar. Yet he still owes Ashford. Because that's a private debt, he isn't eligible for deferments while he's in school, and any future wages could be garnished.

Unfortunately, this isn't a scam that targets only the young and naive. The for-profit industry is so rife with deceit that it's been billed the second coming of the mortgage-loan debacle. And the same people are behind it. Three-quarters of all for-profit students are enrolled at schools owned by Wall Street banks and private-equity firms

All told, they soak $30 billion a year from American taxpayers. But even in the age of slash-and-burn government, Congress has shown no interest in stopping it.

"The problem with the subprime [housing] scam was that it got so big, it almost brought down the entire world's economy," says Barmak Nassirian, a former official with the American Association of Collegiate Registrars and Admissions Officers. "This one's wisely limited to $30 billion a year, which is highly sustainable. In the context of a multi-trillion-dollar federal budget, that's not even a rounding error."


You may not know it, but you're sitting on $117,000. That's basically how much every American potentially is worth in government student aid. Want to attend grad school? Throw in another $114,000.

And as for-profit colleges have discovered, an 18-year-old with 100 grand makes for a very easy mark.

To get in on the gravy train, a school needs only accreditation from some supposedly neutral body. But Congress neglected to say who should do that accrediting, resulting in a system loaded with charlatans. Some agencies have built sturdy reputations over decades. Others are little more than rubber-stamp factories, more geared toward gobbling up members' dues than safeguarding students.

"It never occurred to [Congress] that, as billions of dollars get attached to the recognition process, the process [gets] corrupted," says Nassirian.

Yet even bargain-bin accreditation takes several years. So the titans of Wall Street found a way around this by purchasing small, failing schools to snatch up pre-owned accreditation.

Take Bridgepoint Education. Its majority stockholder is Warburg Pincus, a New York private-equity firm. When it needed accreditation for Ashford University, it bought 85-year-old Franciscan University of the Prairies, a struggling, 300-student religious college in Clinton, Iowa. Overnight, it was transformed into online powerhouse Ashford.

Bridgepoint, which also owns the University of the Rockies, grew from just 12,623 students in 2007 to 77,892 in 2010. Its profits also exploded, going from $4 million to more than $216 million annually. About 85 percent of its revenue comes directly from the U.S. Treasury.

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20 comments
fairymagic13
fairymagic13

http://doonesbury.slate.com/strip

 

YOU HAVE GOT TO CHECK THIS STRIP OUT - RIGHT ON POINT - Chris Parker - please follow up with this - Phoenix University is doing the same damn thing here.  Check out the Religious Colleges too - let's stop this bullshit!!!!

 

ChrisLong
ChrisLong

This week's story in the New Times, "Education Only a Con Man Could Love" by Chris Parker appears to have been lifted from the PBS Frontline program "Education, Inc." Just a few names are and schools are changed here and there, but I actually thought I was reading a ripoff of Frontline, probably was.

 

Makes all the same points in the same order, even has an identical story of a PhD candidate from a for-profit school with only the name changed. I guess Chris Parker was feeling a bit lazy and should have credited PBS and Frontline, because the two stories have damning parallels, points and overall direction.

 

Hey George Harrison was sued for less over My Sweet Lord -- and lost ! For shame NT !!!

Chrislongski
Chrislongski

Frontline even had an identical scenario for the PhD in psych, but the names are different

Chrislongski
Chrislongski

The whole thrust of the story if lifted from the Frontline special, "Education, Inc." Parker changed the vignettes and names, that's about it.  This was Frontline's idea, not Parker's.... Maybe he thought no one would notice...

bob_lablaw96
bob_lablaw96

Is this the same school that the Shurrff claims to have attended?  He has paid for his school loans with taxpayer dollars, and we still have a POS for a Shurf!

marcy
marcy

Someone under 18 years old cannot sign a contract and the kid's debt isn't enforceable.

 

Other than that, yes there are a lot of people who prey on the naive.  

ConcernedCitizenAZ
ConcernedCitizenAZ topcommenter

Where's the oversight? Where's the accountability? Ooops forgot -- the private for-profit corporations don't have to answer to the people / taxpayers. They are "private" and not government.

bill.shine
bill.shine

Somebody else built it, and you went in and stole all the money!

thaitea10
thaitea10

When touting the importance of higher education to kids, we must warn them about these types of schools...

PlausibleDenial
PlausibleDenial

SRP & WIU are running this same scam.  Pass or fail?  All U.S. Treasurery Money.  The paper tiger is serving up graduate degrees.  I do give them credit for at least holding some class room or group participation.  However, its mostly smoke & mirrors.  How many SRP people in upper management come out of the WIU programs?  The program is just selling false security.

fairymagic13
fairymagic13

The same people who crashed the Savings and Loan industry and the Housing Industry are at it again.  These people are crooks and should be locked up.  Why are our elected representatives protecting these charlatans!  It's disgusting - Republicans SUCK!!!!

ptcgaz
ptcgaz

 @marcy I was thinking the same thing. if he was in 8th grade wouldn't his parents or gaurdians have to do that?

ConcernedCitizenAZ
ConcernedCitizenAZ topcommenter

 @fairymagic13 All eat out of the same trough. Do you really expect any of them to stop their gravy train. They sure are rushing around to pass laws to protect themselves (immunity) while taking more rights away from the people.

 
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