Yet if Pantzke got away, there were plenty of other servicemen where he came from. A story by Bloomberg News caught a recruiter from Ashford University visiting a wounded warrior barracks at Camp Lejeune in North Carolina. It seems injured veterans — notably those with head injuries — are particularly receptive to the for-profit sales pitch. The story's opening line said it all: "U.S. Marine Corporal James Long knows he's enrolled at Ashford University. He just can't remember what course he's taking."

Federal data shows that for-profits are increasingly targeting veterans. In 2009, they took in almost as much military money as public colleges — though they were educating just one-third of veteran students. Last year, eight of the top 10 educational institutions collecting G.I. Bill benefits were for-profit, taking in a stunning $626 million.

"I think sometimes the emphasis is on signing up the student as opposed to whether or not the student is really ready to be successful at that school," says Holly Petraeus, an official with the Consumer Financial Protection Bureau and wife of General David Petraeus. "The top 10 recipients of G.I. Bill aid, eight are for-profit schools, and they are very heavily engaged in marketing to the military — quite successfully, frankly."

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."


The University of Phoenix never will be confused with Yale. According to a 2010 report, 90 percent of its students fail to graduate within six years.

Still, by pure monetary standards, former CEO Todd S. Nelson was a success. During his tenure, he tripled revenue for the school's parent company, the Apollo Group. Enrollment surged to more than 300,000.

Unfortunately, he accomplished this the old-fashioned way — by cheating. Since 1992, it's been illegal to pay recruiters based on how many students they bring through the door. Phoenix did it anyway until two recruiters blew the whistle, initiating a suit that would ultimately cost the school $88.3 million in settlements and fines.

Under pressure, Nelson was forced out in 2006, walking away with a generous $18 million in severance. Founder John Sperling put a polite spin on the exit, saying only that Nelson was "preoccupied" with stock price to the detriment of the school's long-term health.

Yet if Nelson's profit motives were too lusty for Phoenix, they were a match made in corporate heaven for Goldman Sachs, the Wall Street bank that had partnered with two private-equity firms to buy EDMC. Nelson was hired as the company's new CEO. Former Maine Governor John McKernan Jr. — husband of U.S. Senator Olympia Snowe — was named chairman of the board. Over the next five years, the company's revenue would nearly triple to $2.8 billion.

Last year, Nelson took home $13.1 million in salary and stock. By the standards of for-profit executive pay, he was working on the cheap.

Gregory Cappelli, his replacement at the University of Phoenix, received $25 million last year. CEO Robert Silberman of Strayer Education raked in an astounding $41.9 million in 2009. Yet even this pales next to Jonathan Grayer, the former CEO of Kaplan University, who walked away with a $76 million severance package — courtesy of Kaplan's parent company, the Washington Post.

By comparison, Harvard President Drew Faust collected a meager $875,331 in 2010.

Nelson's bad-boy practices predictably have caught up with him. Last year, the Justice Department and attorneys general from five states charged EDMC with fraud for paying recruiters based on the money they generated. Six more states have joined the suit.

EDMC claims its sales pay is not just based on bodies enrolled, but on such things as business ethics, professionalism, and job knowledge. Kathleen Bittel would beg to differ. She was an EDMC recruiter when Nelson arrived, and will readily attest to the change in atmosphere.

Over the next three years, the sales staff increased from 950 people to more than 2,600. "Once Goldman Sachs took over and they brought in [Nelson], everything changed," she says. "Everything became much more cutthroat. It was just more oppressive and very high pressure . . . They were watching you constantly. We used to joke it was like being on the cotton plantation, and they were the overlords coming by on their horses. The only thing they were missing were the whips — but they had the whips verbally."

Like Lawrence, Bittel had studied psychology and proved adept at forging bonds. She'd gone back to school in her 40s to support her family of four after her husband got cancer. She understood the difficulties of raising kids, working full-time, and going to college. At first, she admits to "drinking the Kool-Aid," believing Argosy's online program could help people like her.

But after six months on the job, she was allowed to take Argosy courses for free. That's when she discovered she'd aided a bait-and-switch. Many of the features she heralded to students barely were functional or didn't exist. The Worldwide Professionals Network, in which students could find graduate mentors in their field, was nothing more than a bulletin board. Promised MP3 downloads of classes also didn't exist.

Worse, the classes themselves had less content than a political soundbite. "When I saw what they were passing off as college, I was appalled and mortified," Bittel says. "I'm a fabulous salesman if I believe in my product. But I was blown out of the water. I couldn't sell it anymore."

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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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