For-Profit Schools Made Enrollment Mistakes, Trade Group Says
August 12 2010 - 3:16PM
Dow Jones News
The trade group representing career colleges is acknowledging
that member schools have made mistakes as they sought to grow their
student populations quickly and should increase transparency in the
face of harsh government scrutiny and the threat of new
regulations.
"My schools have stopped blaming other people for their
troubles," Harris Miller, head of the Career College Association,
said in an interview with Dow Jones Newswires. "This is a teachable
moment."
Miller, speaking in advance of a day-long seminar on the
regulatory environment and how institutions can garner more
political support, said there has been a noticeable shift in the
attitudes of member schools as they have been humbled by a barrage
of bad news in the past few days.
Last week, the U.S. Government Accountability Office issued a
report showing recruiters at all 30 institutions involved in an
undercover investigation misled students or even encouraged
fraudulent activity as they attempted to boost enrollment. The
schools are also facing proposed new rules from the U.S. Department
of Education that would penalize individual programs for graduating
students with high debt loads, and 30 institutions received data
requests last week from a Senate committee investigating their
business practices as they capture a growing share of federal
student aid dollars.
While a number of schools have issued statements saying they
would step up recruiter training and they have zero tolerance
policies for employees violating their codes of conduct, Miller
acknowledged that isn't enough: "The skepticism about what we're
doing to product consumers is extremely high."
Miller said his group, which represents more than 1,400 programs
in subjects including beauty, business, health care and culinary
arts for nearly two million students, is considering booting some
members for bad behavior. The organization announced last week it
would enhance its own code of conduct and launch a mystery shopper
program. The group was creating a checklist of sorts for
prospective students to look at with recruiters as a way of
ensuring they have discussed the risks and responsibilities
associated with enrolling in a school and taking out student loans,
he said.
The association's makeup, which includes schools ranging from
the French Culinary Institute to DeVry Inc.'s (DV) namesake DeVry
University and Apollo Group Inc.'s (APOL) sprawling University of
Phoenix, could change "quite a bit," he said.
Miller, who led a charge this spring and summer attacking short
sellers for stirring up trouble in the interest of profiting from
declining stock prices, said schools are beginning to take
ownership of some of the problems they now face.
For example, Washington Post Co.'s (WPO) Kaplan Higher Education
unit, which had two schools cited in the GAO report, suspended new
enrollment at the campuses involved and launched an investigation
into its other schools' recruiter practices. Miller said that was a
good start and he would like to see more schools "crow about"
instances when they dismiss employees for wrongdoing and share
examples of "platinum" compliance programs.
Publicly traded school operators must also put aside fears of a
short-term stock hit in order to institute programs that will
improve graduation and loan repayment rates. Shares of Apollo and
Lincoln Educational Services Corp. (LINC) both sank after the
schools announced tighter admissions standards, but Miller said
investors shouldn't be punishing them for acknowledging bigger
issuers than just how many new students they can enroll each
quarter.
-By Melissa Korn, Dow Jones Newswires; 212-416-2271;
melissa.korn@dowjones.com
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