Student Loan Debt Clock

Tuesday, May 22, 2012

Part 2 Education Management Corporation (EDMC) - Art Institute (AI) the Worst Kind of For Profit Education in this Country

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According to USA Today, Donors to Romney Super Pacs have ties to For Profit Colleges written by Fredreka Schouten and Ray Locker 03/29/2012

“The Apollo Group, which owns the University of Phoenix, contributed $75,000 last month to Restore Our Future, a super PAC run by former Romney aides.”

“Other Restore Our Future donors linked to the industry include James "Bill" Heavener, the CEO of Full Sail University, who gave $85,000 to the super PAC and serves as a top Romney fundraiser in Florida, and C. Kevin Landry, an executive with TA Associates, a private equity firm that has a minority ownership stake in Full Sail. He donated $120,000 to the committee, records show.”

The wife of EDMC CEO, “Amy Nelson, using a post office box in Utah as her address, also contributed $50,000 to Restore Our Future on Feb. 13, campaign-finance and property records show.”

“The industry has donated to both parties. Full Sail's co-chairman Ed Haddock has donated more than $60,000 to Obama and the Democratic National Committee for this election, and served as an Obama fundraiser in 2008. Apollo Group founder John Sperling, meanwhile, has donated $47,800 to Democrats' 2012 congressional election efforts.”

“Their revenue stream is almost completely dependent on the federal government," said Kevin Kinser, an expert on higher-education policy at the State University of New York-Albany. About six in 10 for-profit schools received more than 70% of their revenue from federal student-aid programs, according to the U.S. Education Department.”

“There are voices in public policy today who don't believe you need to have for-profit delivery of higher education," said Steve Gunderson, a former Wisconsin congressman who is the group's new president. "We meet a need. Don't blame schools for the students they serve.”

According to, U.S. Joins Suit to Recover Funds from For-Profit Education Firm written by Terry Freiden 08/08/2011

“Assistant Attorney General Tony West at the Justice Department said the company had misused federal educations funds by paying improper incentives to admissions recruiters.

We will protect both students and taxpayers from arrangements that emphasized profits over education," West said.”

According to The Huffington Post, For-Profit College Corporation accused of Violating Federal Law by States, Justice Department written by Chris Kirkham 08/08/2011

“To entice recruiters to enroll more students, EDMC created a “President’s Club” for the highest-performing recruiters, offering all-expenses paid trips to destinations such as Las Vegas, Cancun and Puerto Vallarta, Mexico. Others were offered Pittsburgh Pirates baseball tickets, free passes to amusement parks and other gift cards based on the number of student enrollments secured, according to the complaint.”

“The complaint cites an e-mail from Gregg Schneider, a director of admissions at EDMC’s Art Institute Online, that chided admissions employees for not meeting recruitment goals in October 2006.

Each of you knows your plan for November, the e-mail read. This number is not a casual level that I want you to be at but rather a number that you must hit to have a good review, get promoted or keep your position here. This number is set by the VP of Admissions and the Director of Admissions. E-mail from Gregg Schneider, director of admissions.”

“A number of top executives at EDMC, including chief executive officer Todd S. Nelson, moved to the company from the University of Phoenix, which paid $9.8 million to settle a similar dispute with the Department of Education over improper employee compensation.”

“In 2002, the Department of Education under the George W. Bush administration added a series of “safe harbors” to the rules, which added language saying that salaries can be adjusted as long as they are “not based solely on the number of students recruited, admitted, enrolled, or awarded financial aid.”

According to, About Education Management Corporation, written by ask a professor (no date listed)

“The remaining directors of EDMC include representatives of Wall Street firms that have significant investment interests in EDMC. Three Wall Street giants—Goldman Sachs, Leeds Equity Partners, and Providence Equity Partners —have an 80% controlling interest in EDMC.”

“Watch what they do, not what they say. EDMC has received $11 billion in state and federal financial aid money since 2003. And in 2010, more than 89% of their net revenues came from federal financial aid! 

Meanwhile, for-profit colleges spend millions to lobby the federal government on financial aid issues, such as rolling back the Obama administration’s proposal last year to cut off federal student aid to unfit programs. EDMC alone spent $1.41 million from January 2010 to October 2011 on federal lobbying.”


According to, Good for Wall Street – Bad for Students written by Danny Weil 02/11/2012

“…for-profit colleges and universities have managed to wrangle 12 percent of all college students in the United States.”

“…these colleges and universities also receive 25 percent of all federal aid for colleges and universities, and they are responsible for a lion’s share of student loan defaults - a whopping 50 percent of all college and university defaults.”

“in the late 1980s, after close to a decade of Reaganomics or neoliberalism, massive deregulation of governmental policies were put into motion that were to affect favorable consolidation and growth in the for-profit educational industry. This led to the development of what we now see as large "higher educational or vocational chains" owned outright through corporate ownership. Wall Street was now becoming a huge player in the burgeoning industry. For-profit diploma mills issuing four-year degrees rose steadily as a result.”

“Under the tutelage of Ron Paige, education secretary under Bush, regulations governing the for-profit educational industry were further eliminated in the interest of profit-taking purposes on behalf of corporate shareholders, CEO's and Wall Street. Predatory recruitment practices by the for-profits that had been singled out for tight regulation earlier were now allowed to proceed with reckless abandonment.”

“Techniques and tactics deployed resembled the high-pressure sales tactics utilized by the matchstick men who sold subprime mortgages to unwitting Americans, especially to people of color, the same targeted audience for the subprime colleges and universities.”

“…none of the faculty at the schools were tenured. This is, of course, due to the fact they have no collective bargaining, no union to represent them. A full-time professor or teacher, Dehn testified, teaches 20 classes, many with class sizes of 45 students or more.”

“Again, not unlike the subprime mortgage fraud where consumers were sold overvalued and overpriced homes, students at for-profit colleges and universities are being sold a toxic educational product with little value other than the "title," which in this case would be the diploma, if one were ever able to pay for it."

“Mike DiGiacomo, former student at EDMC's New England Institute of Art, who himself now owes $80,000 in student loans, testified that he took one class and wished to drop it directly thereafter only to find he had missed the "window of opportunity" to do so. He was charged in full for the class and continued to be listed as enrolled.”

“While non-profit colleges and universities, along with public institutions, see graduation rates of 60 percent or more, the for-profit sector graduates as little as 20 percent of their recruits.”

“…dropout rates as high as 80 percent as many students inevitably squirm to get out from under the massive debt and perfidious subterfuge that has locked them down in these rapacious institutions.”

“Mike DiGiacomo remarked that students really did not know much about debt either, how it worked or the consequences of taking it on. He said students were tricked into applying and accepting various loans, both Sally Mae and private. This, too, of course, is analogous with the subprime mortgage and practices at Fannie Mae, for example, that left many homeowners in default and in debt.”

“The conversation then took a path into the area of accreditation. The for-profits, much like purchasers of liquor bars who look to capture a license from the Alcoholic Beverage Commission to sell alcohol to the public, look to purchase other colleges that already have accreditation so they will not need to reapply for a license.”

“If an accrediting agency says 'No' to a for-profit school they could face a $2 million dollar law suit.”

“…, 24 percent of all students at Corinthian College (Goldman Sachs) are ATB students. The ability to test was designed for the for-profits to benefit, not students, and was simply another corrupt tactic authored and designed to capture more and more federal dollars.”

“It has also allowed such public policies like the onerous Race to the Top to be considered as simply an issue of educational standards or achievement when it actually goes to the heart of the explosive attempt at corporate financialization of the entire $500-billion-dollar educational sector in the United States. The move is to have students placed on an educational for-profit fast track that will begin in kindergarten or before and traverse all the way to college or university.”

“He stated that in all 50 states this was possible. In 1992, the 50/50 rule was promulgated that required 50 percent of instruction be done on campus. This, however, was repealed under the tutelage of Ron Paige, head of the DOE under George W. Bush in 2005. It was removed late at night, with no hearing, as part of an attachment to another bill. What this means is that no for-profit distant learning college or university has to have a "footprint" in any state to do business. In fact, one can set up a for-profit in Belarus or Romania and enroll students in the US and there is nothing that the government, consumers or taxpayers can do.”

“…it was apparent that the for-profit educational sector operates much like the Wall Street subprime home mortgage fraud. Unsuspecting working people, most notably people of color, are being herded into these for-profit schools by to benefit shareholders looking to exploit ‘sharecroppers.’”

“…interesting connections are emerging between the American Legislative Exchange Council (ALEC) and North Carolina politicians associated with the group…”


According to, Goldman Sach’s Political Contributions Tainted by Money Swindled from Veterans and Other Misdeeds written by Danny Weil 05/04/2012
“Dropout rates for veterans at these diploma mills are as high as 68 percent, meaning while the schools keep the money, the veterans are left with neither degree nor GI benefits.”
“…advocacy group Student Veterans of America (SVA) revoked charters from its chapters at 26 for-profit colleges operating sham chapters.”
“According to, as of April 2012, Goldman Sachs had contributed $1.97 million to over 250 candidates running for office in 2012.”

“…campaign contributions of at least $10,000 from Goldman Sachs as of April 2012, according to Seventy-five percent of all Goldman contributions have gone to Republicans.”


According to, Student Loans Blog, Illinois Attorney General Slams Student Loan Debt From For-Profit Colleges written by Shannon Rasberry 03/27/2012

“Madigan made the comments last week in testimony before the U.S. Senate Judiciary Committee’s Subcommittee on Administrative Oversight and the Courts, as part of a hearing by Illinois Sen. Dick Durban called “The Looming Student Debt Crisis: Providing Fairness for Struggling Students.” In her testimony, Madigan compared the increasingly high level of debt that students are taking on to obtain a degree from the for-profit college industry to the housing crisis, which has trapped millions of borrowers in underwater mortgages (“Madigan Testifies in D.C. on Alarming Student Debt Level in For-Profit Schools Industry,” 
 Office of the Attorney General of Illinois press release, March 20, 2012)." 

“Madigan said. “The abuses in the for-profit schools industry are rampant. Left unchecked, I fear this troubling trend will produce a generation of students saddled with crushing debt and years of financial insecurity.”

“Since filing the Westwood case, Madigan said her office has received 1,007 calls from students with similar stories of taking out student loans for worthless degrees that failed to lead to careers in criminal justice.”

The Looming Student Debt Crisis: Providing Fairness For Struggling Students

Senate Judiciary Committee; Subcommittee on Administrative Oversight and the Courts, DATE: March 20, 2012, TIME: 10:00 AM, ROOM: Dirksen 226

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