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

Call your Senator and Congressperson Today Address & Phone Directory: (http://studentloandebacle.blogspot.com/p/congress-senate-phone-address-directory.html).
 

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.”

(http://www.usatoday.com/news/politics/story/2012-03-26/romney-for-profit-colleges/53865654/1).

According to CNN.com, 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.”

(http://www.cnn.com/2011/CRIME/08/08/schools.recruiting.suit/).

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.”

(http://www.huffingtonpost.com/2011/08/08/justice-department-for-profit-college_n_921661.html).

According to forprofititu.org, 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.”

(http://www.forprofitu.org/about-edmc/).

According to TruthOut.org, 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…”

(http://truth-out.org/index.php?option=com_k2&view=item&id=6618:good-for-wall-street--bad-for-students-seiu-hosts-webinar-on-predatory-proprietary-colleges-and-universities).

According to Truthout.org, 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 opensecrets.org, 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 opensecrets.org. Seventy-five percent of all Goldman contributions have gone to Republicans.”

(http://truth-out.org/news/item/8885-goldman-sachs-political-contributions-tainted-by-money-from-swindled-veterans-and-other-misdeeds).

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.”

(http://studentloansblog.nextstudent.com/2012/03/27/illinois-attorney-general-slams-student-loan-debt-from-for-profit-colleges/).

“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

Webcast: http://www.senate.gov/fplayers/jw57/commMP4Player.cfm?fn=judiciary032012&st=840 (114.54 min).

(http://www.judiciary.senate.gov/hearings/hearing.cfm?id=eb997a7c3376c76b36a041cf2a10ca10).

Part 1 Education Management Corporation (EDMC) - Art Institute (AI) the Worst Kind of For Profit Education in this Country

Need proof that those in the student loan debt collection realm are enticing students to become credit broken debtors and prefer that those students default on their student loans? Now you may be asking yourself why? Because, they are reaping monumental profits on defaults rather than on those who pay the loans back in a timely fashion. The ones that are hurt the most are the middle and lower classes; and our government has thrown the 99% under the bus; all for the sake of Congress & the Senates financial relationship with their special interest friends. How else can one explain the millions spent in lobbying for specific laws that are geared to protect the big business rather than the constituency of America?  How is it that our government is in the habit of sub-contracting to debt collection agencies that aren't any better than payday lenders. When did racketeering become a mainstream practice against the American people?

How is it that our government is allocating 1 billion dollars a year to sub-contract student loan debt collection agencies, when they should be providing services that allow for the modification of such loans and also assist in protecting the American consumer from predatory collection agencies and their terroristic threats tactics to such clients.

Mike DiGiacomo has witnessed first hand to the nature of the Art Institute – AI and Education Management Corporation EDMC – in which Goldman Sachs owns over 40%, anyone see a conflict of interest there? Mr. DiGiacomo was also responsible for all the links provided here, which support this thesis. This is not in the form of an executive summary as of yet, just a small outline of the impropriety and lack of ethics of the company EDMC. A more comprehensive evaluation will later be explained, once all the pieces have been brought together.

According to the Huffington Post, Education Management Corp, “they engage in Predatory Lending,” Whistleblower Claims, written by Chris Kirkham 3/15/2012

“The company is ‘motivated by profit rather than student success or rankings,’ and has ‘every incentive to maximize enrollment by recruiting unqualified students who will not be able to repay their loans,’ the suit says.”

“The suit, brought by Jason Sobek, who worked as an admissions manager at Education Management's South University online, likens the company's business model to ‘the predatory lending industry, taking zero risk in signing up students for federally guaranteed loans’”

“A bachelor's degree in graphic design at The Art Institute of Pittsburgh, one of Education Management's colleges, costs more than $90,000, according to the school's disclosure. Education Management has more than 150,000 students across more than 100 college campuses. The company's schools include the The Art Institutes, Argosy University, South University and Brown-Mackie College.”

(http://www.huffingtonpost.com/2011/10/14/goldman-sachs-for-profit-college_n_997409.html).

According to Bloomberg, Education Management Preys on Students, Ex-Recruiter Claims

written by John Hechinger 3/15/2012

“Education Management used “boiler-room” tactics to receive millions of dollars in federally backed student loans and grants, Jason Sobek, a former recruiter for the company’s South University, said in a complaint unsealed yesterday in Pittsburgh federal court. The company targeted “troubled” students, including the homeless and mentally ill, according to the lawsuit.”

“For-profit colleges, which can receive as much as 90 percent of their revenue from federal financial-aid programs, are under scrutiny by Congress, state attorneys general and federal prosecutors for their sales practices and student-loan default rates.”

“Education Management targeted “a troubled population” that included “the poor, the undereducated, the homeless,” students with criminal records, single mothers on welfare and those living in shelters and halfway houses, Sobek said in the complaint. 

The company routinely enrolled mentally ill students who had to retake classes and were likely to default on their loans, according to the lawsuit.” 

The case is U.S., ex. rel. Jason Sobek v. Education Management, 10-cv-0131, U.S. District Court, Western District of Pennsylvania (Pittsburgh).

(http://www.bloomberg.com/news/2012-03-15/education-management-preys-on-students-former-recruiter-claims.html?utm_source=twitterfeed&utm_medium=twitter).

According to New America Foundation, What’s the Matter with EDMC? written by Stephen Burd 10/10/2011

“There was a time not so long ago that Education Management Corporation (EDMC) was considered to be one of the better for-profit higher education companies in the business. The arts schools that it had run since the early 1970s were generally well regarded, and the company seemed to be focused on its long-term success, rather than just its quarterly profits.”

So what happened? That question can be answered in two words: Goldman Sachs.

In 2006, Goldman Sachs and two other private equity firms acquired EDMC for $3.4 billion. The deal eventually gave Goldman about a 40-percent ownership stake in the company.”

 “Despite all of this scrutiny, EDMC has been among the most resistant for-profit higher education companies to reforming its practices -- going so far as to quit a lobbying coalition it started after that group began developing a voluntary code of conduct for its members to follow.”

“To execute the plan, they hired a team of executives from the Apollo Group who had been instrumental in the massive expansion of the University of Phoenix but had come under fire for the tactics they used to achieve this aim. In fact, the man they chose to lead EDMC -- Todd S. Nelson, who served as Apollo Group’s CEO from 2001 to 2006 -- had the rare distinction among for-profit college executives for having been forced out of his job for having been, according to his former boss University of Phoenix founder John Sperling, too “preoccupied” with the stock price of the company.”

(http://higheredwatch.newamerica.net/blogposts/2011/what_s_the_matter_with_edmc-58847).

According to New America Foundation, The Transformation of EDMC? written by Stephen Burd 10/13/2011

“The methods EDMC’s leaders used to achieve this massive expansion, however, have taken an enormous toll on the reputation that the company’s founders worked so carefully to build over nearly four decades. While EDMC was long considered to be one of the best for-profit higher education companies in the business, it is now the target of a multibillion dollar lawsuit brought by the U.S. Department of Justice and half a dozen states, accusing it of defrauding the federal government by defying a federal law that prohibits colleges from compensating recruiters based on their success in enrolling students. Meanwhile, attorneys general in four states – Florida, Kentucky, Massachusetts, and New York – are investigating the company, as is the Department of Education’s Inspector General.

In other words, under the leadership of Todd Nelson and Goldman Sachs, the days when Education Management had a “reputation for quality and doing things the right way” appear to be long in the past.”
“When Goldman Sachs and its private equity partners purchased EDMC in 2006, only about 4,000 of the company’s students were enrolled in its online programs exclusively. Five years later, that number has increased more than tenfold, and there have been serious allegations that the company has pumped up these numbers by aggressively recruiting unqualified students.”

(http://higheredwatch.newamerica.net/blogposts/2011/the_transformation_of_edmc-59018).

According to New America Foundation, How EDMC went bad? written by Stephen Burd 10/20/2011

“The drive for numbers has created a recruiting staff that could care less about the well-being or success of the students, they bring in, a recruiter for EDMC's South University told the Huffington Post, in the online publication's words. ‘They’re wolves; they’re hunters,’ the recruiter said. “They have one objective: They’re there to make money and get students.”

“In other words, firms that do these types of deals are not invested in the long-term health and well-being of the corporations they purchase. Instead, their mission is to build the companies up as fast as they can so they can sell them off and make a killing.”

“As a result, these recruiters say they were encouraged to admit anyone with a pulse, including “applicants who are unable to write coherently, applicants who appear to ADAs to be under the influence of drugs, and applicants for EDMC’s online program who do not own computers,” the lawsuit states.

Even worse, they loaded these students up with federal and private student loan debt that many of them will never be able to repay.”

(http://higheredwatch.newamerica.net/blogposts/2011/the_extraordinary_growth_and_decline_of_edmc-59329)

According to Courthousenews.com, For-Profit Art Institutes of California Accused of Swindle

written by Matt Reynolds 04/13/2012

 “Importantly, no one at AICH ever advised plaintiff that federal student loans for her AICH bachelor's degree were subject to an aggregate limit of approximately $57,500 which would not cover the full cost of tuition," the complaint states.”

 “Since Washington did not qualify for private student loans, and could not afford the school's $650 monthly payment plan, she says she was forced to drop out of school with a $52,162 debt.

In August 2011, the U.S. Department of Justice and four states filed suit against The Art Institutes' owner, Education Management Corp., for fraudulently receiving $11 billion in state and federal aid.”

(http://www.courthousenews.com/2012/04/13/45603.htm).

[EDMC's 50th Anniversary Passes Without Much Ado, Wonder Why?]

According to Triblive.com, EDMC: Party’s Off at For Profit Juggernaut written by Andrew Conte 05/15/2012

“The for-profit company generated $229 million in net income last year for its owners, which include equity funds at Goldman Sachs, a major Wall Street investment firm. Much of that money comes from federal grants and government-backed student loans.”

“Criticism of EDMC, the nation's second-largest for-profit educator behind Apollo Group, which owns the University of Phoenix, occurs amid increased pressure on the industry. Students at for-profit colleges make up 11 percent of the nation's 11 million full-time undergrads but account for 26 percent of borrowers and 43 percent of defaulters, according to the Department of Education.”

“The revenues of these institutions are dependent on the number of students they enroll in their programs," the Education Department wrote when it issued the rules in the Federal Register. "They are not otherwise dependent on whether their students graduate, find jobs and ultimately repay their loans.”

“EDMC last year received $2.6 billion, or 74 percent of its revenue, from the Education Department's Title IV programs such as Pell Grants and government-backed Stafford Loans.”

“Student retention rates are so low at 13 EDMC schools that the Accrediting Council for Independent Colleges and Schools, a national accrediting agency, increased its monitoring.”

“For-profit schools tend to enroll students who are more financially disadvantaged and who tend to take out more loans, said Brian Moran, general counsel for the Association of Private Sector Colleges and Universities, a Washington-based trade group. To remain viable, he said, schools need successful graduates.”

(http://triblive.com/news/adminpage/1803123-74/edmc-company-schools-students-education-federal-percent-profit-programs-student?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+alltribstories+%28TribLIVE+News%29).

According to Triblive.com, For Profit Grad Struggles written by Andrew Conte 05/15/2012

“As a student at The Illinois Institute of Art-Schaumburg, owned by Pittsburgh-based Education Management Corp., she borrowed nearly $80,000 for tuition and living expenses -- and her debt grew by about $15,000 before graduation. If Oliver, 26, makes only the minimum payments during the next three decades, she would pay more than $216,000.”

“EDMC says bachelor of fine arts students in the media arts and animation program at the Schaumburg campus where Oliver attended pay $130,000 for tuition, room and board, and other costs.

Fewer than a third of the students in that program finish in four years, EDMC says, and two-thirds of its graduates find jobs in the field.”

(http://triblive.com/home/1803183-74/edmc-animation-institute-oliver-art-students-bachelor-borrowing-debt-degree).

According to WJLA.com, Art Institute of Washington Seniors blocked from Graduation written by Ben Eisler 05/11/2012

“Some seniors at a local institute say their school won't let them graduate, and not because they didn't pass their classes.

They say their advisers miscalculated their credits.

The students say since they came to the Art Institute of Washington, their advisers told them which classes to take, and that they were on track to graduate. Then just weeks before graduation, they got the devastating news.”

“Art Institute officials declined to be interviewed on camera, but in a statement the school wrote, "The Art Institute of Washington is unaware of any student not on track to graduate this quarter due to revised credit hour requirements...(The Institute) encourages any student who may have concerns to contact their academic advisors or academic department chairperson directly.”

“Now the school has instructed any students with this problem to meet with the dean.”

(http://www.wjla.com/articles/2012/05/art-institute-of-washington-seniors-blocked-from-graduation-75891.html).

According to Projectcensored.org, Change to Win Goes after the Educational Management Corporation for Violations of Regulations in an effort to Protect Members’ Pension Funds written by Danny Weil 02/15/2012

"EDMC Board of Directors:

 

Mick J. Beekhuizen – he joined Goldman, Sachs & Co. in 2000 and has been a Managing Director in the Merchant Banking Division since 2010.

Samuel C. Cowley – he served as Executive Vice President, Business Development, General Counsel and Secretary of Matrixx Initiatives, Inc., a seller of over-the-counter healthcare products, from May 2008 until its sale in February 2011.

Adrian M. Jones — he joined Goldman, Sachs & Co. in 1994 and has been a Managing Director within the Principal Investment Area of its Merchant Banking Division since 2002, where he focuses on consumer-related and healthcare opportunities and is also a member of the Corporate Investment Committee of the Merchant Banking Division of Goldman, Sachs & Co.

Jeffrey T. Leeds — he is the co-founder of Leeds Equity Partners, LLC, a leading New York-based private equity firm focusing on the education, training and information services industries. Prior to co-founding Leeds Equity Partners, Mr. Leeds spent seven years specializing in mergers and acquisitions and corporate finance at Lazard Freres & Co.

John R. McKernan, Jr. – he is Chairman of the Board of Directors. Mr. McKernan served as our Executive Chairman from February 2007 to December 2008 and our Chief Executive Officer from September 2003 until February 2007.

Leo F. Mullin is a retired as Chief Executive Officer of Delta Air Lines, Inc. in December 2003 and Chairman in April 2004, after having served as Chief Executive Officer of Delta Air Lines, Inc. since 1997 and Chairman since 1999.

Paul J. Salem – he is a Senior Managing Director and a co-founder of Providence Equity Partners. Prior to joining Providence Equity Partners in 1992, Mr. Salem worked for Morgan Stanley & Co. in corporate finance and mergers and acquisitions. Prior to that time, Mr. Salem spent four years with Prudential Investment Corporation, an affiliate of Prudential Insurance, where his responsibilities included leveraged buyout transactions and helping to establish Prudential’s European investment office.

Peter O. Wilde — he is a Managing Director of Providence Equity Partners. Prior to joining Providence Equity Partners in 2002, Mr. Wilde was a General Partner at BCI Partners, where he began his career in private equity investing in 1992.

Joseph R. Wright – he currently serves as Chairman of Seamobile/MTN Satellite Communications and is a director of Federal Signal Corporation, where he serves on the Compensation and Benefits Committee, and Cowen Group, Inc., where he serves on the Audit Committee (http://www.edmc.edu/about/Board.aspx).”

“One of those investors is Change to Win, a coalition of labor unions founded in 2005 whose central mission is, in the words of their website, “to unite the 50 million American workers who work in industries that cannot be outsourced or shipped overseas into strong unions that can win them a place in the American middle class — where their jobs provide good wages, decent working conditions and a voice on the job” 

(http://www.changetowin.org/about).

“In 2008 the company received 70.2% of its operational revenue from the government with the amount steadily increasing to 81.3% in 2009, 88.5% in 2010 and a whopping 90.3% in 2011 with the .3% taking it over the government threshold of no more than 90% allowance from federal funds. The company is clearly in violation of the 90/10 rule which regulates how much federal dollars a for-profit corporation can take from taxpayers.”

“Currently, for-profit institutions are also prohibited from participating in Title IV programs unless they meet one of the following three criteria which are part of the new gainful employment regulations promulgated in 2011 by the Department of Education:

35% of former students are paying down debt, typical graduate’s annual loan payment does not exceed 30% of discretionary income, and typical graduate’s annual loan payment does not exceed 12% of total income.”

“For more information as to what SEIU is doing to fight for-profit education and educate members and the public as to their predatory status please visit http://www.ForProfitU.org.”

(http://www.projectcensored.org/top-stories/articles/change-to-win-goes-after-the-educational-management-corporation-for-violations-of-regulations-in-an-effort-to-protect-members-pension-funds/).

 

Helping Students with Crushing Student Debt 

(http://www.youtube.com/watch?v=WMbNxuSEbns).

Senator Dick Durban from Illinois & Lisa Madigan - Illinois - Attorney General, addresses the deceptive practices from Westwood College a school whose lacking in accreditation and those who attend are not being acknowledge for those degrees, by employment possibilities. Individuals are graduating with $50,000 - $70,000 worth of debt for what, a degree that means absolutely nothing.

How is it even possible that an educational institution that receives Title IV funds lacks in accreditation for the degrees they tout? Why are these institutions being federally backed, when they are nothing than diploma mills, and diplomas which happen to be as worthless as the paper in which they are written on.

According to the Huffington Post, Auctions 2012: For Profit Colleges Win when Lobbying Blitz Weakens Regs written by Chris Kirkham 02/03/2012

“Data showed that for-profit colleges accounted for nearly half of the defaults on federal student loans, despite educating only about 10 percent of the nation's college students.”

“Beginning in 2010, the administration announced a broad package of new regulations that would crack down on programs that leave students with outsized debt and few career prospects. But a year later, those rules had been substantially weakened, following a $13 million lobbying blitz by the colleges aided by some of Washington's most powerful Democratic influence peddlers.”

“The well-coordinated lobbying and public relations campaign, targeted largely at Democrats, was an effort to protect the industry's access to more than $30 billion in federal student loans and grants that fuel the vast majority of its revenues. Some of the largest higher education corporations receive more than 85 percent of their revenue from federal student aid dollars.”

“Among the all-star cast of lobbyists hired by the industry: former Democratic House Majority Leader Dick Gephardt; Tony Podesta, one of the most prominent lobbyists in Washington and the brother of John Podesta, who led President Barack Obama's transition team; and Penny Lee, a former top adviser to Senate Majority Leader Harry Reid (D-Nev.) who was also a senior staff member for the Democratic National Committee. In total, 14 former members of Congress were hired by the industry to fight regulations that would have cut federal aid to programs in which students fared poorly.”

“In order for a program to be disqualified from receiving federal student aid dollars, more than 65 percent of students would have to be delinquent in repaying their loans, and graduates would have loan debts that constituted more than 30 percent of their discretionary income or more than 12 percent of their total earnings.”

“Though the vote was largely symbolic, it revealed many Democrats siding with the for-profit colleges, including House Minority Leader Nancy Pelosi (D-Calif.) and Democratic National Committee Chairwoman Debbie Wasserman Schultz. (D-Fla.).”

“In the months after, industry representatives continued to meet with top policy officials in the Obama administration, according to meeting records from the Office of Management and Budget. Last May, the month before the final regulations were released, the White House had 17 separate meetings with for-profit college representatives.

Among those in attendance were influential executives such as Donald Graham, chairman and chief executive of the Washington Post Co., which owns Kaplan University; and John "Jock" McKernan, chairman of Education Management Corp., a former congressman and Maine governor, and husband of Sen. Olympia Snowe (R-Maine). By contrast, a coalition of civil rights and student advocacy groups met just once with the administration.”

(http://www.huffingtonpost.com/2012/02/03/auction-2012-education-for-profit-colleges_n_1251072.html).

According to the NY Times, For Profit College Group Sued as U.S. Lays Out Wide Fraud written by Tamar Lewin 08/08/2011

 “The government’s incentive compensation ban was designed to stop companies from signing up unqualified students for their aid money. The False Claims Act, the basis for the government’s lawsuit, provides for triple damages, and since the complaint said all the government student aid came from such claims, the damages could be as much as $33 billion. As a practical matter, though, such huge cases are usually settled for far less than the maximum damages.”

“Publicly traded for-profit college companies have recently been a target both of government scrutiny and whistle-blower suits. In 2009, the Apollo Group, which owns the University of Phoenix, the largest for-profit college, settled a whistle-blower case for $78 million.”

“In 2003, Education Management’s chief executive was Jock McKernan, a former governor of Maine who now serves as chairman of the board. Mr. McKernan is married to Senator Olympia J. Snowe, a Maine Republican whose 2010 financial disclosure form lists Education Management stock and options worth $2 million to $10 million.”

(http://www.nytimes.com/2011/08/09/education/09forprofit.html).

According to Pittsburg City Paper, For Profit Educator EDMC Gives its Employees a Tough Lesson in Business written by Charlie Deitch 02/01/2012

“Actually, EDMC wasn't lacking money before: The company had $400 million on hand last year, financial records show. But the firm has directed much of its cash elsewhere. Weeks before the layoffs, EDMC announced it would spend millions to buy back its own stock. 

That move, analysts say, will create another group of winners: the investors who own the vast majority of shares, including some EDMC board members.”

“In 2006, it joined with two other firms — Providence Equity Partners and Leeds Equity Partners — to purchase EDMC for $3.4 billion. Leeds is a private-equity firm that has built a portfolio investing in what it calls the "knowledge industry." The company's advisory board is chaired by Colin Powell, former Secretary of State under President George W. Bush. Providence is also a private-equity company with a wide array of investments — including the YES network, which is best known as the television home of the New York Yankees — totaling roughly $23 billion.”

“Among the shifts in the "regulatory environment," meanwhile, was a lawsuit filed by the Obama administration's Justice Department, as well as ongoing congressional inquiries into the recruitment practices of EDMC and other for-profit educators. During the conference call, Nelson partly blamed "negative press" for faltering enrollment.”

“As the Times noted, "The principle behind buybacks is simple. With fewer shares in circulation, earnings per share can rise smartly even if the company's underlying growth is lackluster." But meanwhile, the paper added: "Liberal critics insist the trend is another example of top corporate executives raking in an inordinate share of the nation's wealth, even as their employees suffer.”

“Of EDMC's 10 directors, two are principals in Goldman Sachs, three either directly represent or have ties to Providence Equity Partners and one represents Leeds Equity Partners. Nelson is the only executive to serve on the board, though former CEO John McKenran Jr. serves as its chairman. (The remaining members are a former airline executive and a corporate lawyer.) Together, those 10 directors, as well as the private-equity firms tied to several of the directors, control 80 percent of EDMC's shares.

By contrast, according to financial documents, managers, directors and large investors at the Apollo Group, Nelson's former employer, hold only 14.4 percent of shares at that company. At for-profit educators Capella and Career Education Corporation those numbers are 9 percent and 3.8 percent of shares, respectively.”

“Goldman has a very large position here," agrees Griffin. "You've got two of Goldman's main players — Mick Beekhuizen and Adrian Jones — sitting on the board of directors. They have a big interest in keeping this stock price up.”

(http://www.pittsburghcitypaper.ws/pittsburgh/for-profit-educator-edmc-gives-employees-a-tough-lesson-in-modern-business/Content?oid=1487478#.TyvZo_22n_Q.email).

Education over Corporation 

(http://www.youtube.com/watch?v=MS_-UniAAnQ).

The Faculty Federation of the Arts of Philadelphia fight for their right to a fair wage. A protest against another corporation or should I say vulture capitalistic endeavor; to cut the pay for those who keep the show on the road, all for the profit margin of EDMC Board of Directors and Goldman Sachs. It's the American way, right?

 much, much more to come - check back at a later time.