Four years and nearly $40,000 of debt later, Sacramentan Lia Andreotti is emphatic about her decision to attend Heald College in Roseville.
“It was literally the worst mistake I’ve made in my life,” she said.
California Attorney General Kamala Harris recently leveled a lawsuit against Corinthian Colleges Inc., a sprawling, Orange County-based for-profit college chain that manages 10 Heald College campuses in California among its 111 schools, which also include Everest and WyoTech locations.
In a scathing complaint, Harris’ office accused Corinthian of inflating or outright lying about job-placement prospects to potential students and to the investors who bet on Corinthian’s business model. The lawsuit depicts a disingenuous marketing strategy that includes preying on students who are vulnerable, socially isolated or down on their luck: those who have “low self-esteem,” feel “stuck” or cannot “see and plan well for future,” according to internal documents the complaint cites.
A spokesman for Corinthian declined to address the specific allegations contained in the complaint but defended the company’s record in connecting its graduates to work, employing more than 750 people to that end.
Despite those resources, Andreotti has had little luck in finding the type of work she hoped to attain when she signed up with Heald.
In 2009, Andreotti found herself in a rough place. She had enrolled at American River College with aspirations of becoming a journalist, but an unexpected pregnancy led her to drop out. When her son was 3, under pressure from her family to make something of herself, Andreotti followed the near-ubiquitous ads for Heald College to an admissions interview.
The person interviewing Andreotti sympathized with her having dropped out of college once before, she said. She said the recruiter pitched Heald aggressively, saying the school could be her shot at something better, and encouraged her to take out loans.
“It was come on, do it now, sign, sign, sign,” Andreotti said. “Like a used-car salesman. I couldn’t get a word out.”
After a “medical assisting” certificate yielded no jobs, other than in-home care or nursing home positions Andreotti said she could have obtained without a college education, Andreotti, 26, returned to get her associate’s degree. Now she takes care of her ailing grandmother. Of her former classmates, she said, only one found the type of medical assistant job that her program purported to help students secure.
“I don’t have faith in that degree, that it will hold up at all in job interviews,” she said.
Lawsuit alleges fraud
California sued Corinthian for both deceiving consumers and misleading investors. The basic premise is that Corinthian did not deliver what it offered: Officials touted the schools to students and investors as a route to gainful employment, but the attorney general’s office cited evidence that Corinthian exaggerated those claims.
In that respect, the attorney general’s suit adds to a list of lawsuits already filed against Corinthian on behalf of students and shareholders. Whether they had sought degrees or bought stock, the people bringing these lawsuits maintain they were deceived. A prior investigation by California’s attorney general led, in 2007, to a court order barring Corinthian from making false statements about job placement.
Loan default rates offer one way to measure a degree’s utility. Under tightened financial aid eligibility requirements included in California’s 2012 budget, several Corinthian schools became ineligible for Cal Grants this school year. Fourteen Everest College campuses registered three-year default rates of more than 20 percent; eight were more than 30 percent.
Graduation statistics can also be instructive. Six Heald College campuses flagged by the California Student Aid Commission lost their Cal Grant eligibility for graduating fewer than 30 percent of their students in 2010.
Regulation of for-profit colleges is divided between the entities that constitute what is commonly known as “the triad:” federal guidelines, regulations set by a California consumer entity and the accreditation agencies that sign off on schools and programs.
Accreditation agencies require some for-profit schools to meet minimum job-placement rates. The intent is to ensure programs fulfill their purpose of getting students work, but attorneys and experts who have sued and studied the industry said it risks giving schools an incentive to distort their job-placement numbers.
“What happens is there’s just rampant fraud that goes on,” said Stuart Talley, a Sacramento attorney who has filed lawsuits against for-profit educational corporations.
Kent Jenkins, a spokesman for Corinthian, said the company briefly offered financial incentives to job-placement officials who found work for more students, but has since discontinued the practice.
“We absolutely want to make sure we’re doing all we can to help our graduates find employment,” Jenkins said.
California’s lawsuit alleges widespread fraud in how Corinthian broadcast its job-placement record, alleging that publicly disclosed job- placement rates fail to match Corinthian’s internal estimates and that executives were aware of the discrepancy. The complaint faults Corinthian for manipulating job numbers to advance claims that were “untrue, misleading or both.”
Some students listed as placed had gotten two-day jobs at health-screening fairs, the complaint further alleges. In one instance, it says, a Corinthian executive emailed a colleague about paying temp agencies to “place students to meet the accreditation deadline and minimum placement %.” It says Corinthian employees created Craigslist ads that they presented as having been written by self-employed students.
“In some programs, not one single student obtained a job,” Harris said at a San Francisco news conference this month announcing the suit, adding that Corinthian knowingly sought “to cook their books.”
Underlying all of this is a tangled thicket of regulatory responsibility, with separate members of the so-called “triad” wielding different levels of authority and operating under distinct standards.
Federal law dictates certain criteria that for-profits must meet to be eligible for federal financial aid, stipulating they must prepare students for “gainful employment in a recognized occupation.” Critics call the language overly vague, and it is currently under review at the U.S. Department of Education.
In California, the prior state law regulating for-profits expired in 2007. The fledgling agency that now oversees nonprofits, the Bureau for Private Postsecondary Education, requires that schools disclose certain student data. It conducts on-campus compliance inspections, relying on a staff of 11. It also approves licenses for schools to operate.
Because of the accreditation agency it falls under, Heald College is exempt from state regulation. WyoTech and Everest, the two other branches of Corinthian named in the attorney general’s lawsuit, went through condensed approval processes because of how they received accreditation.
For some for-profit skeptics, the accreditation agencies are part of the issue. For-profit school executives often populate the leadership committees of accreditation agencies, and the revenue supporting accreditors flows from their member schools. That level of overlap between regulator and regulated raises questions about the amount of will to crack down.
“If the schools that are subject to the accreditation process are controlling the accreditation process, that is absolutely a legitimate concern,” said Pauline Abernathy, vice president of the Institute for College Access and Success. “I think there’s many of the same concerns that were raised in the financial crisis where credit rating agencies were dependent on revenue from those they were rating.”
Those concerns surfaced at a 2010 U.S. Senate hearing. Lawmakers grilled Michael McComis of the Accrediting Commission of Career Schools and Colleges, responsible for dozens of WyoTech and Everest schools, about federal investigators finding fraud at schools that passed muster with accreditors.
In response, McComis said lawmakers misunderstood what his organization does. Its purpose is “to evaluate quality of education, not to detect fraud,” he testified, a point he reiterated to The Sacramento Bee.
“Accreditation is not designed to detect whether there is fraudulent activity being engaged in,” McComis told The Bee. “The accreditation process can find it, but it is not an audit along those particular lines.”
McComis’ organization does run data reported by schools by an independent third party, an Illinois-based company called HyperCore Solutions. They did not return calls seeking comment.
Heald Colleges came under the authority of the Western Association of Schools and Colleges’ senior commission in the last few years, when it began offering bachelor’s degrees. Richard Winn, executive director of that accreditor, acknowledged that Heald differs from the types of schools historically in its purview, those less tethered to career preparation. But he cautioned against seeing Corinthian as a monolith.
“I think our evidence would suggest that even within the Heald system some of those campuses are doing extraordinarily well, some are doing not so well,” Winn said.
Cory Ekopak of Loomis said his experience fit into the latter category. Hoping to acquire more skills to help with his family’s business and drawn by the convenience and usefulness promised in the “Get in. Get out. Get ahead” slogan that Heald trumpets, Ekopak filled out an online form. Soon after – within a half hour, Ekopak said – Heald called.
At the interview, Ekopak said, an official steered him to a network security program. Within a year, discouraged by a visit from a Microsoft employee who made him question the value of what he was learning, Ekopak had dropped out. He still owes money.
“There were some amazing professors who really did care,” Ekopak, 24, said on a recent afternoon, his young daughter scrambling around his lap. But to a first-time campus visitor, he said, “you would have gone there and you would have said, this is a social experiment. This isn’t real.”
Editor's note: This story was updated Nov. 12 to remove references to an unrelated lawsuit against Corinthian that was dismissed. That suit alleged that student recruiters working for the corporation faced undue pressure to keep their numbers up. A judge dismissed the case, ruling that the people who filed the suit were repeating claims made previously and had no direct knowledge of the information upon which the allegations were based.