This New Lawsuit Against Everest College Explains Why The Government Is Going After For-Profit Schools
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The Obama administration has been cracking down on for-profit colleges. And Corinthian Colleges Inc. which owns Everest College, has been the biggest target: They’ve been the subject of investigations by the Department of Education, the Securities and Exchange Commission, the Consumer Financial Protection Bureau, and more than a dozen state attorneys general.
Last week, Massachusetts attorney general filed the latest lawsuit, the result of a two-year-long investigation. The suit, which draws from interviews with students of Everest College campuses in Massachusetts, lays out exactly what the government s problem is with the for-profit education industry.
These are the Attorney General s allegations:
Everest was aggressive about recruiting students.
Many students don’t apply directly to Everest s schools; they express a slight interest, such as calling to ask about financial aid policies, and are allegedly “aggressively targeted and induced to enroll” through high-pressure daily phone calls by recruiters who act essentially as salespeople.
Really, really aggressive.
From a student at the Chelsea campus of Everest College: “[The representative] called me every day at any time during the day or night to tell me that car[eer] will change my life. Guess what? It didn’t! I m working on my city grocery store.” Another student said, “You were almost not given a choice, with phone calls daily till you re signed.”
Sometimes the college allegedly recruited students who couldn t speak English and couldn t understand what they were signing.
One Everest student said (through a translator): “Though I didn’t understand the content of most of the forms, I was asked to sign. As I was eager to attend the class, finish the course and get a job, I signed.” She took out loans and completed the program, the lawsuit says, but never got a job.
And it allegedly recruited students who legally couldn t do the jobs they were trained for.
Students who had been in prison were recruited for medical training jobs, which will not hire people with criminal records. One student said, “When I finished the 10-month course and tried to get work I could not at a medical facility due to my DUI. They promised it would be OK and would not effect [sic] job opportunity.”
It also recruited students without high school diplomas or GEDs. Medical employers in Massachusetts don’t hire people without a diploma.
The college is accused of using deceptive tactics to get students to sign up for classes.
According to the lawsuit, advertisements and recruiters consistently told students that there was “limited space available” and that they would miss their chance to sign up, forcing them to wait a full year to start the program, unless they enrolled immediately. Everest didn’t actually turn away students because of limited space and classes start once a month.
Everest allegedly misrepresented the kinds of opportunities their degrees provide.
Everest recruiters told students that their credits were transferable to all accredited schools. In fact, most schools do not accept any of Everest’s credits. Everest also “made material and false” statements about the availability of externships in career programs.
It also misrepresented the wages that graduates would earn, citing wages that were several dollars an hour higher than state averages.
Its employment rates are falsified.
The lawsuit says that Everest recruiters allegedly told students that they were “guaranteed” to obtain jobs after graduation. The job placement rates Everest actually reported were much less than the implied 100%, but the lawsuit says that even those were false.
According to the lawsuit, for example, the medical assistant program at one college in Massachusetts advertised a 72% placement rate, but it was in fact 23%. Sixty-three percent of the “medical assistant” jobs that students were placed into were falsified, temporary, or improperly classified as in-field, such as a receptionist at a hospital who was counted as a medical assistant.
Its degrees are really expensive more than similar programs at community colleges and even other for-profits.
Senate records show Everest’s tuition prices are among the highest of for-profit schools. Diploma programs in Massachusetts cost up to $19,000, plus books and fees.
And students go into a lot of debt to get them.
Almost all Everest students funded their education with federal grants and loans. They often can’t pay off that debt, so they go into default: Though they make up only 12% of students nationally, students at for-profit schools comprise almost 50% of loan defaults.
And the government has a particular reason to care: Most of that debt is from taxpayer money.
In 2010, 89.8% of Corinthian’s $1.76 billion in revenues came through federal dollars.
In a statement, Corinthian said Everest “has a strong record of offering students a quality education and treating their students honestly and fairly.”
Its full response is here .
Molly Hensley-Clancy is a business reporter for BuzzFeed News and is based in New York. She covers the intersection of business and education.