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From Capitol Hill to the Bronx, scrutiny for College Inc.

Signs greet visitors to Monroe College in Fordham. Photo: Elisabeth Anderson

Signs greet visitors to Monroe College in Fordham. Photo: Elisabeth Anderson

Ruth Garcia used to be a college student, which is a tough feat for someone who hasn’t finished high school.  Tired of living on welfare, the 57-year-old South Bronx mother of seven grown children decided her life needed an upgrade.  She enrolled in a program at Monroe College, a for-profit institution in the Fordham section of the borough, that would allow her to pursue her General Educational Development (GED) high school equivalency and an associate’s degree at the same time.

“When I went, I was on cloud nine,” she said.  “I figured I was getting two for the price of one.  Supposedly TAP and Pell would pick up the bill,” she added, referring to the state and federal loans in her financial aid package.  Monroe’s admissions staff indicated that aid would be enough to cover her education.

But as Garcia would quickly learn, only one of her first four courses earned her a college credit.  She was taking mandatory classes in reading, social studies, and math, but none counted towards her degree.  She was spending down her financial aid, without the credits to show for it.  She dropped out after her second semester.

“When you expect that dream to come true and it pops, you get depressed about it,” she said.  “I’m still stuck in the same spot, and I want to move up the ladder.”

Cases like Garcia’s are currently the subject of a national debate that could forever change for-profit schools’ license to operate.  The Senate Committee on Health, Education, Labor and Pensions (HELP) is leading an investigation that focuses on deceptive marketing and recruiting tactics, over-reliance on federal loan funds as a primary revenue source, and program ineffectiveness as measured by the percent of graduates who secure gainful employment.  The entire for-profit college sector is under scrutiny, with large players like University of Phoenix and Kaplan generating the most attention. Monroe College is not the subject of an individual investigation, but several Monroe students have complained about aggressive recruiting and what they call misleading descriptions of how far their aid packages will go in financing their educations.

After an initial investigation of 15 schools, three hearings, and two reports, the Senate committee demanded data from an additional 30 institutions that collectively operate nearly 100 schools, of which Monroe College is not one; this information is currently under review.  The Department of Education has just approved its own set of regulations related to the controversy, which will go into effect in July 2011.  The new rules aim to strengthen federal student aid programs by protecting students from aggressive or misleading recruiting practices, providing higher education consumers with better information about colleges’ program effectiveness, and working to see that only eligible students receive aid.

“The basic regulatory framework within these schools operate creates perverse incentives for excessive profitability,” said Barmak Nassirian, Associate Executive Director of External Relations at the American Association of Collegiate Registrars and Admissions Officers (AACRAO), and a critic of for-profit college practices.  AACRAO is a national nonprofit professional association of more than 10,000 higher education admissions and registration professionals.

According to the federal Department of Education, students at for-profit institutions represent 11 percent of all higher education students, but 26 percent of all student loans and 43 percent of all loan defaulters.  The schools carry “obscene bottom lines that they generate based almost entirely on tax dollars,” Nassirian said.  More than a quarter of for-profit colleges receive 80 percent of their revenues from taxpayer-financed federal student aid.  Nassirian said that he doesn’t believe every school is a bad actor, but that the causality can’t be overlooked.  “Human nature tends to look at short-term motives,” he said.  “If the federal regulatory system doesn’t kick in, don’t be surprised if the profit motive takes over.”

Many for-profit colleges target low-income and minority student candidates who qualify for federal loans.  Monroe College offers certificates, associate, bachelor’s, and master’s degrees at its main Bronx campus and two satellites in New Rochelle, in Westchester County, and on the Caribbean island of St. Lucia; the St. Lucia campus is accredited as an American institution offering American degrees, meaning students may apply for federal aid.  Monroe’s Bronx campus, a series of nondescript mid-rise buildings along a commercial stretch of Jerome Avenue, caters to a largely female, minority, lower-income student base.  Nearly three-quarters of undergraduates enrolled in the fall of 2009 were women; 42 percent were black, and half were Hispanic.

Monroe officials defend their institution’s record and say it’s wrong to target for-profit schools.  “Clearly there are problems in all sectors of higher education,” said Dr. Donald Simon, the school’s assistant vice president of governmental affairs. “Selecting one sector and excluding the others is counterproductive.” He added that according to state education department data, Monroe College has the third-highest number of minority baccalaureate grads in New York State, in any sector.

Indeed, state data from 2006, the most recent available, supports the notion that minority students get their associate’s degrees in two years at a much higher rate at for-profit schools than elsewhere.  More than 27 percent  of black students graduated in that timeframe, compared to 11.5 percent at independent schools, 3.7 percent at State University of New York (SUNY) schools, and 1.3 percent at City University of New York (CUNY) schools.  The picture is similar for Hispanics, with 28.7 percent of for-profit students getting associate’s degrees in two years, compared to 17.7 percent at independent schools, 5.3 percent at SUNY schools and 1.2 percent at CUNY schools.

“New York State’s proprietary degree-granting colleges have the highest associate degree graduation rate of any of the four sectors,” Simon added.  Preliminary data for 2009 from the New York State Office of Higher Education shows proprietary or for-profit schools coming in second place to independent colleges, although the data has not yet been fully edited.  Thirty percent of full-time first-time students, of any ethnicity, at for-profit schools earned an associate’s degree within two years, compared to 42 percent at independent schools. Both for-profit and independent schools did much better than SUNY and CUNY schools, which showed two-year associate’s degree graduation rates of 11.4 percent and 2.3 percent, respectively.

Like other for-profit schools, Monroe College isn’t shy about recruiting prospective students.  Marlyn Morillo, a 28-year-old South Bronx resident originally from the Dominican Republic, fit the profile of a typical Monroe College student when she was heavily recruited by the school.  She applied and was accepted to a joint GED and associate’s degree program in 2008.  “By Fordham Road, they were giving out cards and magazines with what courses you could do,” she said.  Morillo said that six representatives from Monroe College had a table set up outside the Fordham Road subway stop the day she applied.

Morillo said she was captivated by the promise of being able to pursue her GED and associate’s degree at the same time, and by the thought of how proud her 11, eight-, and four-year-old children would be to see her in school.

She was getting assistance from a social service agency called FACTS when she was accepted to Monroe College.  The group urged her not to enroll, explaining potential pitfalls in earning credits and financing her education.  FACTS is where Morillo met Carol Williams, who now runs the College Prep Program at Grace Outreach, a South Bronx non-profit organization helping women earn their GEDs and prepare for college.

Williams said for-profit colleges frequently use the two-for-one GED and associate’s degree package as a marketing device.  What they don’t tell prospective students, however, is the impracticality of such an approach.  Most students who don’t yet have their GEDs are unqualified to take college-level courses, and even those who are can be subject to school restrictions about how many of the classes they take will earn them college credits before they get their GEDs.  This means students can be taking and draining their aid packages on college classes that are non-credited.  “I tell my students to do it the right way,” she said.  “Get your GED, then apply to college.”

Morillo, now enrolled in Williams’ college prep course and applying to Bronx Community College, said she still spots Monroe recruiters frequently at the same location, during rush hour, and that she’s been approached again.  “I still see them and I say, ‘Oh no no, no thank you,’” she said.  On one occasion two months ago, she told recruiters she attended Lehman College, so that they’d let her go.  “And they tried to convince me, ‘You should have gone to Monroe.’  I said, ‘Don’t convince me.’ ”  Morillo, who wants to be a social worker, said she feels like she’s averted a big mistake by not enrolling in Monroe and choosing to get her GED before re-applying to college.  “You don’t know how much,” she said.  If she had chosen her original path, “Probably right now, I’d be crying.”

Monroe College Way, near the school's main buildings. Photo: Elisabeth Anderson

Monroe College Way, near the school's main buildings. Photo: Elisabeth Anderson

The New York Post reported in July that Monroe College spends about $3 million a year on marketing and pulls in $90 million in tuition, mostly from taxpayer-backed federal loans and state and federal grants given to 99 percent of its students.  Representatives from Monroe would neither confirm nor deny these figures, and said its financial information is  private.

Colleges around the country have faced criticism for admissions-related practices, such as pumping up applicant numbers to enhance selectivity.  A problem that appears to be unique to certain for-profit schools is the use of recruiter commissions.  “When the basis for an admission officer’s pay is based on commission, the incentive to mislead students is so prominent,” said David Hawkins, director of public policy for the National Association for College Admission Counseling (NACAC), a politically-active membership group of 11,000 professionals who help students make choices about pursuing postsecondary education; the group is critical of current for-profit college practices and does not currently include individuals from for-profits among its membership ranks.  Even some administrators at for-profit schools say the rules need to be changed, and that the federal government should have cracked down on aggressive recruiting a long time ago.

According to Hawkins, who testified during the second Senate HELP Committee hearing on for-profit colleges on Aug. 4, the friendly regulatory environment of the past decade allowed the for-profit college industry to boom.  With many of the schools’ parent companies publicly traded, he said the schools needed to show consistent increases in enrollment as a marker of growth to investors.  Former President George W. Bush signed legislation creating 12 loopholes commonly known as “safe harbors,” which kept the enrollment-based commissions legal.

The Department of Education’s forthcoming regulations would undo those loopholes, a step in the right direction, according to Hawkins.  On Oct. 28, the Obama administration released a broad set of rules to strengthen federal student aid programs at for-profit, nonprofit and public institutions by protecting students from aggressive or misleading recruiting practices, providing consumers with better information about the effectiveness of career college and training programs, and working to see that only eligible students or programs receive aid.  These regulations are expected to be implemented in July 2011.

“We certainly welcome the for-profits as a player in the U.S.,” Hawkins said.  “We have some hope that the successful for-profit colleges will adhere to the standards and by that token, earn a return.”

National Center for Education Statistics data show that with many students starting and draining their aid packages on remedial classes – New York State allows associate’s degree candidates only six semesters of TAP aid – just 60 percent of students who started at Monroe full-time in the fall of 2008 returned in the fall of 2009.  Part-timers fared worse, with only 53 percent returning.  Just half of full-time, first-time students graduated within 150 percent of “normal time” to complete their program; two years is normal time for an associate’s degree, four years for a bachelor’s.  While better than the 44 percent graduation rate for a bachelor’s degree within six years at CUNY schools, it is less than the nearly 70 percent of bachelor’s graduates in the same timeframe at independent schools and 61.2 percent at SUNY schools, according to 2008 data from the New York State Office of Higher Education.

The differences between these various forms of higher education are often mysterious to minority and low-income students. Scherline Feliciano wishes she’d been savvy to potentially misleading marketing.  The 24-year-old, who lives with her mother in the Southwest Bronx, has at least $2,500 in debt to show for her one-month-and-one-week stint at Monroe College.

Students work with a tutor at Grace Outreach in Mott Haven. Photo: Elisabeth Anderson

Students work with a tutor at Grace Outreach in Mott Haven. Photo: Elisabeth Anderson

Enrolled in a joint GED and associate’s degree program, Feliciano said she felt unprepared.  “I didn’t feel like I was ready,” she said.  “If I can’t understand the teachers, what’s the purpose of going to that school?”  She added that the college-level courses she was enrolled in were not credited.  “That’s just like a big waste of time,” she said.  “I wouldn’t recommend it to anyone.”  Feliciano is now studying for her GED, and then hopes to major in psychology at Lehman College, part of the CUNY system.

Of the 2,800 students who either graduated or dropped out of Monroe since 2007, 23.1 percent have defaulted on their government-backed loans, according to for-profit college loan repayment data released by the Department of Education in August; those still enrolled are not included in the analysis.  The rate is nearly seven times the 3.6 percent at private Fordham University and nearly four times the six percent rate at Lehman College.  “If fewer than one-third of your graduates can pay back their loans,” Nassirian said, speaking of for-profit colleges overall, “you are a bad apple.”

Simon, Monroe’s government affairs chief, says the numbers may be misleading.  “The current debate over for-profit education is problematic because it does not consider institutional outcomes such as graduation and placement, but deals with a limited selection of numbers, specifically student repayment of loan principal,” he said.  “Ironically, federal regulations permit students to defer repayment of loan principal yet those who appropriately use such opportunities are being considered a negative statistic against the college.”  Administrators at for-profit schools also agree that the federal and state financial aid rules can be complex and difficult for students to understand.  That’s how many get in to trouble without realizing it.

National legislation that might help is still many months away, according to a Senate HELP Committee official.  Chairman Sen. Tom Harkin (D-IA) plans to hold at least one more hearing and review the results of the latest round of materials requested from an additional 60 for-profit colleges first, she said.

Another big question is the Department of Education’s controversial gainful employment regulation, which would require for-profits to show the value of the education they provide via statistics showing graduation and job placement rates for school programs.  This will be an item to watch, as the department reacts to nearly 90,000 comments received on its proposals.

Two days of public hearings were held on Nov. 4 and 5, and the department has also been hosting more than 30 meetings this fall with individuals and organizations who submitted comments on the proposed regulation; one of these meetings, on Oct. 18, was with representatives from Monroe College.  According to an official in the Department of Education press office, Monroe leadership and staff did express concern with the gainful employment rule at the meeting, but stated that they felt it was possible to make changes that would bring their programs into good standing under the proposed rule.  Monroe’s Simon would not comment specifically on the meeting, but stressed how important it is that the department rules be “realistic and reasonable.”

A Monroe graduate named Trina Thompson generated national attention last year, when she threatened to sue the school for $75,000 worth of tuition reimbursement and personal stress because, she alleged, the school’s career services department didn’t do enough to help her land a job after graduation.  According to Gary Axelbank, Monroe’s director of public relations, “It’s a non-issue.  It was not even a lawsuit.”  Thompson filed a complaint but never a lawsuit.  Axelbank, who added that Monroe’s mission is to provide education focused on job training, said that Monroe hired more career counselors when the economy worsened.  Thompson could not be reached for comment.

There are many cases of hope in the Bronx.  Betsy Vega’s comes with a warning. Vega is on track to get her GED, studying hard at Grace Outreach.  The 22-year-old had aged out of New York City’s foster care system and was working minimum wage jobs when she decided to enroll at a for-profit college in Queens.  She spent two years earning 15 credits, but no GED.  She still owes the school between $3,000 and $4,000.  Vega hopes others won’t make her mistakes.  “Focus on one thing at a time,” she said.  “Especially with all these sharks in the water.  You get nothing.  They only sell you dreams.”

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