Three Lessons the Ed Dept Should Learn from the Corinthian Case

The U.S. Department of Education deserves a lot of credit for taking action against Corinthian Colleges over its deceptive job placement rates. It’s clear that the company has long misled students into enrolling, and then left them worse off than before – overloaded with debt and without the training they need to get jobs that will help them repay their loans.

It’s very encouraging that the Education Department – which I have long criticized for its lack of oversight and enforcement – carried out a thorough investigation of Corinthian’s Heald College campuses. It’s also encouraging that the Department is considering discharging the federal loan debt of at least some of the students who attended the company’s schools.

I think there are three lessons that the Education Department should learn from this case:

The Department could have acted on this long ago: Back in 2007, the California Attorney General’s Office found substantial evidence that Corinthian had intentionally lied to prospective students about its record of placing graduates into jobs. Jerry Brown, who was the AG at the time, reached a settlement with the company that required the school chain to provide $5.8 million in restitution to students who had been misled. The Department could have followed up on those charges and conducted its own investigation. Had it done so, it may have prevented tens of thousands, if not hundreds of thousands, of students from being deceived.

This is not just a problem with Corinthian but throughout the for-profit higher education industry: Hopefully, the Department’s findings at Corinthian will galvanize it to examine job placement rates at other for-profit college companies. A good place to start would be at the Education Management Corporation (EDMC). In 2010, Kathleen Bittel, who was a career service adviser at the company’s Art Institute of Pittsburgh, testified at a U.S. Senate hearing about tricks she said EDMC played to inflate its job placement numbers. Many of her allegations mirror the Department’s findings in the Corinthian case. For example, she revealed that graduates had to work for only one day to be considered successfully placed. In addition, she said that EDMC “counted placements that were clearly out of the student’s field as in-field placements,” as the Department alleges that Corinthian did. Bittel’s testimony shows that questions about for-profit colleges’ job placement rates aren’t new, and they go far beyond Corinthian Colleges.

The Department needs to establish clearer guidelines on what counts as a job placement and what does not: The federal government has not established a standard methodology for career colleges to use when calculating their job placement rates. As a result, the corporations have an extraordinary amount of discretion when it comes to determining who they choose to include in their calculations and who they don’t – allowing them to inflate the rates to make their schools more attractive to potential students. I have long argued that policymakers need to develop a single, national standard that for-profit colleges would be required to use when calculating their job placement rates and to establish a strict regulatory regime to make sure that the rates are not rigged. Failing that, the Department should at least be clear about the types of practices that are not allowed.

So while the Education Department should be applauded for taking action against Corinthian, it is clear that it has a lot more work to do to protect students and taxpayers from fraud and abuse. Because one thing we can be sure about is that what happened at Corinthian is not an isolated case."

Author:

Stephen Burd is a senior policy analyst with the Education Policy program at New America.

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