(This post is from our new blog: Unofficial Sources.)
The spectacular crash of Corinthian Colleges after years of systematically deceiving thousands of students into enrolling into low-quality, high-cost education programs has once again raised questions about how the for-profit college industry staved off stronger rules governing the $1.4 billion per year in federal loans that helped keep Corinthian afloat.
Some hints emerged today in the giant chain’s filing for Chapter 11 bankruptcy protection in Delaware. It shows that Corinthian made secret payments to an array of political consultants, think tanks and political dark money groups.
The filing doesn’t list amounts, but shows that Corinthian made payments to Crossroads G.P.S., a group co-founded by Karl Rove that has raised over $300 million to elect Republican members of Congress through campaign advertising. Crossroads G.P.S., a 501(c)(4) nonprofit, does not disclose any of its donors.
Crossroads G.P.S. spent over $700,000 to help elect Sen. Marco Rubio, R-Fla., during his 2010 election. As Bloomberg News revealed, Rubio later filed a letter with the Department of Education, requesting that the agency “demonstrate leniency” with Corinthian.
Corinthian registered only two lobbying firms last year — Akin Gump Strauss Hauer & Feld LLP and Akerman LLP. But the filing shows that Corinthian also paid a myriad of other consulting firms that work to influence the political process.
Corinthian’s creditor list includes: TheGroup DC LLC, a public affairs firm founded by Art Collins, an advisor to Barack Obama’s 2008 election; Stanton Communications Inc., a firm that specializes in “crisis management”; and Strategic Partnerships LLC, a Virginia-based public affairs company founded by Kenneth Smith, a former Reagan administration advisor who now serves as the president of Jobs for America’s Graduates, Inc.
APCO Worldwide, a lobbying firm, is among the Corinthian creditors, though the firm never registered to represent Corinthian under the Lobbying Disclosure Act.
The listing reveals a number of payments to influential D.C. groups that have battled regulations on the for-profit college industry. The U.S. Chamber of Commere is listed multiple times as a Corinthian creditor. The Chamber has run campaign advertisements on behalf of opponents of the Department of Education’s “gainful employment” regulation, which would measure the performance of vocational programs. The Chamber made defeating the rules a top priority.
The American Legislative Exchange Council, a nonprofit that helps corporate interests draft model legislation, is listed as a creditor. As Republic Report reported, although for-profit colleges are far more expensive for programs offered by community colleges and other public institutions, ALEC drafted a resolution calling for state officials to “recognize the value of for-profit providers.”
Another gainful employment regulation opponent, the American Enterprise Institute, is listed as a Corinthian creditor. AEI scholars have repeatedly attacked the rules, calling them an example of the Obama administration’s “crusade against for-profit colleges.” Last October, Andrew Kelly, AEI’s resident scholar on higher education reform, specifically defended Corinthian and criticized the “Obama administration’s bloodlust for such schools.”
Payments are listed for current and previous board members to Corinthian, including former Defense Secretary Leon Panetta, Urban League President Marc Morial, and Sharon Robinson, president and chief executive officer of the non-profit American Association of Colleges for Teacher Education. Payments are also listed directly to the Panetta Institute and Morial’s National Urban League.
Corinthian allegedly lied to students by providing bogus job-placement statistics, misled accrediting agencies by claiming unemployed graduates were employed, and steered students to in-house loans for bachelor’s programs with a price tag as high as $75,384. Though Department of Education rules state that students do not have to make loan payments while attending school, the Miami Herald reported that Corinthian “frequently demanded that its students pay while attending classes” and were publicly shamed through classroom removals if they did not pay.
“This is public money that’s going into a for-profit college, that then is used to fund organizations that do lobbying work and other PR work on behalf of this company,” says Ann Larson, an organizer with the Debt Collective, a group pushing for loan forgiveness for Corinthian students who say they were defrauded. “In the end, Corinthian can file for bankruptcy while tens of thousands of students, most of them low-income, are stuck with this debt.”
“It’s certainly not surprising that the corporate and political elites managed to come up with this scam,” Larson said.
Photo: David McNew/Getty
This article is a little off base. It is saying that these lobbying firms must have received payments from Corinthian, but it is apparently relying on a creditor matrix that at most shows that the lobbying firms are OWED money by Corinthian. In reality the creditor matrix doesn’t even show that, it is just an overinclusive list of names that Corinthian thinks might have a claim against Corinthian (and thus should be receiving notices of the bankruptcy pleadings). The document that would show recent payments to the lobbying firms is known as the statement of financial affairs (SOFAs), and has yet to be filed. The document that would show specific amounts owed to the lobbying firms is known as the schedules, and also has yet to be filed. Corinthian is requesting an extension of the deadline to file the schedules and SOFAs to July 6.
Another fun piece of information- the training material used in the Everest schools, Ignite, is owned by one of the Bush brothers.
Zenith Corp which is now running the remaining 58 campuses sold is run by Jack Massimino former CEO of Corinthian. Even after the DOE stated he and his board can never run schools again! Heald termination letters signed by Massimino were in Zenith letterhead.
Maybe the NSA should take over for the FEC, at least then they would be useful.
The fraud is so massive in our country. The results are so easy to see. Every defrauded student needs 100% Loan Forgiveness. These people need to be in jail and taxpayers reimbursed.
I think it’s telling that these people were “deceived” because they listened to a business promote itself without ever bothering to check the claims for themselves. A fool and his money…..
Same flim flam as the Treasury eliminating 30 year bonds and shoving Freddie and Fannie bonds up the globe’s ass instead. When Uncle Sam builds a titty farm, the pigs come running. Who needs a loan for a project they will never complete? Everyone, apparently. Thanks, pig farmers.
Justin,
Hindsight is 20/20. You say that people should not have taken this debt upon themselves. Yeah, I agree, in hindsight. The thing is, we went to school in an economy that was thriving. We saw our parents graduate and get good jobs. Everyone told us that this debt was not only safe and protected, but that we would have no problem getting a job that would earn enough to pay these debts. Then, right after we graduated, the economy crashed. Those jobs are long gone, our degrees become more worthless every day as universities graduate seas of students and our debt remains. It accrues interest upon interest. It just grows and grows and there seems to be no end in sight.
You seem to have angst against people who go to school, as you are calling them “entitled.” I wrote my thesis on self-entitlement and let me tell you, the title is hugely overly-used and frankly, it is getting annoying. If these same people all skipped college and decided to flip burgers for a living, you’d be telling them, “hey, it isn’t my fault that your life is crummy. Why didn’t you go to college and take out a few loans to make your life better?” It seems the younger generation can do no right.
Here’s a newsflash: you already HAVE paid for student debt and you continue to do so, whether your are in debt or not. Here’s another news flash: most students and ex-students are taxpayers, too. Billions of our dollars are given to countries that hate us “just because.” I’d rather see our money spent on investing in our students and graduates. Dig them out of this trench and allow them to stimulate our economy. If they were loosed from these shackles, they could buy houses and cars, start families, open businesses, travel – imagine the influx of money from 40 million people. We’d probably pull out of this recession that many pretend no longer exists.
“… systematically deceiving thousands of students into enrolling into low-quality, high-cost education programs …”
That can truly be said of these for-profit colleges, but more and more these days, one could say the same thing about the more traditional non-profit public and private colleges and universities. The availability of easy loan money and a sense of entitlement to education at any cost are driving cost up and standards down. They have quite the nerve to hold those signs saying “We demand: cancel all student debt now”—I mean, it’s too bad they got scammed, but I don’t really think the rest of us should be on the hook for it. Sure, anybody will lend you money when you’re not allowed to discharge that debt in bankruptcy, but that doesn’t mean it’s a wise idea to take on that debt.
Part of the problem is that it’s too easy to get into debt for school, and to hard to get out of debt. Relatively few people get that dream job when and if they graduate from college, and those “average” salaries they quote on career sites for jobs in a particular field tend to be quite a bit above the actual average, especially for fresh college grads. Part of the fix would be to make all private student loans dischargeable in bankruptcy, and drastically cut the federal student loan programs. Dry up some of that “easy” money, and colleges would be forced to lower tuition if they want to enroll students. Then maybe more people who want to go to school could actually afford it, rather than getting into unsustainable debt.
If people want to study history, or French literature, or computer science, or whatever it may be, there is no reason they shouldn’t be able to afford any tuition with, say, a part-time or summer job, which would have been no problem fifty or sixty years ago. How times have changed! If you can’t afford tuition out-of-pocket, it’s likely because you are competing with hordes of students who recklessly borrow no matter what it costs to get the education they think they’re entitled to. Bum deal for them, because they’re stuck with the debt, and bum deal for people with any financial sense at all, because they’re priced out of an education. People stupidly borrow too much money, and there is no legislative fix for stupidity.
How do other countries provide higher education (not to mention healthcare) for free to their children? We really are exceptional. Exceptionally brainwashed. Go Bernie Sanders.
It is called socialism or communism
Why do you use “alleged” in the ending yet clearly state “after years of …”, as if the case was finally decided? I do not know what they did or did not do. I was not there. I do know this:
https://www.opensecrets.org/orgs/list.php
Why do you say their political support was a “secrete” and why are the vast majority of the HUGE contributors unions? Are political lobbying and contributions illegal? Perhaps they should be FOR EVERYONE. No matter the final truth, all of which we shall never know, the students suffer and that sux. This is where the support needs to go. Their work should be accepted and not discredited, their time valued and not wasted, their opinions respected and their intelligence not disrespected. They just want an education and a Job. How can we all help with that?
Easy money in the form of readily available loans has in my opinion been a large contributor to the explosive growth in the cost of education over recent decades. But insofar as the traditional colleges and universities are concerned, another factor of great importance has been the reduced funding of those institutions from the states and Federal government. Particularly on the right, colleges and universities are seen as inessential, and even negative influences due to the unfortunate goal of many to promote independent thought. Adding to that is the misconceived strategy of improving the attractiveness of college campuses by offering ever more elaborate perqs in the form of recreation centers, on-campus bars and restaurants, ultramodern sports facilities and the like. It is not uncommon for a university to spend hundreds of millions on such unnecessary and irrelevant facilities, while in the mean time research laboratories go dark due to the reductions in funding.
The “ever more elaborate perqs” really frost me, to think that if I ever want to continue my education, I would have to pay for that garbage. As far as promoting independent thought, that’s of course the goal within any particular field of study, but as far as social issues go, the prevailing liberal political correctness seems to be the only kind of thought that’s permitted on campus, so there’s not much love lost there with conservatives. Small wonder then that conservatives don’t want to fund centers of liberal indoctrination.
I must be an oddball, because I’m conservative, but I’m all for education and research. I’m just not for the waste and fraud that is happening so much in education these days. University administrators, who, by the way, make way too much money themselves these days, need to humble themselves, lower tuition, and run the university on a budget. Make some cuts to these unnecessary facilities rather than allow tuition to skyrocket yet another year. But the truth is, they’re not going to do that as long as students are willing to pay (and able to finance) that tuition no matter how high they raise it.
I think the demand from students is to have a place to party and have a good time for four years after high school, even if they have to pay for it for the rest of their lives—there’s just no demand for actual quality in education. Meanwhile in the workplace, the college degree has become the new high school diploma—it just takes four years longer (or more) and costs a whole lot more.
It’s easy to dismiss people as “stupid” when looking back on their decisions in hindsight, but that’s a delusion based on the idea that you are superior to others, and that they were operating with perfect knowledge of the situation. Many of these students were the first in their families to go to college, meaning they had no one else in their family to advise them. Then, these well-funded schools, with slick advertising campaigns promise easily obtained jobs with degrees paid by grant money. Then after the first or second year, the “grants” dry up, and students have to take out loans so that the coursework they have done so far won’t be wasted. Then they find out the colleges weren’t being honest about the hiring rates for new grads.
They weren’t stupid, they were tricked.
Well these students who are so smart they got into unnecessary and unmanageable debt are demanding “Cancel all student debt now!”—which wouldn’t exactly be fair to the taxpayers they borrowed the money from or to those who forewent an education because they were taught not to borrow what they couldn’t pay back. I still say if these students were so smart they could have looked up forums on the internet–a lot of these schools are online anyway–and read reviews and so forth, just like they’ve probably done many times if they were buying a used car from craigslist or something off ebay. There are scam warnings all over the place about these colleges. And we’re all stupid if we’re going to be on the hook now for this student debt.
Now I’m not justifying the scam in any way; don’t get me wrong. It’s just that these people who fall for it are really, really gullible, and sometimes when people are that gullible, we can’t all be on the hook to protect them from themselves. And at the same time, I doubt they would have been fined and shut down had they donated money to the correct political party.
We’re “on the hook” either way. Would you rather taxpayer money be spent to protect gullible people from being fleeced or to pay for vacation homes for the assholes fleecing them? We could say no taxpayer-subsidized higher ed, of course, and just let rich kids get higher ed. Is that what you support? And the points about “no climbing walls” and “no fancy latte bars” or whatever it is you think is driving higher ed costs are totally irrelevant to entities like Corinthian, which are non-residential and as bareboned as possible on the student end of the stick (while being fat and delightful on the profiteering end, of course).
Justin,
As a general rule, I do not post on public social media like this – but because you’re so blatantly disrespecting the vast majority of people who were proverbially screwed I’m making an exception.
I was a student at one of the colleges under Corinthian. I was in my final term with two classes on campus and an internship at a local jail. I’d been actively seeking employment in the months preceding my upcoming graduation. I woke up on Sunday morning to a text from a friend requesting I check my email and find my college has been officially closed. Not only did I lose my college and education, I also lost my job as a tutor. So now, I’m stuck scrambling to try and find a college who will pick me up and let me finish out my degree. This has not gone over well for me as the only college I’ve found who will take the credits still requires me to take ten more classes on their campus for an astronomically high price which will be compounded onto what I already owe. This is not feasible or reasonable.
As you can tell from my writing this, I can articulate myself just as well as you. Does this fall in line with the nonsense of your stating these students were irresponsible or “stupid”? My fiancé has a bachelors degree in Biology from a prestigious college, she aided me in making the decision to take up my education at Heald. What do you have to say about that?
You come across as obnoxious and full of yourself. You have no idea as to what or whom you’re even discussing. I’ve worked since I was 15 years old, paying my taxes just like everyone else. Many of my fellow peers served in the military and chose Heald too, also tax payers. So in your bit about “easy loan money” and all the other nonsense you wrote, get over yourself. A good portion of us are no different than you. We’re now sitting in a cesspit of debt with nothing to show for it due to the scandals set in place by this corrupt company.
We’re not “stupid” for having made an attempt at a college who offered us an education that for all intents and purposes had a credible background of 150 years in offering education. In regards to your bit about “doing research” about where we were going to school? I take the what I read on public forums with a grain of salt until I see facts. The FACTS showed a good chunk of students getting jobs and going places. Obviously it’s come to light now these “facts” were a farce, but unless you’re clairvoyant and can predict what’s really going on (as you seem to think you’re capable of doing), then you’re just as susceptible as anyone else to this sort of scheme.
To summarize: You have no idea what you’re talking about. So stop.
Long time no Snowden’s stories :( Wonder if Mona can let us know what’s the deal ;-)
Please, don’t set us up for another droning.
Big flail going on in Germany, just now. It seems that the BND has been working hand in glove with the NSA since 2008, with no disclosure to the legislative branch. Merkel running for cover, de Maziére in the spotlight for covering it up. If you read German, check out the Südddeutsche Zeitung, http://www.sz.de or of course Der Spiegel, http://www.spiegel.de
Thanks for another great article, Lee, but I have to ask, do you sometimes feel like a voice crying out in the wilderness? The scope of how much of our political system has been captured by business interests, illuminated by your articles, is not encouraging to those who are trying to effect change working within that system. With only so much energy to devote to any efforts, working within the system seems like a waste of precious energy and time, both of which are in short supply.
I’m doing my best to try to expose some of the problems!
Thank you.
Of a pattern. The 2008 bailout saved the banks but reneged on any mortgage relief.
Oh, and a followup to the Corinthian story.
http://abc7news.com/education/some-former-corinthian-students-to-get-loans-forgiven/687654/
Note the response by the US Dept of Education, and its undersecretary, Ted Mitchell.
Now, back up a few months, when this Mitchell was seeking nomination.
http://www.thenation.com/blog/178738/oppose-nomination-ted-mitchell-department-education
Isn’t that an interesting dot to connect?
I love the description of Corinthian’s target customer in the photo that accompanies that abc7news story. Among other traits, the target customers are “impatient” and “unable to see or plan well for the future”. That would explain why these customers believe that they are college material despite having flunked out of high school, that they can get a good education by investing a minimal number of hours in class attendance and outside study, and that they can pay back tens of thousands of dollars in loans in addition to supporting self and family on the salary of a dental assistant. Impatient. Unable to plan well for the future.
Yes, and it’s like issuing a mortgage to someone with little collateral or income, as was the case with numerous mortgages prior to the 2008 crash — and then selling collateralized mortgage securities based on those mortgages to investors unaware just how weak the mortgages were. At some point it suggests that the students, or home buyers, were patsies in a scheme by hucksters who didn’t want them, or their investors, to plan for the future, or at least see the future train wreck.
Yes. The fraud case against Corinthian seems strong. Too bad the government waits for a meltdown (in finance, in education, in food supplements) before thinking about bringing charges. It’s not as if the government officials could be unaware. All the lobbying for no regulation should be a big tip-off that serious dishonesty would come to light if anybody were to look. Regulation doesn’t solve all evils, but it sure cuts down on them.
The government needs to wait until Congress and the White House are sure they’ve squeezed all there is from the contributors.