Illinois For-Profit College Pays $10.25 Million Settlement to New York Attorney General To Settle Charges of Scamminess. Will Trump University Be Next?
The past couple years have not been kind to Career Education Corporation. The Illinois-based for-profit school is the fourth-largest in the nation; it operates hundreds of campuses across 23 states and 5 countries , and currently serves about 75,000 students. It also appears, if we can use a technical term, to be kind of bullshit. New York State Attorney General Eric Schneiderman announced yesterday that CEC would pay a $10.25 million settlement , after a two-year investigation found that the school had wildly exaggerated its job placement rates to lure in new students.
CEC's whiff of fishiness goes back a long way. The company was investigated by the Securities and Exchange Commission between 2005 and 2008 for various undisclosed regulatory and compliance issues, although the investigation was ultimately closed without any action taken. Several of their campuses have had their accreditation temporarily suspended. And their students' track record is also nothing to crow about: a Senate Committee report found that the company has "an unusually high rate of students defaulting on their loans." Eleven of their Sanford-Brown campuses, two of which are in New York, don't meet the Department of Education's minimum standards for providing "gainful employment," due to low loan-repayment rates and high rates of debt compared to graduates' average discretionary income. In 2012, with its revenue plummeting, the company closed 23 out its 90 campuses and laid off some 900 people.
At the same time, CEC got into hot water with the New York Attorney General for downplaying that debt in their promotional materials, choosing to focus on sunny, mostly-fictitious job placement numbers. The school claimed its job placement rates for alumni of its seven New York campuses were somewhere in the 50 to 80 percent range; the real number was more like 24 to 64 percent. Career services employees got bonuses if they boosted job numbers, giving them incentive to lie: an alumni was counted as "employed," for example, if they worked one day at a job fair after graduation.
Under the terms of the settlement, the company will pay a $1 million fine and $9.25 million into a compensation fund for former students. They also have to hire an independent company to verify their job placement rates for the next three years. To qualify as "employed," an alum has to be at a job for at least 18 days.
But they're not alone: CEC is one of at least five for-profit education companies being investigated by the Attorney General, according to a 2011 report in the New York Times. One of them is the former Trump University, founded by terrifying human-pineapple hybrid Donald Trump.
Trump University, an online-only enterprise, now goes by the name Trump Entrepreneur Initiative (TEI), after the state Education Department told the real estate pile of straw and self-tanner in 2010 that it was "misleading" to use the term "university," especially since the school doesn't confer credits or degrees.
Sources close to the attorney general's investigation told the NYT that the inquiry focused on whether TEI and the other companies "misrepresent their ability to find students jobs, the quality of instruction, the cost of attending, and their programs' accreditation." That pretty neatly describes what CEC was fined for, raising questions about whether TEI and the other "schools" will be next on the AG's shit-list.
In the meantime, though, TEI appears to still be going strong. We say "appears to be," because it's virtually impossible to find any information about the program or its course offerings online. Unless, of course, you're a paying customer.
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