Trump U. Scam Unmasks For-Profit College Deceptions

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Worst Offender Corinthian College Slapped with Judgment Asserting Fraud and Predatory Lending

It’s hard for me to say this, but Marco Rubio got it right.

During one of those Republican debates, candidate Rubio, on the attack against Donald Trump and his “university,” claimed that the closest any student got to the real estate mogul was being photographed with a life-sized cardboard poster of Trump.

A grainy “selfie” with a cardboard con man might serve as a bitter reminder to those who were talked into paying thousands of dollars to share real estate “secrets” with Trump that turned out to be, according to former Trump U. sales manager Ronald Schnackenberg, “a fraudulent scheme [that] preyed upon the elderly and uneducated to separate them from their money.”

The “Playbook”

Still pending is a $40 million lawsuit filed by New York Attorney General Eric Scheiderman on behalf of 5,000 former students, charging Trump U. with “persistent fraudulent illegal and deceptive conduct.” Trump U. went out of business in 2011.

In conjunction with the lawsuit, a federal judge ordered the release of 400 pages of documents that hung a lantern on very questionable Trump U. recruitment practices. Called “the playbook,” documents reveal that Trump U. recruiters turned a deaf ear to pleas of poverty and encouraged prospective students to tap into their retirement accounts and “max out” their credit cards.

In one particularly audacious passage that sought to reach deeper into a prospect’s pockets, recruiters were taught:

When the client’s credit card availability is $5,000 or less, have them pull all their [credit card] statements so we can see exactly what interest rates are being charged. Maybe we can save them some money.

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For-Profit Education

The handy, one-size-fits-all definition of a for-profit college, one which conservatives cheer and liberals loathe, is that the school is run “like a business,” and therefore its primary aim is to maximize profits for its shareholders. It stands to reason that for-profits are helpful to mainly older students who for whatever reason were denied a path to traditional higher educations, and rely on the flexible class hours and online courses that for-profits provide. Good for them.

But this business efficiency hubris is really besides the point. For-profit colleges couldn’t exist without the federal government, which provides up to 90 percent of their students’ tuition through grants and loans. In fact, in several key side-by-side comparisons that seem to produce almost eye-popping numbers, for-profit colleges draw the short straw against public colleges:

The average tuition for certificate students at for profit colleges was $8,118, compared to $712 for community college students in these programs.

  • Completion: It is disappointing enough that, according to the National Center for Education Statistics, the graduation rate at traditional colleges is only 57 percent. But at for-profit schools, the graduation rate is a gloomy 32 percent.
  • Post-College Earnings: That same study published in The Washington Post concluded that “students who sought vocational certificates at for profit colleges  made an average of $900 less annually after attending the schools than they did before.” On the other hand, students were $1,500 better off annually when they pursued the same certifications at public community colleges.
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For-Profit Flaws Go Public

Negative reports about for-profit colleges have taken center stage lately. Perhaps spurred on by high-profile busts like the Trump U. boondoggle, for-profit students are beginning to express outrage over being lured into “degree” programs that plunge them deeply into debt without securing any financial well-being–a job–that was promised to them.

According to The Atlantic, the federal government was compelled to forgive over $27 million in debt accrued by over 35,000 students who were enticed by the same kind of “playbook” that the Trump swindlers employed. The US Department of Education has been trying for years to reign in some of the most egregious practices of for-profits, but often gets slapped down by the lobbying forces of this $35 billion industry.

No “Corinthian Leather” Here

Perhaps you’ve heard of Corinthian College. The country’s second largest chain of for-profit colleges collapsed into bankruptcy last year under a cloud of allegations that included deceptive recruiting practices, predatory loans, phony job placement numbers and other transgressions.

In March, a California Superior Court judge ruled that Corinthian was basically a fraudulent operation, and ordered it to pay $1.1 billion in restitution and civil judgments. Approximately 20 state attorneys general are investigating Corinthian.

California attorney general reveals Corinthian's recruiting practices.

California attorney general reveals Corinthian’s recruiting practices., including seeking students with “low self-esteem.”

Corinthian’s recruiting practices would make a mob boss smile wistfully. According to court records, the school would recruit homeless people and entice them with federal loans that all parties knew wouldn’t get paid back. Pro Publica recounts one such homeless recruit:

Hollie Harsh testified that she and her fiancé Brian French were homeless and living in a tent on a vacant lot in Northern California when they toured one of Corinthian’s campuses. They told the recruiter they were homeless and unemployed. Despite that, the recruiter enrolled them that day [and] they took on thousands in federal loans that given their circumstances, would be difficult to pay back.

After a few quarters, Harsh realized that her Corinthian education would never lead to a job or help her start a business, so she dropped out of the program, owing more than $15,000 in debt.

Corinthian was also charged with pressuring students to borrow from a bank to which the school had secret ties. When loans weren’t paid, students were embarrassingly pulled out of class or barred from campus.

So, is there any area where public universities compare less favorably to for-profit colleges? Well, there’s this guy:

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But didn’t the closing credits say that Bluto Blutarsky went on to become a United States Senator?

That’s about right.

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Andrew Goutman

Andrew Goutman is the editor of Enter, Stage Left.

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