- Panelists discuss for-profit education at a webinar at the Fairmont Hotel
A new informational campaign from the Service Employees International Union is taking aim at the for-profit education sector, and specifically, Pittsburgh's own Education Management Corp.
The new project is called For-Profit U and highlights what it calls the pitfalls of attending some for-profit schools, particularly those owed by large public corporations.
SEIU spokesman Kevin O'Donnell says SEIU designed the website that way because of EDMC's "aggressive recruiting practices, high costs, low graduation rates and huge debt loads." Additionally, for-profit colleges derive a large amount of their revenues from public money — government money that students can use to pay for their education.
"We thought it was important for us to get involved here and help get the word out about what's been made of the for-profit education sector," O'Donnell says. "If you look at these schools and the corporate structure of the companies that own them, you clearly see why these schools exist, and that's profit.
"A lot of people out there are confused about these companies and this project is meant to help educate them about what they're getting into when they sign up at one of these schools."
That education initiative came to Pittsburgh on Feb. 2. On the same day that EDMC announced that its enrollment and revenues dropped in the second quarter, SEIU held a webinar entitled "Good for Wall Street, Bad for Students," on the dangers of for-profit colleges, at the Fairmont Hotel, Downtown, just a few blocks from EDMC's corporate headquarters.
EDMC has been in the news plenty in the past year. Two weeks ago, the company laid off about 400 employees in its online division. On Feb. 1, it released its second quarter earnings, which showed a decline in both enrollment and revenues. The day after that announcement, the stock price plunged by 20 percent. Last year the company was sued by the Department of Justice for the recruiting practices mentioned by O'Donnell.
But the company, while taking its lumps in the press and from the Occupy crowd, has stood defiant.
During a Feb. 2 conference call with analysts, EDMC CEO Todd Nelson said the layoffs were a part of doing business. While he indicated they might be over, Nelson was still noncommittal.
"If there are opportunities to streamline the organization, we want to do that," Nelson said during the conference call. "Given the economy and the enrollment trends, that impacted what we wanted to do with online [employees, who were targeted in the recent layoffs].
"Going forward it's hard to predict, but at this point in time we feel comfortable where we are. But to say we know exactly what the future is going to bring is difficult. One of the things we've always done here is try to come up with ways to become more efficient in our operations and sometimes, unfortunately, that results in employee reductions."
On Feb. 3, the company filed a brief in the Department of Justice lawsuit saying their previous recruiting practices weren't illegal.
"The abuse of law in this case is not EDMC's compensation system, but the Government's own abuse of its powers by bringing factually and legally baseless claims," EDMC's attorneys wrote in the brief. Further, they added that the government's claims were "animated by a newly found profit motive, [and] the Government resorts to tortured and baseless arguments in an attempt to rewrite law and history."
O'Donnell and other panelists say the aggressive business techniques used by EDMC and other companies is the main reason they have stepped forward to educate the public.
The Feb. 2 panel featured former students and employees of EDMC schools, as well as other education advocates and experts. The talk mainly focused on the dangers of attending for-profit schools — including the high cost, high loan-default rates and an education not worth the price paid.
Several panelists, including Osamudia R. James, a law professor at the Miami University School of Law, also pointed to the high number of low income and minority students targeted by for-profit colleges, or students who have few other options for higher education. According to a 2010 report from the Washington-D.C.-based Education Trust, an education-policy nonprofit, nearly half of the students at for-profit colleges came from low-income families. Minorities comprised 37 percent of enrollments.
"Based on race or class, particular groups are being funneled into these [educational paths] that will not be secure long-term," says James. "We have to question that. Why are we setting up the same groups of our population to go to institutions where their goal is to get skills that may not be able to sustain them over the course of their lives?
"Not every human interaction can be a commercial transaction. There may be some areas where it may not be appropriate to let people make a lot of money. ... I suggest that education might be one of those areas."
The panelists suggested that for-profit colleges, which gain nearly 90 percent of their annual revenues from federal funding sources, would provide a better education for those dollars.
According to EDMC's 2011 annual report, an average of 78 percent of its revenues from all schools came from federal sources, with some schools receiving as much as 88 percent of their cash that way. Another $129 million came from veterans using their G.I. Bill funds at the school. (Currently, there is legislation pending in Congress that would reduce the amount of federal dollars that for-profits could receive.)
O'Donnell says educational programs like For Profit U are the best way to make sure prospective students know what they are getting from for-profit schools.
Suzanne Lawrence, one of the webinar panelists and a former EDMC recruiter, has her own advice for students who get a call from recruiters at for-profit colleges.
"If you're talking to a recruiter on the phone, the best thing you can say to them is, ‘Please put me on your do not call list,'" she says. "Simply don't talk to them because it's not a good deal."