Sunday, October 16, 2016

ITT And Corinthian: Ending the Scams

By Professor Doom

      After trying to fight the government, ITT tech has been forced to shut its doors. This is the second big for-profit school to be effectively shut down by the government recently. There’s much wailing about all the students displaced, all the people put out of work by this…but there’s more to the story than just unemployed teachers and stranded students.

      First, a quick review of Corinthian, the big fraud school shut down before the government turned its eye to ITT. This major school was an open fraud, and had been known as such by the Federal government for years. The Feds kept going to accreditation and asking “Why do you accreditors keep certifying this school as legitimate, when every time we investigate the school we have no trouble showing it’s a fake school?”

      I really want to point that out: the government would enroll fake students, with fake credentials…and Corinthian didn’t care, even though it was in violation of law. The fake students/government plants would turn in fake assignments; not just plagiarized, but completely unrelated to the assignment in the course, and still get passing grades in exchange for the student loan money. I’m only lightly going over the frauds at Corinthian, but they were extreme.

     The accreditor, of course, saw no problem with any of this; as long as Corinthian paid its dues, it was accredited, because that’s all accreditation means now.

      Ok, the accreditor wasn’t that honest, but I’m not far from what they said:

     The “criteria” for accreditation, for all intents and purposes, was Corinthian made sure to pay the accreditor a cut of the student loan money it was receiving. I’ve seen accreditation rules violated in every single way but one: pay the accreditation dues. I’ve never seen accreditation removed for violations until ITT (and it really seems the government pressured the accreditor), so I figure that one rule must be the only one that actually counts.

     With the accreditor doing nothing, the Federal government was forced to shut down Corinthian on its own. The students were screwed, on the hook for loans, and unable to transfer whatever bogus credits they had (accreditation is supposed to help with transfer of credits, but has long abandoned that purpose as well).

       After decades of being ripped off, the Federal government also decided that ACISC, the accreditor for Corinthian, is as much a joke as Corinthian:

     So, now let’s go over to ITT Technical Institute. Before going further, I need to explain I liked ITT Tech. Thirty years ago, they used to focus on job training skills, and a few of my friends got useful degrees and well-paying jobs based on skills they learned at ITT (I’ll just call it ITT from here on out).

      The student loan scam warped ITT. There were just so many students willing to pay any tuition amount via student loans that there was no need to bother with education. For-profits aren’t the only schools like this, I promise the gentle reader; once I helped to make my community college fully accredited, our student base quadrupled, because accreditation means the students qualify for student loans…and after accreditation, interest in standards vanished instantaneously.

    Anyway, ITT got in trouble not just for being a little weak academically, but for lying about their job placement statistics, and for having low placement rates overall. At the risk of defending ITT too much, I should point out that actual unemployment is far higher than our “official” statistics say…it’s no surprise ITT is having trouble with job placement.

     This time around, we don’t have the debacle of the accreditor asserting the school is legitimate while the Federal government is locking the doors and kicking students out of the school because it’s an open fraud.

In blocking new students from enrolling, the Education Department cited the actions of ITT's accreditor, the Accrediting Council for Independent Colleges and Schools, which determined that ITT "is not in compliance and is unlikely to become in compliance with [ACICS] accreditation criteria."

     Yeah…that’s what they’re saying. The gentle reader needs to understand that ITT hasn’t changed its business practices in a decade or more. There was literally nothing about ITT in 2006 that wasn’t just as true in 2016. The accreditor could have withdrawn accreditation a decade ago, maybe even 20 years ago, for the same reason as today. The only reason accreditation is doing it now, is because the government wants the school shut down.

      As much as I applaud finally shutting down another fake school, the Libertarian in me must be concerned: the Federal government now has the ability to shut down schools it doesn’t like. What happens if a university stops teaching socialism/Keynesian economics as a good thing, but instead presents these concepts as evils? The government can shut the school down. I don’t like the precedent here at all.

      I’m probably just worrying too much, since technically, the Federal government didn’t shut down the school, they merely pressured the accreditor to do its job and not accredit ITT. Anyway, with accreditation removed, ITT no longer has access to all those sweet, sweet, student loan checks. They did the only reasonable thing here:

   They shut down immediately.

"It is with profound regret that we must report that ITT Educational Services Inc. will discontinue academic operations at all of its ITT Technical Institutes permanently after approximately 50 years of continuous service.

    Federally backed student loan money represents 95% or so of their revenue, as it is for most for-profit schools. The gentle reader should understand that getting rid of the student loan scam will end accredited for-profit schools, overnight, as they all rely on the huge profits generated by those loans.

     Of course, ending the student loan scam will also end the many fraudulent community colleges, since those have around 80% of their student base due to Federal money (directly or indirectly). It will likely end many private and state universities as well…so perhaps my concerns are valid regarding the new system of the government telling accreditors to “withdraw accreditation, or else” when it comes to unpopular schools. As much as I agree with the decision here, I still worry about the implications for higher education.

When ITT Technical Institute announced it was closing its doors on Tuesday, Zach Seigel, ITT class of 2008, was thrilled. Not for himself, he says, but for all the people who now won’t be saddled with the same debt and useless degree that he is: $40,000 of student loans he can’t discharge and an associate degree in applied science that he says didn’t lead to any paid work.

     This is certainly good news, and better than the Corinthian debacle where this sort of thing wasn’t clear initially. True, these kids were still cheated out of years of their lives…but being relived of many thousands of dollars of debt is still nice.

     However, the kids that got their fake degrees last year, or 10 years ago, and were thus cheated by the bogus accreditation system? They’ll get nothing. It’s a cruel system the student loan scam has created, and it isn’t just hurting people in the for-profit schools. 

I write as often as I can about the 58 community colleges in N.C. 32 of which do not graduate in excess of 20% of their first time full time students. Yet they have accreditation oversight that does not fulfill its responsibility to the taxpayer who is funding the 80% to oftentimes pocket over and above grant money, and to never finish what they started by achieving a degree.

     Bottom line, the government shutting down fake schools is improving. From the mess of Corinthian to the somewhat more organized mess of ITT, we can see a clear increase in organization of the destruction.

      Still, if accreditation was legitimate, or the student loan scam didn’t exist in the first place, we could have avoided wrecking the lives of so many young people.

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