When Career Education Corporation executives first revealed in August that they had found that "certain" of the company's health professional schools had engaged in "improper practices" in calculating their job placement rates,they did what for-profit college leaders almost always do when improprieties are discovered on their campuses: they blamed "rogue" employees.
"The actions of a few people have let down others who work hard and responsibly every day on behalf of our students," Gary McCullough, Career Education's chief executive officer, said at the time.
But an internal probe of the company performed by an outside law firm has put the lie to these claims. As Career Education officials revealed last week, the lawyers found that the vast majority of the company’s Health Education and Art & Design schools significantly inflated the 2010-11 job placement rates they have been disclosing to prospective students and were about to report to the Accrediting Council for Independent Colleges and Schools (ACICS). “We uncovered that what were going to be reported as placements in a number of cases and a number of places were not genuine placements,” Steve Lesnik, the company’s chairman said during a conference call with financial analysts.. Lesnik took over as the company’s CEO last week after McCullough abruptly resigned from his post.
And these findings may just be the tip of the iceberg, as the law firm is now examining whether similar abuses occurred at Career Education’s other three units: American Intercontinental University, Colorado Technical University, and its Culinary schools. This does not bode well for the company, considering that it recently agreed to pay $40 million to settle a class action lawsuit accusing its California Culinary Academy in San Francisco of engaging in a systematic effort to mislead students about the school’s record in placing students into jobs, by, among other things, fabricating placements. Career Education did not admit to any wrongdoing.
The problems that the law firm unearthed at Career Education are clearly not the result of a few bad apples. They appear to be widespread throughout the company, and in fact throughout the for-profit higher education industry.
Here, for example, are some other for-profit college companies that have come into the crosshairs of federal and state regulators in recent months over allegations that they have manipulated their job placement rates:
Meanwhile, as we at Higher Ed Watch have previously reported, some other giant publicly traded for-profit higher education companies that compete with Career Education have also been accused of cooking the books on their job placement rates. These include Corinthian Colleges, Education Management Corporation, and Kaplan Higher Education. The job placement issue has been a particularly sensitive one for Corinthian. In 2007, a California Attorney General investigation found that the company had deliberately and persistently misled prospective students about their rates.The case was ultimately settled, and Corinthian did not admit to any wrongdoing.
Similarly, the privately-held for-profit college chain Alta Colleges agreed to pay the U.S. Department of Justice $7 million in 2009 to settle allegations raised in a False Claims lawsuit that its Texas campuses had engaged in practices “designed to mislead prospective students and to misrepresent material facts to them.” Among other things, the government found that the school recruiters had lied to prospective students about their job placement rates, saying that they were more than 90 percent when they actually were just over 50 percent. Like Corinthian, Alta, which is the parent company of Westwood College, did not admit to any wrongdoing.
But why are these types of abuses so prevalent at for-profit colleges? We will try to answer that question in our next post.