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Stimulus Wreckage 

Despite having been accused of deceptive business practices by the attorney general, former students, and ex-employees, Corinthian Colleges are getting millions in federal stimulus dollars.

Wednesday, Sep 30 2009

Martine Leveque moved to the U.S. from Haiti in 1983 and eventually established a Hollywood career writing subtitles in Italian and French for English-language movies. When that business recently moved overseas, she decided to pursue a nursing career, but found that it would take her at least two years to complete all the necessary courses.

"You can't be waiting to start living," the 47-year-old said. So she signed up for nursing classes at a vocational school where she could finish everything in only one year. The school was run by the private, for-profit educational chain Corinthian Colleges, Inc., which operates 106 vocational schools with 86,000 students in the U.S. and Canada.

Rather than improving her life, Leveque says she entered a personal hell of incompetent teachers and insurmountable debt. She's now earning $300 per week as a home care provider, and has no idea how she'll pay off the $40,000 in student loans she took out to cover tuition and other expenses at a one-year licensed vocational nurse program at Corinthian's school in Alhambra.

"Every day, the phone's been ringing at five in the morning, and ringing at 10 at night," she says of the constant calls she gets from bill collectors. "It was a horrible, horrible experience. Every time I think about it, I get bad dreams. I was saying to these people, 'What is going on? What is going on?' How can you take $30,000 from a student for a year of that crappy education?"

Sabyne Francis, one of Leveque's classmates, said she's resigned herself to struggling to pay off her loans. They have consulted with an attorney about filing a class action lawsuit claiming Corinthian misled them into taking on debt to pay for substandard education. "As a student, you've already signed your name on the dotted line," Francis said. "You really have no choice but to just deal with it."

A Corinthian spokesman said that faculty at Leveque's licensed vocational nurse program "met at least the minimum qualifications set by the California Board of Vocational Nursing," which meant they had either a bachelor's degree or a valid teaching credential, and two years of recent experience as a vocational nurse.

For years, Corinthian has been accused of employing aggressive recruiting techniques promising more than its schools can deliver, and then leaving students impossibly deep in debt.

In 2007, Attorney General Jerry Brown filed an unfair business practices lawsuit against Corinthian, alleging that the Orange County–based company placed "intense pressure" on recruiters to meet quotas for incoming students, and that it inflated the number of its graduates who were able to find work in their fields. (The company later paid a $6.5 million settlement without admitting wrongdoing.)

Meanwhile, two employees of Everest College, Corinthian's San Francisco campus, have claimed in a pending whistleblower lawsuit that the company broke federal financial aid rules by giving incentive pay to recruiters based on how many recruits they brought in. Corinthian says the suit has no merit and has asked that it be dismissed.

In August, 13 Corinthian students in Texas filed a lawsuit alleging their teachers "were either unqualified to teach in their ... fields, or simply uninterested in teaching." These were just the latest in a nationwide flood: According to Courthouse News Service, more than 80 such lawsuits have been filed against Corinthian since 2005.

Given all these complaints, I was surprised to discover that Corinthian Colleges, Inc. is a prime beneficiary of the Obama administration's stimulus package.

The $787 billion package — supposedly a paragon of accountability and transparency — included $17 billion to increase by $500 the amount of money each student may receive to pay for college classes under the Pell Grant program, which provides money to low-income undergraduates. Nearly 70 percent of Corinthian students receive such grants, the company reports.

According to data from the Federal Assistance Award Data System compiled on, $23 million from that stimulus boost has gone to Corinthian schools in California from some $49 million given to the chain nationwide. This is in keeping with a bonanza received by the whole for-profit school industry. The biggest player, the University of Phoenix, has received $400 million in stimulus-linked money so far this year. In San Francisco, Academy of Art College — famous for using an art school to fund a real-estate investment operation — has received $684,264. And the California Culinary Academy, the subject of a 2007 SF Weekly exposé alleging the school misled students into assuming massive debt, has gotten $65,357.

But the Pell Grant boost has made San Francisco's Everest College — a fifth-floor suite of converted offices where students take classes to become pharmacy technicians, massage therapists, and medical and dental assistants — a local stimulus champion. In fact, Everest has so far received more stimulus-linked Pell Grant money than any other educational institution in San Francisco: more than $1 million. That's more than the University of California San Francisco medical school, San Francisco State University, or City College of San Francisco.

More than merely pouring cash into the economy, the American Recovery and Reinvestment Act was supposed to help people recover financially. As President Obama said during a March speech, "We're already taking steps to make college or technical training affordable. All in all, we are making college affordable for seven million more students, with a sweeping investment in our children's futures and America's success."

But instead of actually helping prepare people for future success, it is setting up many of them for a lifetime of student debt.

How could this happen? The answer is complicated, but it involves large corporations that have figured out how to work the federal system of student aid, while selling bogus dreams to students.

For those students, the American Recovery and Reinvestment Act will be an antistimulus.

We've all seen advertisements for vocational schools in which beaming young men and women brag about getting their lives back on track.

Everest College, which, like other for-profit schools, targets low-income minorities and immigrants, sports what might be one of the least subtle versions of this pitch. In a commercial for the college, a young black man in a red T-shirt, sideways cap, and goatee smirks at the camera in front of what looks like an urban cement wall. "It's about doing something better than you're doing right now," he enthuses. "Why don't you flip up the script? You can create your own story. Graduate! Graduate! Go on to a career. Make more money. Have a better car. Live a better life. Do something. Do something right now. The number's right here. Don't do it for your kids. Don't do it for your mom. Do it for you!"

About The Author

Matt Smith


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