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A popular YouTube parody of the ad has a doppelgänger of the pitchman saying, "I don't care if your grandma is dying right now. You need to take her dying money and go to college."
These appeals have become so commonplace as to seem prosaic. But they are part of a sophisticated marketing operation designed to attract students who qualify for federal assistance. Trade schools like Corinthian train their sales staff to push prospective students into applying for financial aid, which makes up a huge share of schools' revenue. In financial disclosure statements filed with the Securities Exchange Commission, Corinthian reported that it obtains 89 percent of its $1.3 billion annual revenue from federal aid programs.
And the more federal student aid the students bring in, the more money Corinthian can spend on marketing.
During the 12 months ending June 30, Corinthian spent nearly $300 million — about $1 for every $2.50 used for educational expenses — on Internet, television, and newspaper advertisements; presentations at high schools; and telemarketing operations.
By comparison, "the entire admissions budget for traditional collegiate institutions is so minuscule that it wouldn't even merit a footnote on the institutions' financial statements," said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers. "The periodical budget at the library would be higher."
Corinthian says it employs 1,700 "admissions reps," its term for its sales force. They are assigned to "capitalize on the strong lead flow that's coming through from the media," CEO Peter Waller said during an Aug. 25 conference call with stock analysts, a Thompson/Reuters transcript of which was obtained by SF Weekly.
This government-subsidized-marketing merry-go-round is a blueprint for extraordinary growth. During the past year, thanks in part to these efforts, and in part to people lured back to school by the bad economy, enrollment during the past 12 months increased 24 percent to 86,088 students, while operating income increased 166 percent.
I got a sense of this boiler-room sales mentality when I recently visited Everest's "campus" at a small office building across Mission Street from the Yerba Buena Parking Garage. "Are you going there to pick up a brochure?" a security guard asked.
I said I was. But mostly I just wanted to see this remarkable school, the San Francisco champion of the Obama stimulus sweepstakes.
I took an elevator to the fifth floor, walked down a narrow hallway that opened up to a small reception area, and asked a cheery young woman for a brochure.
"We don't have them up here," she said, although her desk was about eight feet from a rack of brochures. "Let me get an admissions representative to help you."
After a while, a tall, thin, dressed-to-kill woman appeared and took me to her spot in a warren of cubicles that seemed to take up a significant portion of the school's floor space.
I heard an unseen, friendly-sounding man say through a cubicle wall, "Does your husband support your desire to go to school?" Another voice said, "If you're going to learn to swim, you've got to get into the water."
Smiling, my admissions representative asked me what I thought I'd like to do. I asked what the classes cost. She said that depended on my income. I insisted on asking how much they cost, independent of federal financial aid. The woman finally pulled down a binder from a shelf and silently opened it to a page that said the programs, which lasted from eight to 10 months, cost more than $17,000.
She insisted that I really did need to see a financial aid counselor and directed me to a different friendly and attractive young woman, who also smiled and asked me what I wanted to do with myself.
For-profit trade schools weren't always polished billion-dollar sales operations. And they didn't always benefit from unfettered taxpayer largesse. Career colleges date back to mid-19th-century urban stenography schools. The industry evolved to spawn correspondence art schools and later to private trucking, beautician, and mixology schools. Today, you can take out federal grants and loans to obtain a $33,000 online bachelor's degree in "homeland security" from the inaccurately named American Public University System — actually a private company that consists largely of a Web site.
The industry has never been without hucksters, and for much of its history, these schools have been met with skepticism and scrutiny by regulators.
Recent years, however, have seen a steady erosion of rules designed to prevent for-profit schools from defrauding students and taxpayers. The industry's ability to subsist on federal funds — $16 billion in aid went to these schools in the 2007-2008 academic year, according to the Chronicle of Higher Education — is the result of a vigorous decades-long lobbying effort to rewrite student and taxpayer protections.
The industry received substantial help dismantling consumer-protection rules during the Bush administration, when for-profit schools gained favor as entrepreneurial-minded alternatives to traditional public schools.
In 2002, Sally Stroup, the top lobbyist for the University of Phoenix, was made the Department of Education's assistant secretary for post-secondary education. During her tenure, which ended in 2006, the Department of Education softened rules that prevented these schools from obtaining more than 90 percent of their income from federal aid. Under Stroup, the feds also reduced the level of scrutiny they were required to receive from accreditation agencies.
