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New operator of local for-profit college tries — and fails — to rebrand

At least it's no Trump University


The good news: You can't attend this guy's now-defunct school even if you wanted to. - FILE PHOTO
  • File photo
  • The good news: You can't attend this guy's now-defunct school even if you wanted to.

As the class-action lawsuit against Republican presidential candidate Donald Trump's namesake "university" moves toward trial in the midst of this stranger-than-fiction election cycle, the nebulous realm of for-profit education once again finds itself under scrutiny.

But, to be fair, lumping in the now-defunct enterprise formerly known as Trump University with the rest of the industry may be overly generous.

Discovery in those proceedings has turned up the "Trump University Playbook," chock full of tips and tricks to nudge vulnerable customers into buying successively pricier classes, seminars, mentorship programs and books. It includes explicit instruction to push the most expensive "Elite" program and encourage customers to incur debt for it if necessary. The manual also includes psychological advice, like "don't ask people what they think about something you've said. Instead, always ask them how they feel about it. People buy emotionally and justify it logically."

What they bought was hardly educational. According to New York state's top prosecutor, "The contents and materials presented by Trump University were developed in large part by a third-party company that creates and develops materials for an array of motivational speakers and seminar and timeshare rental companies."

So, in Colorado Springs, a city with its own array of for-profit educational institutions, should prospective students heed the unflattering demise of Trump U. as a warning? Maybe, but our local for-profit universities do behave better.

Crucially, what sets Trump U. apart is that it wasn't a state-chartered, accredited, degree-granting institution, so its "students" (otherwise known as customers) couldn't get federally backed loans and grants, while in general, for-profit schools have primarily been rebuked for their abuse of the federal student loan system.

Today, outstanding student loan debt in the country totals more than $1.4 trillion, according to Federal Reserve data that financial tracker MarketWatch calculates to be rising at a rate of $2,726.03 a second. Of that debt, a disproportionate amount is owed by students of for-profit universities. Eight of the 10 schools whose students owed the most debt in 2014 were for-profit institutions.

Topping that list is University of Phoenix, whose students owe $36 million. Locally, just over 500 students are enrolled. The ubiquitous for-profit university came under federal investigation over allegedly deceptive marketing practices, job-placement reporting and improperly recruiting on military bases without permission. In February, after posting plunging enrollment and revenue numbers for the year, its parent company, the Apollo Group, sold the publicly traded company to private investors.

Another local school, Everest College, also finds itself in hot water. The campus just west of the Colorado Springs Municipal Airport is one of more than 100 nationwide formerly run by now-bankrupt Corinthian Colleges Inc., a giant, Wall Street-funded college operator that was the target of 200-plus lawsuits before collapsing in 2014. In one suit, California's attorney general accused the company of targeting poor, single women whom Corinthian's own internal documents described as "'isolated,' 'impatient' individuals with 'low self-esteem' who have 'few people in their lives who care about them' and who are 'stuck' and 'unable to plan well for the future' through aggressive and persistent internet and telemarketing campaigns and through television ads on daytime shows like Jerry Springer and Maury Povich."

The final nail in the coffin came when the U.S. Department of Education shut off the annual flow of $1.4 billion in federal financial aid to Corinthian. Without that revenue stream, which represented 80 percent of the company's total revenue, the company finally sunk.

With over 70,000 students on the verge of abandonment, student debt collector ECMC Group bought out more than half of Corinthian's 107 campuses, the Springs' Everest College included. The company then formed the Zenith Education Group to turn the for-profit schools into nonprofits.

At the time, critics found it odd that a company with zero teaching experience and a reputation for aggressive debt collection should be tasked with reforming what Corinthian left behind. But the Department of Education blessed the deal anyway (perhaps the feds' long history contracting ECMC to collect student debt made for both a familiar applicant and past employer reference).

At the outset, ECMC promised to cut tuition, forgive $480 million in outstanding student debt and improve educational and vocational programs. With a gesture to transparency and accountability, the Department of Education required that the new Zenith Education Group hire an independent monitor, but in March an Associated Press investigation uncovered that lawyers doing the monitoring had been retained by Corinthian in the past. The AP also found Zenith was continuing to recruit through mass telemarketing campaigns, neglecting to update curricula and hiring back senior Corinthian officials.

In need of a new monitor, Zenith tapped another firm that had litigated on behalf of Corinthian and employs several lobbyists paid by the for-profit colleges' main industry association. Last month, having posted a $100 million loss for the year and consolidated down to 24 campuses, ECMC infused Zenith with a $250 million endowment to keep forging ahead with promised reforms.

Colorado Technical University is also under scrutiny, though less visibly than its higher-profile counterparts. The campus near the Garden of the Gods exit off Interstate 25 offers a slew of degrees — associate, bachelor's, master's and doctoral — in business, computer science, engineering, health care and security. But of the 1,200 students enrolled, only 16 percent normally graduate, according to Department of Education statistics. Most students receive federal loans and leave with an average of $35,000 in debt.

Those facts, plus New York state's attorney general having found job placement rates on multiple campuses were falsified, earned CTU's parent company, Career Education Corporation (CEC), criticism from the Senate Committee on Health, Education, Labor, and Pensions. Based on such a high student withdrawal rate and "unusually high rates of students defaulting on student loans," the committee's report on CEC concluded that "it is unclear that CEC delivers an educational product worth the rapidly growing Federal investment taxpayers and students are making in the company."

The same Senate committee had rosier feelings for National American University, which enrolls 543 students between two campuses in the Springs. Though 80 percent of its revenue comes straight from the federal government — typical for the industry — NAU spends less than the industry average on marketing. All in all, the committee found that "It appears that many students are faring well at this degree-based for-profit college."

Colorado Springs is also home to Colorado Academy of Veterinary Technology — a two-year, accredited program from which 88 percent of students graduate. It costs $30,000 a year and 91 percent of graduates get jobs that pay between $25,000 and $45,000.

Anyone sinking that much money into anything should be well-informed.

But at least in the realm of for-profit education, local customers can rest assured that, for what it's worth, the options here are no Trump U.

Editor's note: This story has been updated to correctly identify Everest College as a former for-profit university. Everest College now operates under nonprofit status.

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