Thinking of learning a new job skill? Beware of phony colleges that promise great careers but leave graduates with worthless certificates and staggering debt.
Originally published in Good Housekeeping.
BRANDI E. CANICK, 28, LIVES WITH HER HUSBAND, a welder, in an apartment in Kearns, Utah. Three years ago when she decided her job at a dry cleaner wasn’t bringing in enough money, she signed up with Salt Lake City’s Bryman School, hoping to become a medical assistant.
Canick liked the sound of the nine-month accredited program. “They promised up-to-date equipment and training,” Canick remembers. “They promised qualified instructors, small class sizes, and that they would help place us in a job.” Even though it was more than twice the cost of the program at the local community college, there was no waiting list. So, eager to get on track for a better-paying job, she took out a student loan to cover most of the $4,700 tuition—a loan that she didn’t have to start paying off until six months after she graduated. And each day, after work, she would drive to Bryman for night classes.
For the first three months, the school seemed legitimate. But then a new instructor was hired to teach office skills. “He had no knowledge of word processing whatsoever,” Canick says. “He blatantly admitted that to the whole class.” Instead, he read directly from the teaching manual and asked some of the more computer-literate students to bail him out.
Things went downhill from there. Her transcription class used antiquated machines. Class sizes ballooned; in one lab course, students had to double and triple up on microscopes. An entire class shared one hemoglobinometer. And the EKG machines were obsolete.
Canick remained determined. On her own, she arranged an internship with her doctor, whose assistant taught her how to draw blood, analyze urine, culture throats, administer injections, and use a state-of-the-art EKG machine. She checked out additional books from the library and studied hard. “I went above and beyond what Bryman provided me, just so I could learn,” she says.
Then came the bitter finale: When she graduated, no one would hire her. Some told her flat out that they never employ Bryman graduates because their training was substandard. Canick’s own doctor had no openings.
But she persisted, first working at a chiropractor’s office, where she answered phones and performed simple assisting tasks. Finally, she found a clinic willing to hire her—and give her the intensive on-the-job training she needed. Now, no thanks to Bryman, she feels confident in her work.
In 1995, Canick joined 24 current and former students in a lawsuit against Bryman. (As the case progressed, more than 100 current and former students asked to join.) The school’s attorneys asserted that if students couldn’t find work, it was because of “their own failures.” They asked that each plaintiff submit ten years’ worth of medical records documenting all physical or psychological treatment, a request Randall Phillips, the students’ lawyer, called “burdensome” and “harassing.” But the judge ruled it relevant. When the students were unable to fully comply by the deadline, the case was dismissed. (Bryman was sold in June 1996 to Minnesota School of Business and renamed Utah Career College; it is under new management.)
FOR SO-CALLED CAREER COLLEGES, BUSINESS is booming. With a high-school education no longer a ticket to a well-paying job, and 77 percent of adults over 25 without a bachelor’s degree, trade schools have enormous appeal to anyone looking to make more money. And it’s not just 18-year-olds who are signing up; older Americans, who either need to retool careers or start fresh in new ones, are too. Though such schools often cost more than community colleges, about 60 percent of students pay with loans that they don’t have to start repaying until six months after they graduate. The schools also promise speedy training—six or nine months is common—and hands-on help in landing a job.
According to JBL Associates, a private consulting firm, an estimated 1.2 million adults a year—about two- thirds of them women—are getting trained in a variety of fields, the most popular of which include medical and dental assistance, travel and tourism, electronics, and office skills like word processing. While most of the schools are legitimate, a sizable number are shoddy. Starting in 1993, the U.S. Department of Education banned more than 700 trade schools from federal student-aid programs because of various violations including fraud, failure to administer programs properly, and loss of accreditation.
Some scam schools are designed solely to amass tuition monies, federal grants, and student loans. They hire dozens of recruiters—who often outnumber the teachers—to entice naive students with false promises, professional-looking facilities, and pay-later schemes. Then they don’t deliver.
Atlanta’s now-closed Connecticut Academy, for example, hired instructors without obtaining documentation of credentials; many were grossly unqualified. “[The director of admissions] himself said that the school did not care if the students learned anything,” asserted former recruiter Phil Mebane in a sworn affidavit. “The teachers were employed simply to keep the students entertained so that they would stay in school for at least six days,” after which point the students were not eligible for a refund. According to court documents, recruiters were paid $250 per student—but only if the student made it through those first six days.
There are other ways students lose out: a “job placement” service that turns out to consist of someone handing over the local classified ads, credits that prove nontransferable to legitimate colleges, and hundreds of students training for a field where the school knows there are few openings. The result is that the student finds herself no better trained than when she first enrolled—and she’s now thousands of dollars in debt. Without a job to repay the loan, her credit is wrecked. And without credit, she can’t obtain a loan or get a grant for legitimate schooling.
JUDY PAULEY IS A CLASSIC EXAMPLE. At 38, she was fully expecting to be hired as a deputy sheriff; she had made a good impression during her interview and passed both the physical exam and the standard polygraph test. All that remained, she was assured, was a routine background check.
She was counting on the job. With two daughters, 16 and 14, and an $800-a-month apartment, Pauley, divorced, was barely making ends meet as a security guard for a private firm. The sheriff’s job paid nearly $30,000 a year—more than double her current salary.
But suddenly, she felt the job slipping away. The personnel director explained that his office had uncovered a serious blemish on her record: She had failed to pay off a trade school loan.
Pauley rushed to explain. In the mid-1980’s, she had enrolled in a one-year course in medical administration at Century College in Huntington, West Virginia. “They promised me they had the best books, the best teachers, and I’d get credit at any of the colleges and universities around,” Pauley said. The college’s president, Philip Niebergall, described himself as a religious man who wanted to uplift his neighbors through education.
But nothing was as she expected. One class, called “personal hygiene,” consisted of going out to dinner at a local restaurant “to see how we would act and eat around people,” she says. Her teachers had little experience. The typewriters and Dictaphones were scarce and outdated, and the sterilizing equipment “broke down half the time.” What’s more, when she graduated, Pauley learned that, contrary to its promises, the school had no placement service and the field had few openings. She looked on her own but couldn’t find work.
In 1986, the year after Pauley graduated, the school abruptly shut down. Two years later, Niebergall was charged with fraudulently obtaining nearly $900,000 from the students at Century and other schools he owned in Florida and was sentenced to two years in federal prison. Prosecutors say he used diverted refund money to buy a yacht, an airplane, and a condominium. All his students received was bogus training that left them unemployable—and unable to repay their loans. Pauley tried to repay her $5,000 loan in small increments, but without a decent-paying job, she fell behind.
But none of this satisfied the personnel director, who insisted his office couldn’t hire someone who had defaulted on a loan. “He said they couldn’t chance my taking bribes,” Pauley recalls. She was crushed, and furious at Century all over again.
So to make ends meet, Pauley continued working as a security guard and fended off demands from the bank to increase her loan payment. Finally, demoralized, she moved with her girls back to West Virginia, where rents were cheaper. It took until August 1995—ten years after her graduation—before a court ordered her loan canceled. It didn’t, however, require the lender to reimburse the $1,000 or so that Pauley had already paid.
With her credit restored, Pauley, now 43, has returned to a community college to prepare for a nursing degree. But the experience still haunts her. She remembers going without a car when she couldn’t qualify for a loan. And she remembers trying to rent a saxophone for her daughter, and being told “they wouldn’t even rent me a toothpick.”
FRAUDULENT TRADE SCHOOLS RIP OFF more than the students. Every time a student fails to pay off a federal student loan—because a poor education left her unemployable—taxpayers make up the difference. From 1990 to 1995, students defaulted on $14 billion worth of federally backed student loans. Although many people assume the bulk of this debt is owed by deadbeat college graduates, in fact an astounding 76 percent of defaulters come from private trade schools.
Some say the government must share the blame: Historically, it has failed to investigate the quality of a school’s curriculum and teachers before approving loans. Instead, the government has relied on accrediting agencies, which are made up of the schools themselves, and thus don’t scrutinize the process. “In the past, we have not done our job of holding the accreditors as accountable as they should be,” says U.S. Assistant Secretary for Postsecondary Education David Longanecker.
Not until the Higher Education Amendments of 1992 went into effect was pressure put on some of the worst offenders. Now, schools with default rates exceeding 25 percent can lose eligibility for federally guaranteed student loans. This, combined with other measures, has driven 1,500 trade schools out of business.
Yet there’s no question that fraud persists. “You look around every corner and there it is—there’s just no end to it,” says Elena Ackel, an attorney with the Legal Aid Foundation of Los Angeles. Under the stricter guidelines, some schools have simply gotten more wily. In at least one case, a school found guilty of fraud in one state simply opened up shop in a different state. And the schools have discovered other loopholes: They may be disqualified from getting federal student loans, but they still quality for another form of federal aid: Pell Grants. These are awarded to students who can demonstrate economic need, and they don’t have to be repaid.
“The fact is that there are scam schools out there using Pell Grant money to keep themselves in business—and not giving a proper education,” says Congresswoman Marge Roukema (R-NJ). She and others have been pushing for tighter regulation of Pell Grants to schools with high default rates. But because trade schools have lobbied hard, saying the industry is already overregulated, new legislation has been slow in coming.
Some students who’ve been ripped off are seeking legal redress. In May 1995, the Maryland Higher Education Commission found that the General Communications Institute (GCI) in Rockville, Maryland—which charged more than $7,000 per student—failed to find promised jobs for up to 511 of its 573 “office specialist” students. “Students have a contract with the school, and the school has to deliver,” says commission spokesman Jeff Welsh. State officials ordered the school to refund $3.5 million to 500 students, and the school shut its doors for good. Because GCI has not refunded this money, most of the students will have their loans forgiven by the federal government or the state of Maryland.
Also in 1995, four former students sued Brown Mackie College in Overland Park, Kansas, claiming the school had misled them about the quality of its faculty, the size of its classes, and its rate of job placement. The school settled the case for an undisclosed amount, without an admission of wrongdoing. In a second case, the school consented to pay $100,000 in order to settle similar complaints by nine other students. Again, school officials denied wrongdoing, and Brown Mackie, which specializes in business, legal, and management training, continues to operate in another city.
This year, Congresswoman Maxine Waters (D-CA) plans to introduce a bill designed to forgive or reduce a former student’s loans if the government decides the school has committed fraud. With such a strong industry lobby, Waters expects a tough battle, but she promises not to quit. “I will continue to speak against this fraud and abuse by for-profit trade schools,” she says. “I am not going to go away.”
SIDEBAR: How to make sure a school doesn’t fail you
- Call the human-resources departments of some businesses in the field you’d like to enter. Ask what credentials they look for in prospective employees. Do they recognize certifications from trade schools? If so, which ones? Ask, too, if openings in the field are plentiful.
- Get the name of the agency that accredits the school. Write and ask for the results of the school’s latest review. The agency will tell you whether the school passed, and if not, why.
- Ask the school for its graduation rate. A decent school should boast a 50 percent completion rate in any program—70 percent for courses of less than a year. Lower rates generally mean that students are dropping out discouraged. Request the percentage of students who pass their licensing exams and get placed in jobs. If a school publicizes its placement rate, it must also, by law, provide all information necessary to back up its claims. Those numbers must be available to you by the time you apply for admission.
- Request the names and phone numbers of recent graduates. Ask them: Did you find the training useful? Did you find work? While you run the risk that the school will give you only the handful of happy graduates, that’s at least something; a school that can’t cough up even a few satisfied customers is one you should definitely avoid.
- If the school tells you that local colleges will turn the program into credit, call the colleges directly and confirm. If it turns out the trade school gave you wrong information, it’s a good bet they’ve misled you on other fronts too.
- If, after taking these precautions, you still feel your education was inadequate, or if the school closed while you were a student, you might have some legal recourse. Contact your lender or the U.S. Department of Education (800-4-FED-AID), and ask for the “Fact Sheet for Students Adversely Affected by the Closure of a School or False Certification of Eligibility to Borrow.” It warns you to keep making loan payments until you are notified otherwise, and outlines the narrow conditions under which you might be eligible to have your loan discharged—if the school closed, for example, or you can prove that they knew you’d be unable to meet licensing requirements because of your age or disability.
Related stories by Barry Yeoman on career colleges