Social Death, Public Banishment and Increased Militarization: Youth Living Dickensian Lives

In his prescient work written in 2005 entitled Shortchanged, author Howard Karger wrote about the subprime economy in which many of our citizens work and live:

Driving through low income neighborhoods you can’t help but notice the large numbers of pawn shops, check cashers, rent-to-own stores, pay day and tax refund lenders, auto-title bonds and buy here, pay here used lots. We are awash in “alternative financial services” directed at the poor and those with credit problems. These fringe economy services are equivalent to an economic Wild West where just about any financial scheme that is not patently illegal is tolerated.1

The situation is far worse four years after the publication of Karger’s book and the global meltdown of capitalism. Now, with rising unemployment and financial catastrophe, as author Henry Giroux, recently wrote:

Youth, in particular, are assaulted by market forces that commodify almost every aspect of their lives, though different groups of young people bear unequally the burden of this market-driven assault. Those who are marginalized by class and power suffer more than the indignity of being endlessly commodified and commercially carpet-bombed. They are also objects of a low-intensity war that now criminalizes their behavior, subjects increasing aspects of their lives to harsh disciplinary practices and treats them as both dangerous and disposable. In a society in which the social state that has been hollowed out, largely stripped of its welfare functions, youth are no longer provided with the economic, social, and cultural supports that offer them dignity, prosperity and the promise of a better future. Instead, they are now largely governed by a corporate state that “secures power through the imposition of law, discipline and uncompromising modes of punishment and imprisonment.”2

It is clear that the labor of young people in our society, especially that of youth of color, is surplus labor, simply not needed for the productive activities associated with a market driven society and so we now find increasingly that there are more and more youth who have become disposable — banished from public life and who all too often inhabit a Dickensian life of nightmarish proportions, turning to crime, gangs, violence, and other deracinated outlets of despair just to survive. They are the ‘target audience’ of many of these proprietary schools for the students have no other place to go, no other social or public outlet for their young lives, no health care, no housing, no work, no public libraries, no public services as they habitat a world largely divorced of their potential and increasingly directed by the penal and venal realities of capitalism. As Giroux goes on to note:

Children, for example, make up a disproportionate share of the poor in the United States in that “they are 26 per cent of the total population, but constitute 39 per cent of the poor. Just as alarming, more than eight million children lack health insurance, and millions lack affordable child care and decent early childhood education. One of the most damaging statistics revealing how low a priority children are in America can be seen in the fact that among the industrialized nations in the world the United States ranks first in billionaires and in defense expenditures and yet ranks an appalling 29th in infant mortality.2

I spoke to a young man of about 30 years old in my last sojourn at the Phoenix Institute in Oakland. When I asked him how his classes were going he told me that they were going well, but he was living in his car with no job. However, he indicated, a bit animated, with the federal monies for school he received not only does he have the use of the computers and a warm place to go, but he can clean up in the office bathroom. This is privatized homelessness under Title IV.

The free-market policies ruthlessly pursued through the calamitous corporatization over the last thirty or more years have imposed crushing and profound changes onto the lives of children. On National Public Radio, November 23, 2009 a student at one of these proprietary colleges was interviewed. She reported that she now pays $300 dollars per month to service her federal loans and that her parents had to take second jobs just to help her pay for her proprietary education. Currently she cannot find a job so her answer: she will borrow more money now to go on to graduate school for in this way she will not default on her loans, meaning wage garnishment, withheld social security and an inability to rent or buy a home. Debt peonage and a lack of public and civic life are forcing her and her family into the brutal margins of society.3

What is to be done?

In a perfect world, one could argue for the banishment of such schools, for they offer no campus life, no culture, no intellectual nourishment — nothing associated with a dignified student life and their existence threatens the whole notion of public education. These colleges promote education as a privatized segregationist activity, through an avatar style ‘Second-Life’ pursuit of learning coupled with privatization, insipid individualism and commodification. What is needed is an investment in public education that provides the full breath of student life – college campuses, libraries, cafeterias, auditoriums, student placement centers, social clubs, social meeting places, book stores, health clinics, office hours for professors, writing labs, arts and culture.

There is no “college experience” at these proprietary schools; there are not even libraries at most of these schools or facilities where students can meet. At many of the proprietary schools that offer a ‘campus’, one finds the colleges really languish in grimy storefronts in large office buildings along side other businesses, like insurance companies, mortgage outfits and financial institutions that share the office building rent. Usually the administration office of the ‘campus’ is comprised of simply a desk and rows of computers; the food services are vending machines dominated by Pepsi and Coca Cola and the class rooms are rented to corporations when not in use by the proprietary school. At the Phoenix Institute’s ‘campus’ in Pasadena, California, the college sits in a large office building that shares tenancy with the Rand Corporation, harbored on the upper level floor. The college also makes $25,000-30,000 per month just renting out the classrooms when they are not in use.4

But this is hardly a perfect world and thus perhaps what can be hoped for is a thorough frisking, oversight and regulation of the industry. The largest indictment in the GAO report — one of the two that Congress released – the other focusing on minority-serving colleges, was the result of the GAO’s investigative work that uncovered that officials at a Washington-area branch of one publicly traded for-profit college (the GAO report will not release the name) violated federal rules when they provided answers to, and “tampered” with answers given to GAO investigators posing as prospective students taking the ABT.5

This coupled with evidence of abuse regarding rules that are supposed to govern the ability of underachieving students to qualify for federal financial aid has now begun to surface. Jane Oates, another critic of the proprietary school scam who advised New Jersey Governor Jon Corzine before she joined the Obama Administration, told the Newark Star-Ledger that the schools should reduce their earnings by offering more student aid. Ohio Board of Regents Chancellor Eric Fingerhut told state legislators that “it is simply untenable for … a publicly or privately held company, seeking the maximum return for their owners [to] set tuition in a manner that is designed to maximize the public dollars they receive and then expect the taxpayers to pay the bill.”6

Add to her comment facts that point to the disproportionately high rates at which students at career-related institutions default on their student loans, and the U.S. Education Department is now being asked to toughen its oversight of the colleges – perhaps a direction in which the Obama administration has begun to move in recent months.7

The GAO is clear in regards to its positions on this growing segment of privatized education and warns that:

Without better oversight of the ATB testing process to ensure more frequent identification of improper testing, and stronger processes for handling and reporting improper testing, both the integrity of the testing process and the qualifications of students who receive federal funding cannot be assured, the GAO writes. “In addition, without stronger controls, such as clear guidance from Education banning the use of high school diploma mills to obtain federal aid and information on how to identify diploma mills, the government cannot be assured that its student aid funds are only provided to students who have an ability to benefit from higher education.”8

When Arne Duncan, the Education Secretary was asked about the stimulus boon for the for-profit college industry he told Business Week that he intends to increase monitoring of federal student aid to all schools, private and public:

I am creating an internal task force to optimize our procedures and to build better connections to other consumer protection agencies.9

The words are hardly heartening and with Duncan’s express desire and support of school privatization, the public would be right to be skeptical about any of his declarations. You can see Duncan’s horrific record in Chicago and elsewhere.10

But many argue that there are truly ethical and tangible polices that can begin to be put in place to at least staunch the wound inflicted by these institutions. They are sensible, even if they are reform efforts aimed at regulating the public commons. Stephen Burd, writer for the Washington Monthly, explained it this way:

Just publishing lifetime default rates would give prospective students a clearer picture of the risks of enrolling in a particular school. But the impact would be far greater if Congress used this data, along with graduation rates, to weed out abusive institutions; ideally, any school that failed to meet a certain threshold should be kicked out of the federal financial aid programs.

At the same time, Congress should require companies that offer private student loans to give the same kinds of flexible repayment options and consumer protections as are available through the federal student loan program, including allowing borrowers to repay their loans as a percentage of their income. Lawmakers also need to revisit changes Congress made to the bankruptcy code in 2005, which make it exceeding difficult for financially distressed borrowers, including those with private student loans, to discharge their debt in bankruptcy (The Subprime Student Loan Racke) With help from Washington, the for-profit college industry is loading up millions of low-income students with debt they’ll never pay off.11

Certainly a better system of transparency and accountability must be developed to track these institutions. The cost of personnel to police them could certainly be paid for by the fraud and abuse their diligence would prevent. But is putting more ‘police on the beat’ the answer? After all, why regulate an industry that commodifies education for profit while soaking up public funds that could be used to strengthen public institutions? Isn’t the industry itself the problem? Fighting crime certainly requires more personnel but stamping out crime requires a different tactic: one that would stop the crime at its root.

And that is the point: the whole miserable business plan should be stopped, not regulated and controlled. The question could be put forth metaphorically this way: “Do we as citizens wish to control and regulate the private prison industrial complex”? Or is the issue to do away with this for-profit center of despair completely? It is the same question the public must grapple with when trying to sort out what to do about these gigantic money making machines called proprietary colleges that seem to have grown overnight under the noses of both the politicians that enabled them and the public that was clueless to their harms and effects, thanks of course to the corporate sock puppet press who reports for some of the same radio and TV stations that run paid commercials for the same for-profit colleges.

Students Fight Back

The good news is that students who have been ripped off by these targeted scams and others too large to put into this article, have organized themselves online to testify as to the quality, costs and outright wholesaling of a bankrupt education. You can find them at such sites as RippOff Report.com or Degree.com. Here, and at many more such sites, students and some former workers are registering their complaints and public interest lawyers are listening. As I noted in an article, many of these schools are now embroiled in class action suits on behalf of students. Of course the proprietary colleges defend the suits with the federal monies from Title IV and the Paulson largess, but that is neo-liberal economics for you.

This should not sway students, teachers and whistleblowers to come forward with any information they may have regarding the impropriety of these proprietary schools. In fact, students are the front-line in struggling against the oppressive practices of these schools as can be testified to by the large amounts of monies paid either in class action suits or to the government as fines. They work with public interest lawyers who then seek to hold these schools responsible through class action suits. If enough students and their teachers come forward and seek legal redress, the practices of these schools will be uncovered during legal discovery and publicized to the public.

Shareholder Lawsuits

Shareholder lawsuits are another way that these companies might be reigned in. Recently shareholders of the Apollo group sued the proprietary corporation that runs the Phoenix Institute:

Shareholders claimed that Apollo misled investors four years ago when it kept secret a 2004 Department of Education report that criticized the University of Phoenix’s recruitment policies. The report concluded that the university paid enrollment counselors solely based on the “recruiters’ success in securing enrollments,” which violated federal regulations.12

A federal jury agreed, deciding that the Apollo Group Inc., the company that owns the University of Phoenix, fraudulently misled investors in 2004 about their student recruitment policies. The panel ordered the company to pay shareholders about $280 million.12

Apollo Group Inc. was, as recently as October of this year, in settlement talks to resolve another student-recruiting lawsuit. In this suit they are facing a liability of $40 million to $200 million.13

There are many other similarly situated proprietary schools that deserve and could face a good tort lawsuit and these schools should be on notice that citizen lawsuits are not only possible, but probable. The issue is that students, staff and the teachers that work at these schools must come forward to identify fraud and abuse and then seek legal remedies to hold these companies responsible. The good news is that in droves, they are.

Vigilance through investigative reporting

Another important way to hold these proprietary colleges responsible is to expose their practices through vigilant investigative reporting and public awareness. This article is attempting to do just that. Educational progressives and organizations should do likewise, exposing the practices of these institutions in face of the inability and disinterest of the corporate media to rarely even mention them. Using the web and FaceBook, YouTube and other means, these colleges should be the subject of heightened exposure and discussion. Only through independent and investigative journalism coupled with narrations from students and teachers will this information get out to an ill informed public.

The Role of Government Oversight and Regulation

The AACRAO’s October 16, 2009 letter to the Federal Trade commission points out that the Department of Education can do a vastly better job of regulating and enforcing the program integrity of these colleges. They believe that any rule-making in the Department of Education should, at minimum, cover specific identified concerns. Many of these recommendations are really calls for re-regulation and enforcement of current regulations that are in place but were gutted, such as the issue of incentive compensation that violates the statute it is supposed to interpret and allows for shoddy the recruitment practices illustrated in early parts of the article.

Another recommendation the organization puts forward is to address accreditation. Here AACRAO’s concern is that the accrediting agencies for these colleges lower their standards to assure approval, thus ushering in more schools and more opportunities for abuse. Since there are no substantive adverse consequences for an accrediting agency that accredits these proprietary schools inappropriately, an incentive exists that provides for lax judgment and enforcement in favor of approving, rather than denying accreditation applications, even when there is doubt as to the integrity of these institutions.

The group goes further: advising the government to devise regulations that more clearly articulate “gainful employment in a recognized profession” and their eligibilities and criterion. They argue that the gainful employment statute should be tied to the amount of post graduation debt, for many students graduate with more debt than their employment can possibly cover.

In their letter, the association goes on to note that these proprietary institutions should be accountable for the dirge of saturation advertising and deceptive marketing practices which they continuously engage in and which this article has attempted to expose. In the most recent year, 2008, AACRAO notes that nine advertisers participating in Title IV spent $1.75 billion on saturation marketing and they are set to spend more than $2 billion in 2009. The heaviest advertisers, according to the letter issued by the group, receives as much as 81% of their revenue from student aid. This is unconscionable and means less money spent on instructional needs, students needs and general costs, including salaries. They argue for 34 CFR 668.71-75, a law which regulates this type of marketing spending be enforced. They argue that under the Bush administration for eight years the law was ignored or intentionally misinterpreted.

The letter goes on, asking the Department of Education to assure full disclosure, as Burd argued above, on the part of these for-profit schools and ask that all financial figures be disclosed to both the department and the public. This would mean students could then see the percentage of participating schools in relation to former students who leave with debt, their graduation rates and any other salient information they would need to make critical choices.

Finally, AACRAO goes on to request the Department of Education to define a “credit hour” as well as to assure satisfactory academic progress on behalf of students, for at this point as the AACRAO letter as well as this article notes, many unscrupulous schools are simply gaming the Title IV system by inventing new products like “credit hours” and then ushering in the least advantaged students, many ill-prepared for higher education to sign up for them.14 When I asked Nassirian about his expectations that the colleges would be reigned in, he only chuckled and stated that he had survived eight years of the Bush regime, so nothing could be much worse. But could it?

It is true that owners and shareholders seem frightened now that the Obama administration has discussed possible changes in the rules that have allowed many of these schools to cannibalize students. Barons, a conservative pro-market financial publication that is now online, reported on November 9, 2009, that:

The for-profit college business grew sensationally right through the recession. September-quarter enrollments rose 20% to 50% across the industry, from little Grand Canyon Education (ticker: LOPE) to giant Apollo Group (APOL), parent of the well-advertised University of Phoenix. So why are the industry’s stocks trading at historically low multiples of their fast-rising profits? And why did an Education Department panel spend last week discussing regulation of these businesses — which enrolled more than 10% of all U.S. college students last year while accounting for almost 25% of $60 billion in government-backed student loans? (Leveraging up to Learn, Apollo Group and other for-profit colleges will find it harder to make the grade — especially as they come under scrutiny for aggressive enrollment practices.15

However their clout in Washington and elsewhere cannot be underestimated and as more and more public institutions come under attack by fiscal blowback and government policies, these schools could see tremendous growth.

Public community colleges, state colleges and public university personnel must get involved: The issue is morality and the deliquescence of the public realm

The San Diego Union Tribune, November 20, 2009 covered the student protests at the UC campuses, noting:

These students need a course in Reality 101. And the reality is that there is virtually no segment of American society that is not straining with the economic recession. With UC facing a $535 million budget gap due to state cuts, the regents have to confront reality and make tough choices. So should students.16

The Tribune is simply incorrect, untruthful, or both; but then that is to be expected from the corporate press that makes its living auctioning off advertising space. As this article points out, many individuals in our bankrupt society are doing just fine in the Second Great Depression. Sure, they represent a tiny elite that includes the proprietary colleges and their owners and shareholders. Yet for them, economic crisis foreshadows large profits.

With higher education cuts foreseen in the future throughout the United States and with forced tuition fee hikes in the making, it is in the interest of public school employees of all stripes to become active in fighting back against the wholesale giveaway of Title IV monies to ruthless proprietary colleges. If not, then they will be allowed to continue and will force public education into a rat hole, decimating pensions and future wages for public workers. Although it is essential for public administrators and union representatives to struggle as hard as they can for increased public funding for their institutions, the fact of the matter is the fight right now is for the public realm itself. Without awareness and discussion among all public workers and staff at public colleges and universities and without direct organized opposition to the for-profit proprietary schools, community colleges, state colleges and universities could see proprietary schools compete more effectively with the public realm through saturation marketing and unscrupulous business practices thereby pulling the rug from under these public institutions by siphoning off public funds and eventually reducing them to secondary institutions.

The issue must be grounded in moral principles. It is time to reclaim education as an act of solidarity, not one of cold blooded profit and vicious individualism. Education must encompass such values as appreciation for diversity, participation in power or decision-making and equity in the form of equal opportunities for workers and students. Proprietary colleges see diversity only as a marketing plan, participation in power limited to the decisions of the CEO’s who run these colleges and equity or equal opportunity, as simply not part and parcel of their business plan. In fact the opposite is true, the proprietary schools prey of the most impoverished.

In closing, if we allow the proprietary colleges and universities to predate our public institutions by siphoning of billions and billions of dollars of taxpayer funds, then we’ve become the alchemy of fools. I have higher hopes or perhaps, let us say, greater expectations that this sublimated subsidized industry must and can be relegated to the trash heap of history, probably the greatest lesson these schools could teach us.

Read Parts 1, 2, and 3.

  1. Shortchanged: Life and Debt in the fringe economy, Howard Karger, 2005. Monthly Review Press. []
  2. Giroux, Henry, “No Bail out for youth: Broken Promises and dashed Hopes,” Truthout. [] []
  3. NPR, All things considered, November 23, 2009. []
  4. Interview with former Phoenix employee. []
  5. United States Government Accountability Office, Proprietary Schools: Stronger Department of Education Oversight needed to help ensure only eligible students receive financial aid , August 2009. []
  6. Bashing Career Colleges, July 21, 2009 WSJ, opinion page. []
  7. Lacking the ‘Ability to Benefit‘ September 22, 2009, Doug Lederman. []
  8. United States Government Accountability Office, Proprietary Schools: Stronger Department of Education Oversight needed to help ensure only eligible students receive financial aid, August 2009. []
  9. Business Week, “For profit colleges scooping up the stimulus.” []
  10. Danny Weil, “The Future of Charter Schools.” []
  11. Stephen Burd, Washingtonmonthly.com in his November and December article found at 2009. []
  12. New York Times, “Fraud by University Owner Is Found,” January 17, 2008. [] []
  13. Joseph Perreira, Wall Street Journal, October 1, 2009. []
  14. Nassirian, Barmak, Letter to Federal Trade Commission, October 16, 2009. []
  15. Bill Alpert, Barons November 9, 2009. []
  16. San Diego Tribune, November 20, 2009. []
Danny Weil is a junior college teacher at Allan Hancock College in California where he teaches philosophy. He is a former kindergarten, first grade, and second grade teacher who has written a great deal on education. Read other articles by Danny.

5 comments on this article so far ...

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  1. Ronald McRaygun said on December 4th, 2009 at 11:54am #

    I “attended” one semester at one of these proprietary colleges in order to finish my undergraduate degree. They denied a number of my previously earned credit hours and set me up on a 4 year program! I’m a Senior in the “real world” btw.

    When I attended regular university, I didn’t really know how to go about getting federal money, so I paid cash. And now I’m 7,000 in debt for one stinking semester at a lousy school.

    The propietary school in question was so bad that I had to retake ***ology 101, (my major subject thaty I’ve been studying for years) and I. Couldn’t. Pass. The. Class. They kept sending my work back, over and over and over with vague comments regarding what was missing, etc.

  2. Ronald McRaygun said on December 4th, 2009 at 11:55am #

    I “attended” one semester at one of these proprietary colleges in order to finish my undergraduate degree. They denied a number of my previously earned credit hours and set me up on a 4 year program! I’m a Senior in the “real world” btw.

    When I attended regular university, I didn’t really know how to go about getting federal money, so I paid cash. And now I’m 7,000 in debt for one stinking semester at a lousy school. But, boy, did those admission officers at the for-profit university certainly help me get federal funds. Boy, did they ever!

    The propietary school in question was so bad that I had to retake ***ology 101, (my major subject thaty I’ve been studying for years) and I. Couldn’t. Pass. The. Class. They kept sending my work back, over and over and over with vague comments regarding what was missing, etc.

  3. Danny Weil said on December 4th, 2009 at 2:06pm #

    http://www.oregonlive.com/business/index.ssf/2009/12/defunct_trade_school_agrees_to.html

    Another fraud school goes down in Oregon

  4. lichen said on December 5th, 2009 at 7:33pm #

    Excellent article! It is terrible that these for-profit schools offer such a debased forgery of a real, intellectually vibrant college campus experience.

  5. Danny Weil said on December 5th, 2009 at 7:53pm #

    Lichen said:

    Excellent article! It is terrible that these for-profit schools offer such a debased forgery of a real, intellectually vibrant college campus experience.

    It truly is, Lichen for education and for economics. It is criminal, really and debases education by offering little in the way of any liberal arts education. It is training not education at best, scamming and immoral at worst.

    Unfortunately the masses, as you can see by somee comments, blindly come out in defense of this process for people are confused, they really do not understand the role of government at this late stagre of capitalism and with public life disappearing, while more and more young people go to prison or the military, these schools, as written are perched to make a fortune.

    the problem, they sell really nothing and we will have to pay for it.

    What is needed is universal access to public education at no cost for all students but we cannot afford to do this, too many nations to build overseas, yoo much crime to stop here.

    DDanny