A KVUE Defenders investigation found for-profit institutions across Central Texas providing their presidents and CEOs with high-dollar salaries, while their students are often left swimming in debt without a degree.
This is not the first time large for-profit institutions have been under investigation. In 2010, the United States Government Accountability Office (GAO) conducted an undercover investigation of 15 for-profit colleges across the country. The GAO investigation found that “tuition in 14 out of 15 cases, regardless of degree, was more expensive at the for-profit college than at the closest public colleges."
Additionally, “undercover tests at 15 for-profit colleges found that 4 colleges encouraged fraudulent practices and that all 15 made deceptive or otherwise questionable statements to GAO’s undercover applicants.”
This included college representatives exaggerating the potential salary for graduates and failing to clearly provide information regarding program duration, costs, or graduation rates.
The Art Institute and National American University are among several for-profit institutions across central Texas the KVUE defenders uncovered have some of the lowest graduation rates. Those who do complete school often leave with some of the highest student loan debt.
While graduation data is unavailable specifically for the Art Institutes Austin campus, the Art Institute of Dallas has a graduation rate of 30 percent with the typical student debt being nearly $30,000, according to the Department of Education. That’s for undergraduate borrowers who completed the school.
The KVUE defenders found Art Institute campuses across the country with low graduation rates and students who graduate with high debt. The Department of Education records show the Art Institute of Pittsburgh’s graduation rate is 11 percent, with a typical total debt of $40,022.
The Education Management Corporation (EDMC) takes issue with the Department of Education’s numbers, arguing the posted figures measure two different populations of students.
According to the Department of Education, about 25 percent of National American University students graduated in 2014 with an average debt of $34,486.
To put that in perspective, the graduation rate at the University of Texas is 79 percent and its students have an average debt of $22,165
Sabrina Loyless is a former Art Institute of Austin student who was initially proud to make both the president’s and dean’s list. Loyless chose to attend the Art Institute in 2011 because she says the school promised it would launch a fashion design program.
Loyless dropped out of school three quarters later when the school still had not kept their promise with implementing a fashion design program. She is now without a degree and paying off $20,000 in student loans.
“Pretty much, I paid a lot of money for lies,” said Loyless.
The Art Institute is owned and operated by EDMC. EDMC would not provide its current CEO’s salary, but according to the Security Exchange Commission filings, former President and CEO Edward West’s total compensation was $3,524,864. EDMC said that figure grossly over-values his actual compensation.
According to the Security Exchange Commission, National American University CEO Ronald Shape made $798,307 in 2015. Shape declined to be interviewed for this story, but said the DOE’s “calculations are misleading, since the majority of NAU students do not attend full-time and are not first-time students.”
Last year, EDMC agreed to pay $95 million dollars to settle illegal recruiting claims. EDMC declined interview requests, but wrote KVUE this that since September, it has “renewed its focus and its commitment to students by emphasizing program completion and academic preparation."
The EDMC changes include no-cost orientation, weekly advisor meetings, and cost reductions.
“I frankly I think it’s disgusting what they are doing. And I don’t understand how they can sleep at night,” said Loyless.
Rep. Lloyd Doggett (D-Texas) recognizes the issues with for-profit colleges and wants more student assistance.
Doggett specifically wants the Department of Education to better enforce what’s called the”90-10 Rule.” It's a federal law mandating institutions receive no more than 90 percent of funding from federal student aid programs.
“Some of these for profit colleges are making outlandish claims to their student and they don’t deliver, they don’t graduate and if they do graduate they can’t find a job,” said Doggett.
Additional Viewer Information
Go here for the U.S. Department of Education list of for-profit schools in Texas.
Go here for the Department of Justice EDMC lawsuit summary.
Go here to read responses from EDMC and National American University.