Wisconsin Sues Corinthian Colleges Over Everest’s Job-Placement, Graduation Rate Claims

Corinthian Colleges, the for-profit educator behind controversial school chains like Everest and WyoTech, is facing yet another lawsuit. This time, it’s from the state of Wisconsin, which alleges that Everest misrepresented important information, like graduation rates and job-placement stats, in order to lure students in.

The suit [PDF], filed by Wisconsin Attorney General J.B. Van Hollen in a Milwaukee court on Monday, alleges that Corinthian violated of the state’s consumer protection laws by using “false, misleading, and deceptive representations to induce students to enroll” at the Everest school in Milwaukee, which shut down in Aug. 2013, but only after having quickly grown to become one of the largest schools in the Corinthian system.

BAD BEGINNINGS

The Wisconsin suit focuses solely on the practices at one Everest campus in Milwaukee, a school that should have set off alarm bells before it even opened its doors, according to the suit.

Students at Everest Milwaukee were required to finish up to 200 hours of on-the-job externship work in their fields of study.

When Corinthian applied to Wisconsin state regulators five years ago for approval to open its Everest campus in Milwaukee, it said that the school’s target goal was to have about 50% of its projected students end up working for the companies where they externed.

Regulators voiced concerns that Everest might enroll too many students and be unable to live up to its placement rates, but the school pledged to slow enrollment if standards were not met, according to the complaint.

Because of the area’s already crowded job market, especially in the allied-health workforce, regulators also expressed doubt that Everest would be able to consistently secure externships for 600 students at any given time. But Corinthian provided regulators with a list of 300 employers it claimed to have already been in contact with.

However, the complaint contends that “no meaningful effort had been made to establish the willingness of these employers to hire Everest Milwaukee students.”

GROWING PAINS

Corinthian’s promise of slowing enrollment and maintaining a reasonable student body were later called into question by regulators when, after only two years, the school’s expected enrollment size of 600 had swollen to around 1,600.

Prosecutors say that Everest Milwaukee was, at times, the school with the highest enrollment among all Corinthian campuses.

The complaint states that the goal of Corinthian admissions staff wasn’t to work with a potential student to find the program that best suited their background and goals, but to push them into the programs with the most available openings.

“For example, if the Dental Program was not fully enrolled, admissions representatives would direct enrollees to that program,” reads the complaint, “even if the student expressed an interest in the Medical Assistant Program.”

Prosecutors say that applicants seeking enrollment in programs that were already full were told to enroll in a different program and then later roll those credit hours over into the desired coursework. However, say prosecutors, credits did not actually transfer from one program to another.

CHECK & BALANCES, BUT MOSTLY CHECKS

The school’s first president tried to convince Corinthian to institute more stringent entrance requirements, including background checks, but abruptly left after about only one year, and without any changes at the school.

While a background check might sound harsh or overly invasive, it could have saved many students a lot money. Students with drug and felony convictions that would have made it difficult or impossible to find work in the medical field were nonetheless enrolled into allied-health programs to learn skills they could probably never be paid to use.

Additionally, the lack of any real enrollment criteria (entrance exams were given but not required) resulted in high dropout rates from students who were not prepared or qualified for a post-secondary education (but who still managed to qualify for thousands of dollars in student loans).

In the early years of Everest Milwaukee, the school only employed one tutor, but around 50% of the student body needed some sort of tutoring because they lacked basic reading skills.

According to the complaint, the tutor at the time said that many of their students could only read at a second-grade level, inadequate for the allied-health programs that employ a significant amount of complicated medical language. One student was actually illiterate, said the tutor, but the school still enrolled her and allowed her to take out student loans.

ON-THE-JOB TRAINING, OR AT LEAST ON A JOB

When it came time for the required externships, prosecutors say that Everest regularly failed to secure a sufficient number of qualified positions for students.

The complaint gives the example of the Dental Assistant Program, which had around 40 students each month in need of an externship.

“At no point were there more than fifteen,” say prosecutors. “[I]n fact, there were typically less than ten.”

So around 66% of these students were unable to find the externship they required and had been promised. Some students were allowed to find their own externships while others graduated without having even had the requisite on-the-job experience.

A number of students were put into externships that were only vaguely related to their studies. Medical Assistant students were sometimes given externships as nursing aides, which is a necessary and important job but which does not require the training or education of a medical assistant.

School leadership complained to Corinthian that the lack of enrollment standards and the huge enrollment numbers hampered their ability to place students in proper externships.

The campus’s Director of Career Services even asked for Everest Milwaukee to slow its enrollment in the Dental Assistant Program to give her time to catch up and train the current crop of students, but her pleas appear were ignored.

JOB-PLACEMENT STATS ARE JUST NUMBERS

In its marketing, Corinthian touts high job-placement stats, once claiming that 78% of Everest grads found employment in their fields of study.

After the school’s first Career Services head walked out in 2011, her replacement found that the actual percentage of Everest Milwaukee students who were getting jobs in their fields was around 5.5%, according to the complaint.

In the first years of Everest Milwaukee’s existence, disclosures on the school’s website listed “N/A” for many programs’ job-placement rates, claiming that they data had not yet been collected and analyzed because it was too recent.

But prosecutors contend that Everest had actually been collecting and sharing this data with its accrediting body, which had grown increasingly concerned about the low placement rates at this campus.

In 2011, the accreditor placed Everest Milwaukee on heightened monitoring because its placement rates had fallen far below acceptable standards.

Even the data that Corinthian chose to share was shockingly low, with only 28.6% placement in its Dental Assistant program and 31.8% for its Medical Billing and Coding program.

Prosecutors claim that by Dec. 2011, internal reports show that the actual placement rate for Everest students was closer to 5%.

But Everest was able to inflate this number by including students who had jobs — just not in the fields in which they were trained — and by including people who were getting occasional work through temp agencies, and some were just plain unemployed.

One Medical Assistant grad was counted as a successful placement even though that grad was actually employed as a barber.

Two former Everest employees say they were fired after trying to shine a light on the manipulation of job-placement stats.

Even though Everest Milwaukee has been shuttered for over a year, and Corinthian is in the process of shutting down or selling off all its Everest properties, the suit seeks restitution to affected students and graduates, as well as forfeitures and fees.

“Our office will prosecute post-secondary schools that use deceptive recruiting tactics to increase enrollments, leaving vulnerable, unemployed graduates with excessive federal student loan debt, underwritten by the taxpayer,” said Attorney General Van Hollen in a statement.

ONE OF MANY

The Wisconsin suit is only the latest of several state and federal lawsuits and probes into Corinthian’s bad business practices.

In September, the Consumer Financial Protection Bureau sued Corinthian, for, among other claims, allegedly using inflated job-placement and graduation stats to deceive students into taking out hundreds of millions of dollars in federal student loans.

“For too many students, Corinthian has turned the American dream of higher education into an ongoing nightmare of debt and despair,” CFPB Director Richard Corday said at the time.

A year ago, the state of California sued Corinthian over similar allegations.

And the actions taken against Corinthian are just the most high-profile lawsuits against for-profit schools.

In February, the CFPB sued ITT for allegedly deceiving students into taking out long-term loans.

Kentucky Attorney General Jack Conway sued the for-profit Spencerian schools in 2013, also over misleading job-placement claims.

Earlier this month, a group of 14 state Attorneys General signed on in support of legislation that would create greater oversight of for-profit colleges, which enroll only a small percentage of all post-secondary students, but which represent the largest chunk of the student loan pie.

For-profit colleges — many of which are owned by large national corporations — also have high dropout rates but cost significantly more than one would pay to go to a comparable community college. Thus, students are leaving without degrees but with huge debts that will follow them, possibly for decades.