Colleges face new scrutiny

Proposed rules affect for-profit schools, as well as Clark College

By Erin Middlewood, Columbian special projects reporter

Published:

 

Think first

• Considering a career program? Do your homework first. Check the program's website for gainful employment disclosures. Also, check http://careerbridge.wa.gov to see if a career is in demand and how much it pays.

Rachael Mallet still owes $5,000 for her stint at Vancouver's International Air and Hospitality Academy in 2008.

Like 60 percent of the students who attend the school, she's from out of the area. She was 20 when she applied to the school, sight unseen, from her home in Mobile, Ala.

"My teacher was good. I had a good time while I was there. But it didn't pay off," she said.

She never landed an airline job. Now she lives in Greensboro, N.C., where she works at an Italian restaurant.

The Obama Administration has proposed federal regulations, out for comment until May 27, to increase the odds that students like Mallet who shell out thousands of dollars for career certificate programs actually find a job when they're done.

The rules haven't taken effect yet, but the International Air and Hospitality Academy is already taking them seriously. Judging by 2012 data reported to the U.S. Department of Education, the school would meet the new regulations' thresholds.

"We're not perfect, that's for sure," said Colleen Piller, the school's vice president. But the academy, which offers five certificate programs, doesn't deserve to be lumped with the for-profit schools that have been drawing intense scrutiny lately, she said.

Corporate vs. local

The U.S. Consumer Financial Protection Bureau in February filed a lawsuit against ITT Educational Services Inc., which has a campus in Portland, accusing it of engaging in predatory lending. A network of state attorneys general are investigating ITT, as well as Education Management Co., which operates the Art Institute of Portland; Career Education Corp. which operates Le Cordon Bleu in Portland, and Corinthian Colleges Inc., which operates Heald College in Portland and Everest College in Vancouver.

The Washington Attorney General's office would not confirm whether it is also investigating for-profit career schools.

"We fight so hard to do things right," Piller said. "Our students have always meant more to us than the bottom line."

The proposed rules target predatory, poor-performing career colleges, according to federal officials. The regulations would withdraw taxpayer-funded student financial aid from schools whose graduates don't find gainful employment, as measured by levels of earnings and debt.

Students at for-profit colleges represent only 13 percent of the total higher education population, but 31 percent of all student loans and nearly half of all loan defaults, according to the U.S. Department of Education. The agency's analysis found a majority of graduates of for-profit schools earned less than high-school dropouts.

This is the agency's second take on gainful-employment rules. A federal court struck down the first set in 2012.

According to newly proposed regulations, the estimated annual loan payment of typical graduates shouldn't exceed 8 percent of total earnings, and loan default rates shouldn't exceed 30 percent. The regulations would also require career programs to disclose that information.

"We like gainful employment," said Arch Miller, who founded the International Air Academy in 1979 to train students for careers as flight attendants, reservation specialists and other jobs in the airline industry. The school in the last decade has added programs for hospitality, culinary arts, wind-turbine maintenance and rail operations. The school has about 275 students.

"It's all about money. It's all about what you charge for your service," Miller said. "When we sit around the table and talk about the tuition levels, we talk about what's right for the customer. You shouldn't charge more than what you need to pay your bills and make a reasonable profit."

Graduates should be able to get "a job that pays enough money to retire that debt," Miller said.

Debt vs. earnings

Tuition for the school's five-month airline travel specialist program is $7,300, with another $114 for books and $4,995 for room and board. The program graduated 260 student in 2012, who earned a median annual salary of $14,450, according data reported to the U.S. Department of Education. The graduates' median annual loan payment of $825 a year ate up 100 percent of their discretionary income. But the program's "annual earnings rate," a ratio of debt payments to income, was 5.71, which meets the proposed threshold of 8 percent. Nineteen percent of the graduates defaulted on their loans.

Everest College, which has a campus in Vancouver with 300 students, might have a tougher time meeting the rules. Among the programs it offers is a 36-week medical assistant certificate program. The cost: $16,300 for tuition and fees, and another $2,173 for books and supplies. The median debt among students is $9,454 in federal loans and $2,294 in private loans. System-wide, students who complete the program go on to earn $12,816 a year, with the loan payments eating up 100 percent of their discretionary income, according to U.S. Department of Education 2012 gainful employment data. The loan default rate for the program is 29.96 percent, and the annual earnings rate is 9.61. A spokesman for Everest College did not return The Columbian's call for comment.

The rules would also apply to non-degree programs at community colleges.

Tuition for Clark College's 18-month pharmacy tech program is $6,923, and books cost $1,008. The program graduated 55 students in 2012, with a median annual salary of $26,541 and median debt of zero, according data reported to the U.S. Department of Education.

Career placement is always at the forefront when Clark designs its programs, said Genevieve Howard, Clark's dean for career and technical programs.

"If we are going to offer a career or technical program, the underlying premise is can we provide the training in doable chunks, and once students complete those programs, there are viable employment opportunities in the local community," she said. "We're constantly checking in with industry to make sure our curriculum is vetted through them."

Agency oversight

The Washington State Board for Community and Technical Colleges oversees that effort. It scrutinizes employment and earnings data of career certificate programs through an agreement with the state Employment Security Department.

"We strive to ensure students receive training that leads to quality jobs and the ability to pay back student loans," said Laura McDowell, a spokeswoman for the board.

The state's Workforce Training and Education Coordinating Board licenses and regulates 300 private career schools in Washington.

"We've been very proactive in measuring performance of schools and programs and pushing that information to the public," said Marina Parr, a spokeswoman for the workforce training board.

Private accrediting institutions recognized by the U.S. Department of Education also play a role in holding career programs accountable.

The Accrediting Commission of Career Schools and Colleges visited the International Air and Hospitality Academy a couple of weeks ago to review its programs because the school's accreditation is up for renewal this year.

ACCSC accredits about 730 institutions, including some of the schools operated by Corinthian Colleges Inc. and Career Education Corp., said Christopher Lambert, the commission's associate executive director.

"We require every institution to submit to an independent third-party audit of placement of graduates," Lambert said. The commission more closely examines programs that aren't placing 66 percent of graduates in jobs.

The commission has revoked accreditation 88 times in the past 10 years, Lambert said.

Even while meeting that 66 percent placement rate, a third of students could end up in Mallet's position.

Since she left the International Air Academy, it has expanded its efforts to help students with financial aid and career placement, Piller said. The career services department now has six staff members.

"The last thing we want is to have students leave here with no plan," Piller said.

Recent graduates, as well as school officials, post successes on International Air and Hospitality Academy's Facebook page.

A May 5 post from the school crows, "20 students graduated last week and 14 were already hired. Enough said!"