Wednesday, March 22, 2023

Erica Gallagher Speaks Out About 2U's Shady Practices at Department of Education Virtual Listening Meeting

Hello, my name Erica Gallagher and I am a graduate of the University of Southern California’s online Masters of Social Work program. Or to put it more accurately, I am a graduate of 2U’s online Masters of Social Work diploma mill. 

2U is the Online Program Management or OPM company that runs USC’s online MSW program. When I decided to attend USC, I had no idea that the online MSW program was actually run by 2U.

I didn’t know that my classes were going to be taught by instructors who were hired specifically for the OPM classes, rather than USC professors, or that they would be using outdated materials to teach me.

I didn’t know that OPM employees were the ones assigning us field placements, many of which had nothing to do with our experiences.

I didn’t know that the admissions representatives and the counselors I was emailing on a day-to-day basis were actually OPM employees, and not actual USC staff. That’s because they went to great efforts to make students believe this was fully a USC program, even arming 2U employees with USC email addresses. 

If I had known, I would have never enrolled. 

From the moment I looked into the program until the moment I graduated, I was lied to. I was promised a USC education that would open doors for me, and that’s not what I got. Instead, I got a shady, but equally as expensive, version of USC’s on-campus MSW program.

It’s so important for people to realize how much this OPM model hurts students. It rewards greed and profit at the expense of a quality education. It incentivizes schools to sign up as many people as they can, charging top dollar for subpar programs, while hiding their deception and profiteering behind the nonprofit brands of well-regarded schools.





The fact that they did this with a social work program — to people who were trying to build a career motivated by helping others — adds even more insult to injury.

Having this degree was supposed to change my life, but all it has done is complicate it. All I’ve gotten with this diploma is a mountain of debt and anxiety.

Related link: 

OPMS: The Next Frontier of Predatory Practices in Higher Education  (PPSL Blog)

2U Virus Expands College Meltdown to Elite Universities  

Colleges Are Outsourcing Their Teaching Mission to For-Profit Companies. Is That A Good Thing? (Richard Fossey)

Borrower Defense Claims Surpass 750,000. Consumers Empowered. Subprime Colleges and Programs Threatened.

Thursday, March 16, 2023

Borrower Defense Claims Surpass 750,000. Consumers Empowered. Subprime Colleges and Programs Threatened.

The Higher Education Inquirer has posted a number of articles about student loan debt. In 2023, the student loan mess has reached epic proportions. Not only has the US Federal Student Aid debt portfolio reached more than $1.6 Trillion, we learned that $674 Billion was estimated to be unrecoverable. 

In California, the US District Court in Sweet v Cardona agreed to a $6 Billion settlement between student debtors and the US Department of Education. 

In Texas, a group representing for-profit colleges has sued the US Department of Education for their actions in settling Borrower Defense claims. 

And across the US, about 40 million student debtors and their families are awaiting a decision from the US Supreme Court—a decision that will not likely favor the debtors.

Borrower Defense, Subprime Colleges, Subprime Programs

Borrower Defense to Repayment claims are claims by student loan debtors that their school misled them or engaged in other misconduct in violation of certain state laws. The Department of Education may discharge all or some of the student loan debt and hold the school and its owners responsible. 

As of January 2023, there are more than three quarters of a million Borrower Defense claims against schools. And each month, about 16,000 new claims are added.  Evidence from the Sweet v Cardona case revealed that only about 35 workers were responsible for processing hundreds of thousands of claims. Those claims have been disproportionately made against a number of for-profit colleges and formerly for-profit colleges, what we call “subprime colleges.”   

Some of these subprime schools have closed (Everest College, ITT Tech, and Westwood College for example), some remain in business as for-profit colleges (like University of Phoenix and Colorado Tech), some have changed names and become covert for-profit colleges or robocolleges (like Purdue University Global, University of Arizona Global Campus, and the Art Institutes), and some schools act act like subprime colleges regardless of tax status. This includes low-return on investment programs at several US robocolleges and overly expensive graduate programs offered by 2U, an online program manager for elite colleges.  

In the Sweet v Cardona case, more than 200,000 student borrowers are expecting to receive full debt relief after years of struggling.  A Facebook group Borrower Defense-Sweet vs. Cardona currently has more than 14,000 members. 


Named plaintiffs Theresa Sweet (L) and Alicia Davis (R) outside the federal district court in San Francisco on November 6, 2022, three days before the final approval hearing in Sweet v Cardona (Image credit: Ashley Pizzuti)

Transparency and Accountability 

The US Department of Education keeps an accounting of Borrower Defense claims, but only publishes the aggregate numbers, not institutional numbers. Those institutional numbers do make a difference in promoting transparency and accountability for the largest bad actors. So why does the Department of Education not publish those institutional numbers?
 
The National Student Legal Defense Network submitted a FOIA (22-01683F) to the US Department of Education (ED) in January 2022 asking just for that information. And what HEI has discovered is that just a small number of schools garnered the lion's share of the Borrower Defense claims. To get a digital copy of that information, please email us for a free download.

Related links:

Borrower Defense-Sweet vs Cardona (Facebook private group)  

Project on Predatory Student Lending

Sweet v. Cardona Victory (Matter of Life and Debt podcast)

I Went on Strike to Cancel My Student Debt and Won. Every Debtor Deserves the Same. (Ann Bowers)

An Email of Concern to the People of Arkansas about the University of Phoenix (Tarah Gramza)


The Growth of "RoboColleges" and "Robostudents"


Friday, March 10, 2023

Counting What’s Really Important to College Students (Zachary Bleemer, Mukul Kumar, Aashish Mehta, Chris Muellerleile, and Christopher Newfield)

The Cost of Overestimating Cost

What harm is done when people overestimate university costs? Does this overestimation matter for any practical purposes, especially because it seems to affect both lower-income and higher-income families?

The most obvious effect is that people may be less likely to attend college themselves or may be more likely to recommend against attending college when they talk to their children or friends. Misinformation spreads easily—especially in the form of indicators like sticker prices that are easy to misinterpret—and perceived higher prices tend to dissuade people from almost all purchases or investments, including at-tending college. When people decide not to go to college because of inaccurate perceptions of the cost, they miss out on the personal benefits of higher education and all of us lose the benefits to society that accrue from more highly educated communities.

Overestimating college costs likely also impacts the kinds of universities that students apply to and attend, especially those from lower-income families. Despite the fact that many private universities are actually cheaper to attend than nearby public universities for lower-income students because of generous financial aid, the large gap between the sticker prices of selective private and public universities likely pushes many lower-income students to attend the latter, even if the student believes that the former would offer a higher-quality education. The same is likely true for students from families or communities where few people went to college because information about the value of college education is more difficult for them to obtain. At the national scale, these forces may tend to push lower-income students out of the country’s highest-quality universities.

Finally, overestimating college costs almost surely damages the reputation of universities as accessible institutions that promote socioeconomic mobility, especially for public universities as the skyrocketing sticker prices of private universities have generated misinformation about the cost of attending public institutions, voters seem to have cooled toward the public funding of universities, increasingly perceiving them as bastions for higher-income students. These sentiments ironically have led state legislatures to decrease their annual investment in public universities, which in turn has led universities to charge higher tuition.

Interestingly, the empirical evidence about the ramifications of the widespread overestimation of college costs in the United States is relatively thin. Unfortunately, despite (or perhaps because of) wide agreement that overestimates of college costs would actively dissuade some young people from attending college, very few studies have directly tested this theory. 

In 2013, economists Caroline Hoxby and Sarah Turner published a study about the second potential effect—that over-estimating college costs discourages lower-income students from attending higher-quality universities. They conducted a large-scale experiment among high-achieving, low-income high school students across the United States in 2011. Hoxby and Turner randomly divided a large group of such students into treatment and control groups and mailed the treatment group a packet of detailed information about the annual net cost of attending a variety of both nearby and nationwide universities. They presented this information as the average cost for families at three income levels—$20,000, $40,000, and $60,000—so that students could extrapolate their own expected costs if they were to attend each university. In a second experiment, the same information was mailed directly to students’ parents, this time including additional details about the graduation rates and average wages of graduates from each university. 

Hoxby and Turner’s key finding is that students in both of these treatment groups (the one in which students received information and the other in which parents received information) applied to more and better universities than those in the control group and were more likely to be admitted to better universities, which the researchers categorized based on average SAT scores and graduation rates. Not all of these students actually attended better universities as a result, although those whose parents received the information about net costs were somewhat more likely to do so. They also found that when application fees were waived, these effects were greatly magnified 

The study results suggest that lower-income students’ overestimation of university costs warps their decisions about which colleges to apply to and that the simple intervention of giving college students and their families information about the true cost of attending college can meaningfully improve their decisions. This was an exciting finding, and in 2016 the College Board tried to replicate it on a massive scale. It mailed detailed information, including average net college costs for lower-and middle-income households, to hundreds of thousands of lower-income students who took the SAT exam. Unfortunately, this time the mailers had no effect on which universities the students in the treatment group chose to attend. Maybe students didn’t read the information from the College Board or maybe they didn’t trust the information that it provided. ­Either way, it seems that cookie-cutter informational mailers aren’t a magic bullet; widespread misinformation about college costs will have to be combated using other tools. It would be better if prospective college students had access to easy-to-use, interactive, and personalized net cost information for all the universities they wanted to apply to. 

Excerpted from Metrics That Matter: Counting What’s Really Important to College Students by Zachary Bleemer, Mukul Kumar, Aashish Mehta, Chris Muellerleile, and Christopher Newfield. Copyright 2023. Published with permission of Johns Hopkins University Press.

Saturday, March 4, 2023

An Email of Concern to the People of Arkansas about the University of Phoenix (Tarah Gramza)

February 26, 2023. 

Hi! My name is Tarah Gramza. Dahn Shaulis has been talking with me about the University of Phoenix/University of Arkansas situation. I offered to share my knowledge as I have quite a bit with years of experience in this mess of subprime colleges and student loan debt.  

I am the creator/administrator of a quite popular Facebook group with approximately 14,000 members. Theresa Sweet and I came together by sheer accident and became close friends. We have managed this group together for a few years now. 

Theresa started her battle with the US Department of Education (aka ED) nearly a decade ago trying to get anyone’s attention to hear her story and draw attention to the fraud being committed by these schools right under everyone’s noses. Our stories are all similar: we attended schools who promised a future full of butterflies and roses, misled quality of education, pressured enrollment, false advertised job placement, lied about costs...the list goes on. 

Following the bread crumbs

Our lawsuit started as a mission to hold the Department of Education accountable for delaying the processing of Borrower Defense to Repayment applications. These delaying actions broke ED's own rules and regulations. The last several administrations tried to change rules for their own agendas and to satisfy their paid cronies. We know for a fact many congressional leaders have been deeply invested and made millions from this for-profit schools fraud. This includes the Secretary of Education at the time, Betsy DeVos. 

The first settlement forced ED to process applications fairly within a period of time. The department made a big mistake, they decided to deny 90% of class members applications and used illegal denial letters, which ultimately stopped the settlement and sent us back to litigation/discovery. During the discovery it was uncovered that ED had internal emails showing they were intentionally not reviewing applications per the law requirement (a policy of mass denial), withheld evidence by the department on many of the main culprit schools, and knew about the fraud being committed at the highest levels. This led to additional claims by the class and now opened the department up for direct financial liability and undue harm. This led to the final settlement that sits today. 

Between the first settlement and the illegal denials and the present one, the administrations changed and Betsy DeVos quit her job. During the discovery (testimony) it was found that upper leadership under Betsy DeVos pointed their fingers directly at Betsy herself and that she directed these policies, an attempt was made to make her testify. As government always does, they protected her and their own tails in the process and she was allowed to skate by unscathed. The new administration decided it was time to start doing the right thing; the sheet was pulled back enough for everyone to see they well knew about the fraud for over a decade. 

This lawsuit also brought forward the fact that ED had not used its own rules to go after schools for recoupment costs on the taxpayers behalf and recoup funds from these executives, schools, leaders. This includes some of the leaders of major school collapses such as Corinthian Colleges and ITT Tech. Sadly, the executives just jumped from one school to the next bringing their fraud with them along the way, leaving a wake of schools with damaged students. 

Putting it together

The final settlement (Sweet v Cardona) was signed and all of a sudden four schools from the list of 151 known offender schools decided to intervene on the lawsuit. They used every excuse they could to conjure up to stop this case and hold up the settlement--even though the settlement didn’t hold them accountable for the class discharged claims. The judge ultimately denied their requests leading a final settlement approval. Three of those four schools then appealed the judge for a stay,which was officially denied Friday evening. 

Why would four schools appeal a lawsuit that doesn’t involve them of which ultimately has no recoupment against them for the class?

Well- here’s why, the post class group AND any following applications will have recoupment. The department, right around the time of the announcement, had recently announced the recoupment efforts against Devry University and this terrified the schools. They knew full well they were next and that it would put them out of business and these shareholders would be left holding the bag. Now a plan needed to be put into place to try to find a way out. 

The plan

University of Phoenix is one the biggest offenders and probably one the largest schools to profit from this business model of fraud. We’ve seen evidence that much of the fraudulent activity came directly out of the University of Phoenix training manuals. They also had some of biggest lawsuits, so intervening as University of Phoenix was a bad idea. 

The well-known school lobbying group Career Education Colleges and Universities (CECU) led by Jason Altmire banded together to not only bundle money from these subprime schools to stop this lawsuit, by using these four smaller less widely known, less lawsuits, as pawns in a bigger game. Jason has been known and deeply ingrained in this scandal for over 20 years, even before he was lobbying. He was an elected official voting for this for profit game. Holding up the lawsuit benefited every single school named on Exhibit C and you will see why below. 

The new rules and regulations were published a few months back with hard targeted rules that establish a line in the sand starting July 2023. These regs held harsh consequences for all schools not only into the future but also for past bad deeds. The rules also clarified and hardened the rules for information sharing (evidence) and group discharges. 

It became apparent that the shareholders and owners of University of Phoenix needed out and now. This is because the recoupment efforts follow owners. If they can sell the school, they can cash out what is left of their $1 Billion investment and run intact. Which leads to the point of this email, if Arkansas, or any other buyer decides to buy University of Phoenix they will be the target for the recoupment efforts which I estimate to be approximately $600M dollars as it stands today with the number pending recoupable borrower defense applications. If things go as expected this number could exceed $1B. The rules call for recoupment of funds and also steep consequences such as loss of title IV funds. 

Jason Altmire and his lobbying group are so desperate to prevent these rules, they are suing in Texas to prevent them from being implemented.

Why would the Governor of Arkansas pursue this deal?

The Governor of Arkansas knows full well the risks. The political side of this story is administrations. Republican administrations have been very friendly to these schools and have in the past created and changed ED rules in the schools favor and turned a blind eye to the fraud. Democrats have also been guilty of this but in today’s climate we have to think of the present state of the Republican position in student debt relief. The state of Arkansas is offered a sweet deal of a percent of profits on a private deal which they claim doesn’t cost tax payers. 

The hidden agenda by the governor is she is gambling against a change in administration that is friendlier and will either not pursue recoupment against a state owned (affiliated) school OR she is thinking the Biden administration will lose the next election in which they will push to change the rules again! This is a steep gamble as I suspect the secrets in this deal don’t offer protections to the state as presented in press briefings. If the state is signing a contract for profits, what happens if the school goes under? As you may be aware, much of these warnings have been shared with the leadership of Arkansas by many student advocate groups including our lawyers for the Sweet case, the Project on Predatory Student Lending-PPSL


Recent announcements made by the Department of Education have added an additional layer of risk for anyone purchasing University of Phoenix as ED recently announced it “may require certain individuals to assume personal liability as a condition of allowing the schools they own or operate to participate in the federal financial aid programs and likely to require an individual to assume personal liability on behalf of the institutions or groups of affiliated institutions that pose the largest financial risk to the United States. This is determined based on institutions with the most serious and significant sets of concerns.” The question becomes, who will be putting their personal assets as collateral? University of Phoenix is not only a risk, it is one the primary reasons for the need for additional protections to the tax payers.

What value would the purchase of University of Phoenix have to the state of Arkansas if it can’t have its Title IV renewed? This fact alone combined with the University of Phoenix history, should scare away even the most riskiest investor!

Now you know the big picture. I hope it helps guide your actions and I hope you are willing to write and share with the public how this dangerous gamble is being wagered against the people of the state of Arkansas. For the records, I am a Republican and my focus is to point to facts of the situation and the truth of the climate in politics leads toward the assessment I’ve given. Let me know if you have any questions. I’m happy to help where I can. I also hold a large document that provides significant evidence against all the schools but the University of Phoenix file speaks volumes and will likely expand on the depth of the fraud, if you are interested.

Sincerely,

Tarah Gramza