[Congressional Record Volume 157, Number 18 (Monday, February 7, 2011)]
[Senate]
[Pages S600-S608]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              FOR-PROFIT ONLINE COLLEGES AND UNIVERSITIES

  Mr. HARKIN. Mr. President, last December I came to the floor to 
discuss the Health, Education, Labor, and Pensions Committee 
investigation into for-profit online colleges and universities. It is 
an investigation that has now been going on for almost a year, and it 
is an investigation with profound consequences for taxpayers.
  For-profit colleges, mostly online, receive more than $26 billion in 
Federal student aid each year. While some of these schools may be doing 
a good job, taxpayers deserve to know that their education dollars are 
being well spent. It is also an investigation with profound 
consequences for students.
  According to data released last week by the Department of Education, 
25 percent of for-profit college student loan borrowers default within 
3 years of leaving school. One out of every four student loan borrowers 
who go to these for-profit schools defaults within 3 years of leaving 
school.
  For-profit colleges have correctly pointed out that they educate a 
disproportionate number of low-income and minority students. They argue 
that if they were not doing a good job, students would not continue to 
enroll. How, then, is it possible that schools with very high rates of 
withdrawal, high rates of loan debt, and high rates of default continue 
to enroll more and more students each year? The answer, according to my 
committee's investigation, lies in the enormous expenditure of money 
and effort that the for-profit colleges put into their recruitment 
process.
  There have been many stories about abusive recruitment practices in 
newspapers and television programs across the country. Last August, the 
Government Accountability Office documented many of those abuses in 
undercover videos presented at a HELP Committee hearing. The industry 
argued that these misleading and deceptive practices were the work of a 
few rogue actors, but the overwhelming evidence of misleading, 
deceptive, and even fraudulent conduct documented by GAO cannot be 
attributed to anything but a systemic effort to enroll students at any 
cost.
  For anyone who questions that this is a systemic effort to pressure, 
deceive, and mislead, I wish to take a few minutes to explore the 
details of the training practices that led directly to the GAO 
findings. I hope my colleagues on both sides of the aisle and on both 
sides of the Capitol find this a useful window into the training 
tactics used by these companies.

[[Page S601]]

  One of the most common words in the proprietary school industry's 
recruiting documents is the word ``pain.'' It is not the first word 
that might come to one's mind if they think about enrolling in college. 
You might think of your son or daughter enrolling in college. You 
wouldn't think of ``pain'' as the first word. However, perhaps nothing 
worthwhile was ever accomplished without effort, so you might be 
thinking that schools are talking about preparing students for the hard 
work and the pain of excelling in college. The reality is quite the 
opposite. Proprietary higher education companies want to make college 
seem easy. The reason they are focusing on pain is to try to get 
students to enroll.
  Consider this quote from a memo written by the director of 
recruitment at a campus of ITT, one of the largest of the for-profit 
schools. After falling short of the required quota of ``starts''--that 
is the industry term for new students--the recruiter writes:

       The department needs to focus on the selling of the 
     appointment by digging in and getting to the pain of each and 
     every prospective student. By getting to the pain, the 
     representatives will be able to solidify the appointments and 
     have a better show rate for the actual conducts.
       Another example from an ITT document about what recruiters 
     should do to keep students in class, reading now from one 
     which I will include for the record, says:
       Remind them of what things will be like if they don't 
     continue forward and earn their degrees. Poke the pain a bit 
     and remind them who else is depending on them and their 
     commitment to a better future.

  In their training, ITT went beyond rhetoric and created what they 
called a ``pain fund.'' It is probably hard to see this piece of paper. 
I will try to get this included in the Record. It is a picture of a 
funnel, and it is called the ``pain funnel and pain puzzle.'' It 
illustrates four levels of pain, with questions that are supposed to 
get progressively more hurtful to the prospective student.
  Level one starts off with questions such as, tell me more about that; 
can you be more specific; how long has it been a problem? Level two: 
What have you tried to do about that? What have you done to fix it? 
Level three pain: How do you feel about that? Then it gets down to 
level four. The recruiter is asking questions such as, have you given 
up trying to deal with the problem?
  A different document from ITT goes to the same levels of pain. The 
level four question is, once again, what are you willing to change now 
or have you given up trying to deal with the problem?
  What is the problem? The problem is, this young person is out of 
work. They have no future. They probably have a high school degree, 
maybe a D average in high school, C average at the most. They have 
answered an ad. The recruiter is talking to them, and they are stoking 
the pain.
  The last thing they say is, OK, what are you willing to do to change 
it or are you just going to give up on it? That is a question I would 
like to ask the executives who believe that preying on past failures is 
a sound method for enrolling students or a reasonable way to run a 
college.
  According to the Department of Education, 30 percent of student loan 
borrowers at ITT, the one I just quoted, default within 3 years of 
leaving school, and most of them leave before they ever get any kind of 
degree. They are there for a few weeks, maybe a few months, but when 
they drop out and when they default, ITT keeps the money.
  Kaplan University also encourages its recruiters to focus on pain and 
fear. In a page from a manual dated July 8, 2009, with side notes about 
``advisor call control'' and maintaining ``rapport with PROSPECT,'' the 
document is similar to ITT's, with questions to ``uncover the pain and 
fear''--``uncover the pain and fear.'' At the bottom: ``It is all about 
uncovering their pain and fears,'' underlined. ``Once they are reminded 
of how bad things are, this will create a sense of urgency to make this 
change.'' Sixteen pages of sales tactics later the recruiter is taught 
to ``restate back word for word, the better you restate the brighter 
the dream.''
  Another Kaplan document says, ``Keep digging until you uncover their 
pain, fears and dreams. . . . '' If you get the prospect to think about 
how tough their situation is right now and if they discuss the life 
they can't give their family because they don't have a degree, you will 
dramatically increase your chances of gaining a commitment from the 
student. ``Get to their emotions and you will create the urgency!'' 
``Get to their emotions and you will create the urgency!'' Is that the 
way we ought to be enticing young people to go to school? Stoke the 
pain, stoke the fear?
  Again, according to the Department of Education, 30 percent of 
student loan borrowers at Kaplan default within 3 years of leaving 
school. And, guess what, Kaplan keeps the money.
  Let me cite just one more example--Corinthian Colleges. At 
Corinthian, recruiters are taught to convince students that their lives 
are bad and can be improved only by enrolling in the school. As a 
former recruiter, Mr. Shayler White testified in a lawsuit filed 
against Corinthian by ex-students: ``The ultimate goal was to 
essentially make [prospective students] wallow in their grief, feel 
that pain of having accomplished nothing in life, and then use that 
pain'' to pressure them to enroll.
  I have focused on the blatant exploitation of pain to demonstrate the 
terrible cynicism that pervades these companies, but the schools' 
recruiting documents also are ripe with misrepresentations.
  From a brochure for Ashford University, owned by Bridgepoint, it says 
it was ``established in 1918,'' a ``traditional 4-year campus with 
sports teams, dormitories, regionally accredited since 1950--what this 
means to you is that your degree will be recognized both professionally 
and academically.'' That is from Bridgepoint, Ashford University. Well, 
what it does not tell you is that up until 2005, Ashford was a small 
religious school with 350 students. They were purchased by Bridgepoint 
and renamed ``Ashford.'' So 350 students at the end of 2005, and today 
they have 70,000 online students, with astronomical dropout rates. And 
67 percent of Bridgepoint is owned by investment bank and private 
equity fund Warburg Pincus. Think about that--a private equity firm 
owns Bridgepoint. They buy a small religious school, with 350 students. 
They put out these things: You can go to this school, with a great 
campus and all that, but you are going to school online. Now they have 
70,000 students.
  According to the Department of Education, 21 percent of student loan 
borrowers at Ashford's parent company Bridgepoint default within 3 
years of leaving school. That is a 17-percent increase in just 1 year.
  The HELP Committee has heard testimony from experts in college 
counseling. This testimony details the detrimental effects such overly 
aggressive and misleading recruitment can have on the lives of 
students. When students are enrolled through deception or fear, they 
are less prepared to meet the challenges of college. Rather than 
offering students a better life, these types of strong-arm, emotionally 
abusive tactics are all too typical of schools that have little or no 
interest in providing students the academic help and support they need 
for the students to succeed.
  Perhaps the attitude of these schools toward students is best exposed 
in a document provided by Vatterott, a privately held for-profit 
school. Under the heading of ``Emotion,'' it notes that:

       We deal with people that live in the moment and for the 
     moment.

  That is whom they are going after.

       Their decision to start, stay in school or quit school is 
     based more on emotion than logic.
       Pain is the greater motivator in the short term.

  Think about the schools you are familiar with in your own States, 
your private, nonprofit schools, some religious based, then your public 
schools and your universities. Are they recruiting students like this? 
You will not find this in any of them. They are not going after pain 
and fear; they are going after students to help and support them when 
they go through school so they can have a better life.
  Well, if this is the attitude--to stoke the fear and to stoke the 
pain--if that is the attitude of these for-profit colleges, what does 
it say about its students' chances for success? Is it any wonder that 
outcomes are appalling and defaults are skyrocketing, accounting for 
nearly 47 percent of all student defaults?

[[Page S602]]

  Once again, I have to point out that the for-profit schools enroll 
about 10 percent of higher education students in America, but they 
account for 47 percent of the defaults--10 percent of the students, 47 
percent of the defaults.
  The bottom-line finding of my committee's investigation is that, No. 
1, these schools are very expensive; No. 2, they are exploitative; and 
No. 3, these documents show they are focused on their own success--
paying their shareholders if they are publicly held or paying back 
their equity investors if they are equity owned. They are not focused 
on the success of their students.
  The bottom line is that what we are confronting today with this 
tremendous explosion in for-profit schools, this tremendous explosion 
in their enrollment of students--as I said, Ashford in 2005, 350 
students; today, 70,000 students--their tremendous churning of students 
that is going on every year--this has a striking resemblance to the 
subprime crisis that confronted America, a striking resemblance to the 
subprime crisis.
  Mr. President, I ask unanimous consent that the documents I referred 
to be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

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[[Page S608]]

  Mr. HARKIN. Mr. President, I yield the floor.
  The PRESIDING OFFICER. It is the Presiding Officer's pleasure to 
recognize the Senator from West Virginia.

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