[Congressional Record (Bound Edition), Volume 160 (2014), Part 3]
[Senate]
[Pages 4470-4471]
[From the U.S. Government Publishing Office, www.gpo.gov]




                          CORINTHIAN COLLEGES

  Mr. DURBIN. Last December I spoke about a news article that revealed 
another disturbing scam perpetuated by the for-profit college industry. 
The article reported that Corinthian Colleges, Incorporated, a 
publicly-traded corporation, that owns for-profit schools in the United 
States and Canada, has engaged in deceptive job placement practices in 
order to artificially boost job placement rates and avoid scrutiny by 
its creditors.
  It turns out Corinthian schools were paying employers what they 
called an onboarding fee of $2,000 per student so the companies would 
hire their graduates temporarily so that could be counted as an 
official permanent job placement.
  Corinthian college subsidiary schools have been criticized in the 
past for having high dropout rates, high tuition, and some of the 
highest loan default rates in the Nation. Nearly 40 percent of 
Corinthian college students who should have begun to pay their Federal 
student loans in 2008 were defaulting on their student loans. This is 
the highest rate of any publicly-traded company in that sector. Yet, 
over the last 10 years Corinthian Colleges has been rewarded for its 
poor performance with $10 billion in Federal student aid. On an annual 
basis American taxpayers fund more than 80 percent of Corinthian 
Colleges' total revenue. This includes the salary of Corinthian's CEO, 
Jack Massimino, who received compensation of $3.1 million in 2012, 
thanks to the taxpayers. This was seven times the average compensation 
for presidents of public universities, which is about $440,000.
  Corinthian also spent $400 million on marketing and admissions in 
2013, about $3,700 for each newly admitted student. How could they 
afford it? Because the taxpayers are subsidizing this for-profit 
college. Corinthian's marketing strategy has come under scrutiny 
recently because it targets low-income people. Why? If you are a low-
income new student at Corinthian you automatically qualify for a Pell 
grant and a college student loan. They can't wait for you to come 
through the door, sign the papers, and then watch what happens next. 
Most of these students falter, fail, drop out, or if they were, I 
guess, lucky--and I use that word advisedly--they end up with a 
worthless diploma. These students attracted by the prospect of a better 
life and the dream of a college education end up far worse off, deeply 
in debt with nothing to show for it.
  Eric Parms, an Everest college grad, completed a 9-month heating, 
ventilation, and air conditioning repair program. What he ended up with 
at the end of it was a $17,000 student loan for a 9-month program on 
HVAC and no job. After he graduated he had to beg the career counselors 
at Everest to set up some interviews. Frankly, Eric wasn't worth that 
much to them after he graduated. They wanted him to sign up for the 
loans. He did it and they lost interest in him.

[[Page 4471]]

  Finally, he was set up by career services to work in a contract 
position laying electric wires. However, after less than 2 months on 
the job he was laid off and cut off from any career service counseling 
at Everest College, part of the Corinthian operation.
  The school had effectively placed Eric in a short-term internship 
program, and once it was over, there was no incentive for that company 
to hire him when they could vacate a space for another graduate who 
would get a $2,000 Corinthian subsidy, so their numbers would look 
better to the public and to the Federal Government. Then Everest could 
shuttle in another graduate for a part-time position leading nowhere.
  Eric lost out on the deal with a $17,000 student loan for a worthless 
education at Everest College, part of the Corinthian family of schools. 
To get a Georgia HVAC contractor license he needed to have significant 
work experience and references. No one would hire him with a degree 
from Everest. Everest College, part of Corinthian, gave him a worthless 
degree.
  After reading the December article and stories like Eric's, I sent 
four letters. One letter was to the CEO of Corinthian, asking him to 
explain these practices and to outline steps the company is going to 
take to put an end to it. His response to me was not surprising but 
disappointing. Corinthian's CEO Jack Massimino, the multimillion dollar 
CEO defended the school's policies and practices. He did admit that at 
one time three Everest campuses provided incentives to employees.
  This is a scandal that has to come to an end. I tell folks 
repeatedly, if you want to know about for-profit schools and 
universities in America, remember three numbers: 10 percent of high 
school grads end up in for-profit colleges; 20 percent of all the 
Federal aid to education goes to these colleges; 46 percent of all the 
student loan defaults come out of these colleges. These are worthless, 
by and large. There are some exemptions, but most of them are 
worthless, and we as taxpayers are being taken to the cleaners by this 
industry.
  When we don't have enough money to do the important things in America 
such as medical research and assistance for education at good, 
worthwhile schools, we ought to say shame on ourselves for not taking a 
look at this for-profit college industry which is fleecing the American 
taxpayers.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Maryland.
  Mr. CARDIN. First let me thank Senator Durbin for his commitment on 
this issue. We know education is a great equalizer in America. We know 
there are major concerns on access to higher education because of 
costs, and that we have to do a better job to make college education 
affordable. We also have to have accountability in higher education, to 
make sure those institutions are providing quality products to their 
students and are doing it in a cost-effective way, particularly when 
taxpayers are providing a lot of the aid.
  Mr. DURBIN. If I could ask the Senator from Maryland to yield for a 
moment.
  Mr. CARDIN. I would be glad to.
  Mr. DURBIN. I just had a meeting with people from the Pentagon and we 
talked about military education, members of the military who are 
seeking education while in the military through the GI bill and such. 
We talked about some of the worst examples of for-profit schools. The 
best example I could come up with of a worthy education through the 
military is the University of Maryland. They have been doing it for 
decades. I steer all my friends in the military and their families to 
the flagship university in the Senator's State of Maryland. Maryland 
does a good job.
  Mr. CARDIN. I am glad I yielded to my colleague. We are very proud of 
the University of Maryland and the programs for the Department of 
Defense. We believe it is a cost-effective way and a quality education, 
exactly what the Senator from Illinois is talking about; and that is we 
have to get value for our dollars and we have to get accountability. I 
appreciate the Senator bringing that to our attention.

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