State Cuts Cal Grant Funding for Many For-Profit Schools

Categories: Education
Vlad  Alvarez
Scavengers feasting on the death of the American Dream.
It took a destructive recession and a budget deficit even MC Hammer finds ridiculous, but California has slowed down the flow of tax-payer money to for-profit colleges.

Yesterday, the California Student Aid Commission announced a sharp decrease in the number of schools eligible for Cal Grants: for the 2012-13 school year, 154 schools will be ineligible -- more than double the previous year's mark.

Because the state's belt continues to tighten, officials sliced the number of grant recipients in the most sensible way possible, by increasing standards: graduation rates now must be above 30 percent and student default rates must be below 15.5 percent. Nearly 90 percent of the ineligible schools are for-profit colleges, those over-priced, under-performing, Wall Street-funded, lying-ass vultures who target poor people and injured war veterans.

The group of institutions cut off from the teet includes San Francisco's land-grabbing Academy of Art University as well as Everest College, Heald College, Carrington College, the Center for Employment Training, St. Francis Career College, and the Art Institute of California, which each have Bay Area branches.

As Chris Parker depicted in this week's feature "Predators in the Ivory Tower," most for-profit colleges "receive 90 percent of their revenue from the American tax payer"-- around $30 billion a year all together. They get this money by enrolling poor people eligible for financial aid and veterans with GI Bill money in their back pockets. And yet, "on average, a four-year degree from a for-profit runs twice what in-state tuition costs at a public school. When it comes to two-year programs, the disparity widens: For-profits charge three to four times the rates of their public counterparts."

The bulk of the money goes into advertising and a deep team of salespeople, who often get paid based on how many people they can enroll. Superiors sometimes encourage them to inflate numbers by lying to prospective students and fudging paperwork, juking the stats like cops on The Wire. One character in the feature compared the office climate to Glengarry Glen Ross.

Always be closing! ALWAYS be CLOSING!!

Schools that receive federal funds are not allow to pay recruiters based on enrollment numbers. As U.S. law states, colleges and universities that get tax-payer aid are prohibited from providing "any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments or financial aid to any persons or entities engaged in any student recruiting or admission activities."

That's why the Academy of Art is currently embroiled in a lawsuit. Four whistle blowers, in a complaint filed this year, claim that the school blatantly broke this rule. One of the whistle blowers, Mary Aquino, alleges that her superior Noreen Chan told her "that she would receive an $8,000 salary increase if she met her recruitment goal of 65 students, if she achieved 125 percent of that goal she would receive a $10,000 salary increase and if she achieved 150 percent of that goal she would receive $15,000 salary increase."

Chances are, most of those students the salespeople reeled-in would end up disappointed with the product. According to California Student Aid Commission data, just 29 percent of AAU's students graduate within six years. Students from other schools on the grant ineligible list encountered problems even worse than dropping out. At Everest College-San Francisco, for instance, 37 percent of 2008 graduates defaulted on their students loans within three years.

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