Monthly Archives: April 2015

Mom Misled By Kaplan For-Profit College: Part Of Miami Herald’s Blockbuster Industry Expose

by David Halperin, published April 24, 2015

A blockbuster, year-in-the-making investigative series about the for-profit college industry appears online in the Miami Herald today, and, as industry analysts at BMO Capital Markets predicted earlier this week, “Obviously, this is not going to portray the industry in a positive light.” It doesn’t, but that’s because the industry practices and conduct that the Herald found are simply abominable. (I have studied bad actors in this industry for five years and have found the same.) With both Hillary Clinton and Jeb Bush already addressing this issue, it’s one that’s drawing increasing public attention.

The Herald‘s disclosures about the way for-profit colleges have ripped off students and taxpayers, while buying influence with powerful politicians, are too many to recount, but here are just a few bites to tempt you:

Student Rose Grier: “I specifically said, I can’t take on loans,’ and [the EDMC for-profit college recruiter] said ‘Oh, you won’t be taking on loans.”

Grier said it was a few months after enrolling in 2010 when she received statements in the mail showing she had already tallied nearly $4,000 in loans. Grier was stuck, and loan servicer Sallie Mae would demand payment.

And:

Sir, why did you leave Kaplan [for-profit college]?” [Florida] Assistant Attorney General Rene Harrod asked former recruiter Mark Stegall on Nov. 22, 2010.

“I was disgusted with myself,” Stegall responded. Stegall testified he had previously worked in other sales jobs, and “there are some things I don’t feel bad about selling.” But at Kaplan, he said, “you just felt like you were putting these people who were already in a bad situation in life in a worse one.”

Continue reading Mom Misled By Kaplan For-Profit College: Part Of Miami Herald’s Blockbuster Industry Expose

Entitlements are Bankrupting America. But the Rich Keep Taking Them

by Paul Buchheit, published April 27, 2015, mirrored from Common Dreams

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(Photo: Justin Eason/cc/flickr)

Because of irresponsible reporting by conservative sources, many Americans have been led to believe that social programs are bankrupting our nation. The mainstream media fawningly concurs, with statements like this from USA Today: “The massive deficits…[and] chronic underfunding…are largely the result of Washington’s habit of committing too much money to benefit programs.” States are now beginning to attack imagined safety net abuses, such as the use of food stamp funds to pay for fortune tellers and pleasure cruises.

But hungry people rarely waste their modest benefits, and most are eager to work to support their households. Almost three-quarters of those enrolled in food stamps and other social programs are members of working families. And according to the U.S. Department of Agriculture, only 1 cent of every SNAP dollar is used fraudulently.

The real threat is the array of entitlements demanded by the very rich. As they get richer, they’re gradually bankrupting the greater part of America, the middle and lower classes. The following annual numbers may help to put our country’s expenses and benefits in perspective.

The Safety Net: $370 Billion

The 2014 safety net (non-medical) included the Supplemental Nutrition Assistance Program (SNAP), WIC (Women, Infants, Children), Child Nutrition, Earned Income Tax Credit, Supplemental Security Income, Temporary Assistance for Needy Families, Education & Training, and Housing. These few programs, collectively termed “welfare” by those fortunate enough to survive without them, amount to a lot less than the $1 trillion per year publicized by the conservative press.

Social Security: $863 Billion

Continue reading Entitlements are Bankrupting America. But the Rich Keep Taking Them

Abuses At Corinthian Are Mirrored At Other Big For-Profit Colleges

by David Halperin, published April 22, 2015

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An education technology executive who previously worked with the for-profit college industry told me last year, “The biggest misconception about for-profits is that they are schools. They are call centers that happen to have a school built around it.”

That is a deadly accurate insight.

Numerous federal and state law enforcement investigations, and media investigations, have exposed an industry desperate to always be closing — signing up as many students as possible for high-priced, questionable quality career education programs, without regard to whether the programs will help a given student, or instead will leave that student unemployed and mired in college loan debt. Often the deals that these for-profit colleges pitch are terrible value for students and thus can only be sold through deceptive and coercive sales tactics.

The collapse of for-profit giant Corinthian Colleges, which had been taking as much as $1.4 billion annually in federal student aid at its Everest, Heald, and Wyotech schools, and the shocking revelations of abuses in that company have led some advocates for the for-profit college industry to now claim that Corinthian is an isolated case, the only bad apple. But, as I have written in my e-book and articles, in fact a number of large for-profit colleges are engaged in comparable predatory practices. We might expect similar reports in a detailed series starting Friday in the Miami Herald, the result of a year-long investigation by that paper.

Continue reading Abuses At Corinthian Are Mirrored At Other Big For-Profit Colleges

The Trans-Pacific Partnership and the Death of the Republic

by Ellen Brown, published April 24, 2015

“The United States shall guarantee to every State in this Union a Republican Form of Government. — Article IV, Section 4, US Constitution

A republican form of government is one in which power resides in elected officials representing the citizens, and government leaders exercise power according to the rule of law. In The Federalist Papers, James Madison defined a republic as “a government which derives all its powers directly or indirectly from the great body of the people . . . .”

On April 22, 2015, the Senate Finance Committee approved a bill to fast-track the Trans-Pacific Partnership (TPP), a massive trade agreement that would override our republican form of government and hand judicial and legislative authority to a foreign three-person panel of corporate lawyers.

The secretive TPP is an agreement with Mexico, Canada, Japan, Singapore and seven other countries that affects 40% of global markets. Fast-track authority could now go to the full Senate for a vote as early as next week. Fast-track means Congress will be prohibited from amending the trade deal, which will be put to a simple up or down majority vote. Negotiating the TPP in secret and fast-tracking it through Congress is considered necessary to secure its passage, since if the public had time to review its onerous provisions, opposition would mount and defeat it.

Abdicating the Judicial Function to Corporate Lawyers

James Madison wrote in The Federalist Papers:

“The accumulation of all powers, legislative, executive, and judiciary, in the same hands, . . . may justly be pronounced the very definition of tyranny. . . . “Were the power of judging joined with the legislative, the life and liberty of the subject would be exposed to arbitrary control, for the judge would then be the legislator. . . .”

And that, from what we now know of the TPP’s secret provisions, will be its dire effect.

Continue reading The Trans-Pacific Partnership and the Death of the Republic

Gravity Payments CEO Dan Price

By Alexander Reed Kelly, published April 25, 2015

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Founder of Gravity Payments Dan Price. (Gravity Payments)

Every week the Truthdig editorial staff selects a Truthdigger of the Week, a group or person worthy of recognition for speaking truth to power, breaking the story or blowing the whistle. It is not a lifetime achievement award. Rather, we’re looking for newsmakers whose actions in a given week are worth celebrating.

We’ve all heard the figures: Chief executives of U.S. businesses take home nearly 300 times as much money as the people who toil beneath them. It’s a reality that stunts the development of many tens of millions of Americans and makes both material and emotional aspects of life harder. Thousands of workers have mobilized a struggle for a higher minimum wage, with some success. But some luckier workers—such as employees of the Seattle-based payments processing firm Gravity Payments—don’t have to.

This month, Dan Price, the 29-year-old founder of Gravity Payments, announced that he would cut his salary by roughly 90 percent from nearly $1 million to $70,000 per year and raise the salaries of his lowest-paid employees to that same level. Members of his 120-person staff were stunned. The paychecks of some 70 of them will grow over the three-year period during which the change is set to go into effect, and 30 of them will earn twice what they do now. The average annual salary at the company is $48,000.

Price said his own salary would shift back toward the $1 million mark in the years ahead in proportion to Gravity’s growing revenue. He began the company in his dorm room at Seattle Pacific University a few years after he learned he could process credit card payments more cheaply and with better service than existing large corporations.

Honorable remarks by Price on his decision were reported in The New York Times (the article included a video recording of Price making the announcement to his staff): “The market rate for me as a C.E.O. compared to a regular person is ridiculous, it’s absurd.” The Times reported that the main extravagances enjoyed by Price, who grew up in rural Idaho, are snowboarding and picking up the bar bill and that he drives a 12-year-old Audi, obtained in a barter arrangement with the local dealer.

Continue reading Gravity Payments CEO Dan Price

Over Taxed? They spent $1 Trillion on Stock Buybacks

by Bud Meyers, published April 24, 2015

According to a study by the Roosevelt Institute (Disgorge the Cash), businesses once borrowed to invest and improve their company’s long-term performance. But for the past 30 years business investment has been replaced by shareholder payouts. Companies now borrow to enrich their investors in the short-run (including their executives with stock option grants as pay for performance).

Under the older managerial model, more money coming into a firm (either from sales or from borrowing) typically meant more money was spent on fixed investment. But in the new “rentier-dominated” model, more money coming in means more money flowing out to shareholders in the form of dividends and stock buybacks. Since the 1980s, shareholder payouts have nearly doubled; in the second half of 2007, aggregate payouts actually exceeded aggregate investment.

The study shows good evidence that the real economy benefits less from the easier credit provided by macroeconomic policy than it once did. Higher corporate profits in recent business cycles have generally failed to lead to high levels of investment — and cheaper money from lower interest rates failed to stimulate investment, growth and wages — because additional funds are funneled to shareholders through buybacks and dividends.

Andrew Ross Sorkin (at the New York Times) recently reported that the chief executives of 500 of the nation’s largest companies will receive a letter in the mail from Laurence D. Fink, chief executive of BlackRock, the largest asset manager in the world (with $4 trillion in assets). He will tell these business leaders that too many of them have been trying to return money to investors through so-called shareholder-friendly steps like paying dividends and buying back stock.

Continue reading Over Taxed? They spent $1 Trillion on Stock Buybacks

Just One Reason why Bernie Sanders should Run

by Bud Meyers, published April 21, 2015

Just one of many reasons: Literally rolling up his sleeves and protesting a trade deal that would throw Americans out of work, Senator Bernie Sanders marched with leaders of the AFL-CIO and other labor organizations to a rally outside the U.S. trade representative’s office.

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Bernie said, “One of the key reasons why the middle class in America continues to decline and the gap between the very rich and everyone else is growing wider is because of disastrous trade agreements which have sent millions of decent-paying jobs to China and other low-wage countries.”

Bernie’s leading role in opposing the 12-nation Trans-Pacific Partnership follows a long record of opposing the North American Free Trade Agreement, Permanent Normal Trade Relations with China and other job-killing trade deals. Partly because of those and other agreements, nearly 60,000 factories in this country have been shuttered since 2001 and more than 4.7 million manufacturing jobs have vanished.

Proponents claimed that NAFTA would create 200,000 American jobs. Instead, that 1994 deal led to the loss of some 1 million jobs in the United States. The trade agreement with China six years later was ballyhooed by corporate backers as way to create hundreds of thousands of American jobs. Instead, it led to the loss of 3.2 million U.S. jobs.

Americans should not be forced to compete against desperately poor workers throughout the world. In Vietnam, for example, workers are paid as little as 56 cents an hour.

Continue reading Just One Reason why Bernie Sanders should Run

A Day in the Life of a Welfare Bum

by Bud Meyers, published April 22, 2015

The very first thing you do after you wake up in the morning is to run out to get a nice surf and turf for breakfast; and then you do some actual surfing. Then it’s off to the tattoo parlor.

Then later you might buy a car, or have a mid-morning séance with a psychic advisor. At lunch you use your food stamps to buy some unhealthy food (like nachos, cookies and a Coke). Later in the afternoon you take a trip to the local casino, and using your EBT card, do some afternoon gambling and drinking — and also do some drugs.

Then you do some more drugs, before taking a trip to the mall for some shopping, buying jewelry and lingerie — and maybe you’ll even catch a movie while you’re there.

Continue reading A Day in the Life of a Welfare Bum

Senator Blunt Blames College Students for Borrowing

by David Halperin, published April 21, 2015

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Parroting a familiar talking point by bad actors in the for-profit college industry, Senator Roy Blunt (R-MO), appeared last week to blame students for their high student loan burdens. After questioning Secretary of Education Arne Duncan at a Senate Appropriations Committee hearing on Thursday about regulations aimed at for-profit colleges, Blunt, a member of the Senate GOP leadership, said [VIDEO at 1:38:00]:

We ought to be talking about … the debt problem when you get out of school. How much of that related to the actual cost of going to school and how much it related to what you thought your living standards should be while you went to school, and I’m pretty confident over the years that the student expectations for their personal living standards in school have often increased where they would have been a few just years ago.

Exclusive video obtained in 2012 by Republic Report of a meeting of the for-profit college trade association APSCU showed an industry executive engaged in similar blaming of students for alleged overborrowing — to buy cars, cover child support, and pay parking tickets — a remark that led to thunderous applause by fellow executives in attendance.

Similarly, when in 2013 I asked a spokesperson at for-profit giant EDMC about a veteran who had incurred tens of thousands in debt at EDMC before dropping out, he said:

Current laws and regulations permit students to borrow more than the cost of tuition and fees up to the maximum loan limits set by Congress. While we cannot limit the amount of debt a student incurs, we strive to provide access to resources that encourage responsible borrowing and repayment of loans.

The predatory for-profit college companies tend to accept no responsibility for their sky-high prices, deceptive enrollment and financial aid tactics, and poor quality programs and job placement records that push so many students deep into debt. They blame their own students instead, implying that the students are pocketing the money themselves to buy Escalades and Cristal.

I have been told by staff members at EDMC and elsewhere that there are in fact some students who do enroll in order to pocket some cash and walk away, but these staff say that the management at these schools recognize the problem and don‘t care, because the school gets its federal aid dollars anyway. Indeed, industry insiders say that some for-profit college recruiters actually dangle the idea of extra spending money as a way to entice wavering students into enrolling — get a new laptop, get some cash. No doubt some students at non-profit and public colleges also borrow extra to cover some personal expenses. But the vast majority of for-profit college students are not keeping any cash – they are turning over their federal checks to the school, borrowing more money in private loans, and often going broke in the process. And in fact colleges already have tools at their disposal to limit student borrowing to what the student actually needs.

In an odd follow-up to his line of questioning, Senator Blunt then asked Duncan to “provide a year-to-year summary of marketing and advertising expenses for the Department over the last three fiscal years, as this relates to a topic I’ve been interested in, whether we should specifically identify that this is a taxpayer funded marketing effort.” Duncan replied, “We don’t do a heck of a lot of it” but promised the data.  Blunt didn’t explain what he was getting at. I’m not aware of what the Department of Education might be “marketing” or of “advertising” run amok. But I am aware that Blunt’s fellow Senators, notably Dick Durbin (D-IL), have long argued that for-profit colleges should not be permitted to use taxpayer dollars for marketing, after a Senate committee report found that big for-profit colleges were getting as much as 90 percent of their revenue from federal funds and spending almost a quarter of their revenue on marketing.

Continue reading Senator Blunt Blames College Students for Borrowing

Using RICO to Stop Union-busting and Restore Wages

by Bud Meyers, published April 22, 2015

ricoIncreased productivity no longer has an affect on raising wages, because all the gains go to the top — and the decline of labor unions plays a big part; as well as a tax code that Congress has skewed to mostly favor the very wealthy and large corporations.

Jared Bernstein, former economic adviser to Vice President Joe Biden, recently writes:

“A number of economists and commentators have suggested that faster productivity growth would be a big way to boost the income of middle-class households … There is a large and persistent gap between productivity growth and middle-class incomes: we cannot realistically assume that faster productivity growth would reach the middle as opposed to doing an end-run around them on its way to the top.”

Via the professor of economics, Mark Thoma: As noted by the Economic Policy Institute, since 1979, the vast majority of American workers have seen their hourly wages stagnate or decline—even though decades of consistent gains in economy-wide productivity have provided ample room for wage growth:

“Until workers recover the bargaining power they lost with the decline of unions and the rise of globalization, it’s hard to imagine a reversal of the forces pushing us toward stagnating wages and ever higher inequality. It’s not market forces alone that are determining the split of income between those at the top of the income distribution and those below, it’s also the institutions that determine who holds the cards in negotiations over wages. Presently workers are not faring well … So long as we continue to believe that market forces and the attainment of full employment will solve the problem of stagnating wages and rising inequality, so long as we fail to recognize that workers need a level playing field when bargaining over wages, inequality will continue to be a problem.”

Continue reading Using RICO to Stop Union-busting and Restore Wages