Did a for-Profit School Create Fake Jobs to Pad Job Placement Rates?

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By Consumers Union on Friday, December 20th, 2013

This week, the Huffington Post reported stunning new details about how for-profit Corinthian college boosted its job placement numbers with fake jobs. Corinthian is the for-profit operator of career colleges such as WyoTech, Heald and Everest, and is the subject of a lawsuit brought by the California Attorney General’s office.

Students often choose colleges in the hopes of landing a high-paying job when they get out, and they may look at a school’s job placement numbers to help them make up their minds about where to go. Job-placement numbers are important to schools, too, because they want to attract students. According to HuffPost, job-placement numbers were at the heart of Corinthian’s student recruiting efforts, and former Corinthian employees reported feeling pressured to meet placement goals, even if it meant doing so by dubious means:

For example, they were encouraged by executives to count dental assistant graduates who worked at a one-day volunteer event as “placed” in the field. Business graduates who got jobs moving boxes in warehouses were considered successfully employed in “logistics.”

HuffPost found that Corinthian’s Everest location in Georgia had a job “subsidy” program that, before it was discontinued in 2011, functioned more like an ATM for employers. Everest routinely paid employers $2000 to hire their grads – but the jobs didn’t last long. HuffPost found that dozens of employers would “hire” Everest grads for 30 days then lay them off after collecting the $2000. Then, these same employers would turn around and hire a different Everest grad for a 30-day make-work job in order to collect another $2000. Corinthian defends its job placement services and told HuffPost that the program “did not violate any accreditation or regulatory standards.”

In the last decade, Corinthian took in nearly $10 billion in federal student aid – more than 80% of its revenues according to HuffPost. The Consumer Financial Protection Bureau recently issued a civil investigative demand to Corinthian Colleges at least in part to determine if these colleges “have engaged or are engaging in unlawful acts or practices relating to the advertising, marketing, or origination of private student loans.” We’ve warned about for-profit colleges steering folks into debt, and have called on the on the Department of Education to take a closer look at these kinds of places, to prevent taxpayer money from flowing to bad programs.

If you’re considering going to college but are wary of being scammed, there are steps you can take to protect yourself. The Federal Trade Commission offers consumers tips for choosing a  college or vocational school, avoiding diploma mills (schools that offer diplomas for little work and whose degrees are essentially worthless), and some specific advice for veterans. We also have these tips for consumers looking to minimize student loan debt.

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