A Degree in Debt

In a heavy-hitting series of reports that began in 2009, WFAA/Channel 8 in Dallas reported on the state’s trade school and for-profit college industry. When reporters submitted open-records requests, TWC refused to provide enrollment, program completion, or placement numbers for several career schools.

In early 2011, State Sen. Florence Shapiro introduced a bill to fix some of the problems that WFAA had reported on and to tighten the screws on the for-profit education industry in Texas.

The bill by the Plano Republican required that thorough consumer information on each school be provided on the websites of both the Texas Workforce Commission and the Texas Higher Education Coordinating Board.

“Currently, there is not an easily accessible way to make such complaints nor is there an easy way for the [attorney general’s office] to monitor potentially detrimental activities conducted by for-profit institutions,” a Senate researcher wrote at the time.

In an April 2011 hearing before the Senate Committee on Economic Development, Dallas lawyer Ty Gomez, representing several students who had filed grievances against ATI, stressed that if TWC posts placement information provided by the schools without checking it, the agency might be perpetuating new inaccuracies.

When the agency receives data from the schools, Gomez said, the TWC puts its seal of approval on it, allowing the information to be sent to prospective students.

“If the data is not valid, then you essentially have the TWC authorizing supporting information that may not in fact be correct,” he said.

The measure by Shapiro was folded into another legislator’s successful bill. Shapiro did not return a call requesting comment for this story.

Several other successful bills also instituted some reform measures. One bill clarified the refund policy for students. Another changed the regulatory process for out-of-state career schools that advertise online to Texans.

One bill that failed to pass would have removed TWC’s oversight of all postsecondary schools that offer associate degrees or higher and given that job to the Texas Higher Education Coordinating Board, an arm of the Texas Education Agency. The Coordinating Board had regulated those colleges until an earlier legislative change in 1995.

“I would have testified against moving that regulation from the Coordinating Board,” said Kenneth Ashworth, commissioner of that board from 1976 to 1997. “I think educational matters should be supervised by educators. Profit-makers cannot be entrusted to business people.”

The bills were all attempts to remedy years of what some perceived as lax regulation of the career-school industry in Texas.

For years, any attempt at reform ran into a formidable lobby that begins with the Career Colleges & Schools of Texas PAC, a group that has filtered tens of thousands of dollars into state campaign coffers.

The PAC’s lobbyist, Jerry Valdez, has donated more than $100,000 to various candidates since 2000. The PAC’s former legislative chairman: Brent Sheets, president of American Commercial Colleges, who pleaded guilty this year to federal charges of theft of government funds.

Valdez declined to be interviewed.

 ********

TWC licenses and regulates more than 500 career schools and colleges in Texas that provide vocational training to more than 170,000 students annually. TWC makes annual site visits to campuses and monitors the qualifications of faculty, quality of facilities, class size, student completion rates, student employment rates, and other criteria. TWC also investigates student complaints and reports of unlicensed schools — from the 2011 annual report of the Texas Workforce Commission

By early 2012, the state had implemented new standards and procedures for career schools, required by the 2011 legislation.  Recruiters would be trained on ethics in soliciting students. Employment rates of graduates would be accurately reported. And tuition would be refunded if a school misrepresented itself.

“Since 2012 we have assessed more than $90,000 in penalties” to errant career schools, said Givens, the TWC spokeswoman, She said the agency now has an established procedure for inspecting and otherwise checking on how the for-profits operate.

Today, graduation rates and placement figures are available through a search portal at the TWC website. Before the 2011 reforms, several schools were accused of falsifying employment figures, even going so far as to create phony companies that they claimed graduates were working for.

The Texas Workforce Commission’s staff of auditors include contractor Frank Hammack, who helps police the state’s for-profit colleges. Hammack’s former employer is ATI, where he worked as director of compliance from 2008 to 2011. During two of those years, the school was alleged to have falsified its records.

Hammack also worked for the TWC division overseeing for-profit schools at least a year before moving to ATI.

TWC’s job “is to protect students and businesses in Texas,” former agency spokeswoman Ann Hatchitt said in an interview in 2010, when career colleges in Texas were being investigated by the federal government.

She said TWC is there to support employers, including the for-profit college industry.

In fact, Texas is one of the few states where federal prosecutors closed schools in the face of inaction or sluggish regulation by the state.

“The state gets involved after it becomes apparent the federal agency is going to get serious about enforcement or an action,” said a former employee of American Commercial Colleges. “Otherwise the state does nothing to regulate the schools.”

Although newspapers reported in 2012 that ATI would close all its Texas campuses, at least one Metroplex location with ties to ATI continues to enroll students and receive federal loan money.

“They make a big deal when they claim to close down these schools, but pretty soon they are up and operating again, sometimes with the same people, sometimes with different people,” said Harry Shulman of San Francisco, one of the few lawyers across the country who still handle cases of aggrieved students who feel fleeced by the for-profit education sector.

The state, meanwhile, doesn’t list ATI among the schools closed over the years by the TWC. The last school the state closed, according to its website, was Career Academy of Texas in Grapevine. Like most of the for-profit operations, the academy promised to help students obtain funding assistance from a number of sources, including the Texas Workforce Commission itself, the very agency charged with policing it.

********