August 12, 2011

Goldman Sachs' Art Schools: Surprise! Multi-Billion Dollar Fraud

The Feds and four states including California join civil suits on multi-billion dollar student loan and recruitment fraud at the 45 Goldman Sachs-owned Art Institutes and numerous other EMC owned for-profit schools. Among these, Educational Management Corp owns Art Institute of Seattle and the Academy of Art in San Francisco.

By the numbers- 50% of the defaults on federal student loans comes from the 10% of the students, those who attend corporate for-profit colleges.The suits allege that EMC systematically pressures students into taking huge loans, and compensates recruiters illegally.  EMC pockets federal student loan money even though the students so often default, their chances at a career often destroyed by either the crushing debt or a default.

National Endowment for the Arts budget since 2003: $800 million. Amount of ineligible loan fraud, since 2003, just for this company,  $11 billion.

I know fine and dedicated people who work at one of the ECM Art Institutes, and I also know art students, especially ones from less privileged backgrounds, who are pushed into early default by high-pressure marketing and recruitment. Students who have gone there tell me of intense recruitment pressure.

There are indeed career opportunities in the arts generally (more than you might think - the arts are 6% of the economy; a student with superior drawing/illustration skills has a good shot at video game work for one example)  but facing spotty opportunities with crushing debt (these schools are well over 20K a year),  and what is often a substandard education, is essentially impossible. The education quality is often highly uneven, and instructor salaries range in the several hundred dollars for a quarter long class. (A friend put it this way: if you go there, the teachers will be looking at your lunch).

Most often, much better and vastly cheaper education opportunities abound in the West Coast's still fairly robust community college system, often by the same instructors.   But these for-profit education corporations, EMC and others,  have cultivated political protection; and their rapid growth- often at the expense of community colleges- should raise a few eyebrows and a lot of subpoenas.

EMC's massive, multi-billion dollar fraud is terribly destructive to students and education. It wrings less privileged young people dry, rips off  billions from taxpayers, and squanders human potential. The company's protests about how important is to reach minority students doesn't meet the smell test, unless they mean the huge expenses they put into heavy television marketing and illegal recruitment. $11 BILLION into the community college system would have reached and recruit diverse students much more, and in most instances delivered a superior education. 

Profit alone  is a shockingly bad institutional motivation in education. My own experience teaching with this corporate mindset left me with  real disgust. While some for-profit college models can be very beneficial and helpful, providing experimentation and flexibility for some students (I've had good experiences teaching at small for-profit schools), the corporate for-profit education model, as a whole, is I believe toxic in post-secondary education.  The teaching atmosphere is often empty, disconnected and future-less, and there is little if any incentive for scholarship.

It would have been vastly better,  more morally and socially beneficial, to hold those loans solely for community colleges, where for the same price to the government, perhaps three times the number of students could have attended, and where the level of education, institutional concern for students' careers and for the attainment of knowledge as a desirable social goal for citizens is a greater priority.

As it is, I am forced to strongly discourage students from attending these schools, and feel that I must professionally oppose this model of college education.


Blogger The Other Front said...

I knew it was bad. I didn't know it was this bad.

August 13, 2011 at 10:10 AM  
Blogger Undersecretary to the Deputy Commissariat said...

Does the FSL realize that his suggestion leaves no option for arts education in Anchorage? I mean, point at the community college here.

August 18, 2011 at 2:57 PM  
Blogger First Sea Lord said...

As you know, there is no community college in Anchorage. There is however a perfectly good arts program at the University of Alaska which is all but open enrollment. In Native arts there is a long and re-energized tradition of apprenticeship.

Not to mention, if you really want a career in the arts, but won't meet the UA entrance standards, won't apprentice and also refuse to leave the state for broader options education or a real shot at a career, the very last thing you should do is take out 100K for one of these terrible corporate schools. You'll never pay it back, and that will be the end of your career before you start.

August 24, 2011 at 2:31 PM  

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