March 15, 2012

Sen. Olympia Snowe and Billions in Art School Fraud

I noticed a detail in her biography that made me wonder if it affected Sen. Olympia Snowe's (R) Maine decision not to run again.

Her husband, John R. McKernan, was the CEO of Education Management Corporation- which owns among other things the Art Institute of Seattle, and numerous affiliated Arts and other colleges across the country - during the time the Justice Department and a number of state attorneys general accuse the company of fraud-  11 Billion dollars worth, for receiving of federal student loans under violation of rules,  since 2003.  Sen. Snowe, according to Wikipedia, holds millions in EMC stock. 

EMC is in turned owned by, wait for it, Goldman Sachs. Goldman Sachs profits from an enormous art school business operation where students are charged much, faculty paid little, and the taxpayer foots the bill. 

I know many dedicated, honest, and committed people who work for the Art Institutes - but this model of education, which depends on heavy recruitment of marginal students who take out government-backed loans that are frequently never paid back, all pushed by a Goldman-Sachs drive for rapacious profits, is unethical.   It misleads and bankrupts students, and it effectively defrauded the federal government of literally billions of dollars. 

News articles characterize a major shift in the company culture in 2003 after Goldman Sachs purchased Education Management Corp, when McKernan, Snowe's husband, became CEO. He left in 2007.

What this comes down to is that Sen. Snowe has millions of dollars of investment with a company, formerly run by her husband, that defrauded the federal government of billions and threw thousands of young people into bankruptcy.  Recent attempts to reform the student loan process in Congress to prevent this were thwarted by an intense lobbying campaign by EMC and Congressional allies . It would be interesting to detail her involvement - was she a supporter of reform, did she recuse herself, or did she push through protections for these companies and business practices?

I must continue to recommend strongly against students signing up with these corporate schools, which are very expensive, pay faculty paltry wages, and which relentlessly pressure less sophisticated students into taking out huge loans they have little hope of repaying.  These schools are a financial threat to students, to faculty, and to public education. 

This  widespread corporate fraud affects the Arts directly - Art, much to many people's surprise, I am sure, is a real profession with real careers, but lying to students about career possibilities and pressuring them with military recruiter-like harassment (this has been described to me a number of times by art students),  while inducing them into $80-100,000 in federally backed student loan debt, is an disgusting betrayal of educational responsibility.

Nothing convinces me of the value of public education more than the behavior of many for-profit education companies feeding grotesquely on the dreams of young people.  It's time to challenge them directly, and to hold politicians accountable. Fortunately - I wasn't the only one to notice this connection, but it bears much more scrutiny; with the amount of money involved, I do not accept "frustrations with Washington" as an explanation for Sen. Snowe's resignation.

Direct Sources:  Sen. Snowe, Education Management Corp, John McKernan Wikipedia pages. 

New York Times:
Sun Journal article
Part 3 of New American Foundation Article on Educational Management Corp.


Blogger The Other Front said...

But aren't you overlooking her sensible proposal to make only $40-$50,000 of the forced loans mandatory?

March 16, 2012 at 7:17 AM  
Blogger Author said...

Venality and villainy among the most privileged people in the world has grown extremely tiresome.

March 17, 2012 at 12:50 PM  

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