Career College Association's Harris Miller Responds to Detroit Free Press' Inaccurate Report on For-Profit Colleges

We are disappointed that a reputable newspaper would report (For-Profit College Loans a Threat, June 26, Brian Tumulty) the inaccurate and distorted claims of Mr. Eisman, a Wall Street short seller who profits to the tune of tens of millions of dollars by denigrating publicly traded companies and the students they educate. Students in two year programs in our sector graduate at almost three times the rate of community college attendees. Our sector is expanding higher education capacity in these tough economic times, while financially strapped traditional colleges and universities and community colleges are turning away students. The real “ticking time bomb” in our country is the lack of postsecondary education, as President Obama has discussed several times. Private sector colleges and universities are excited to help this country meet that challenge by preparing unemployed and underemployed Americans gain the education they need to succeed in the 21st century workforce.

Harris N. Miller
President
Career College Association

Why Is Steve Eisman Testifying Before the Senate on Matters Where He Stands to Profit?

Tom Mattzie wonders out loud:

Eisman is best known from his role in author Michael Lewis' book The Big Short: Inside the Doomsday Machine for short-selling practices that helped crash the mortgage securities market. Bets against subprime mortgages helped FrontPoint double its hedge fund to $1.5 billion by the end of 2007. Eisman made his billions off of the crashed dreams of millions of homeowners. When he spotted housing trends he didn't blow the whistle -- he figured out how to get rich when it crashed.

Now Eisman is setting his sights on companies in the higher education sector -- often technical training schools like Devry or ITT Technical. This isn't just speculation about Eisman short selling higher education stocks. He has said it himself. During a May 26, 2010 speech at a hedge fund conference in Manhattan, Eisman promoted increased federal regulation of higher education as a means to assure that stock prices of higher education companies would fall by as much as 60 percent.

Get that? Steven Eisman wants the regulation of higher education to get rich -- not because it will be good for students or the schools. And now this hedge fund manager is leveraging a U.S. Senate hearing to take more short-selling profits.

A short-seller investor will always have a conflict of interest when speaking about a set of companies and that is why it is inappropriate to invite Eisman as an expert witness. He will typically always want to portray those companies in a bad light in order to generate news that would drive down their stock prices. His financial conflict of interest biases his testimony beyond redemption.

Could the committee possibly expect unbiased testimony? No. Eisman has staked a fortune on government action against higher education companies.

Worse than the conflict is that the entire Senate hearing plays into Eisman's strategy of creating a giant circus about higher education companies. The bigger the circus, the lower the stock price and the more money Eisman makes. The U.S. Senate shouldn't have a leading role in a Wall Street investor's "gambling" strategy -- especially a short-seller.

The threat a short seller represents to companies isn't false. The ginned-up threat of regulation or the suggestion of legislation has already been driving down the stock prices of these companies.

Watch HELP Hearing on For-Profit Colleges Live

Click here to get the live feed.

CCA Head Questions Steve Eisman’s Relevance at Congressional Hearing

The head of the Career College Association (CCA) today questioned the inclusion of short seller Steven Eisman’s testimony at an important hearing to be held Thursday by the Senate Health, Education, Labor and Pensions (HELP) Committee that will examine the career college sector.

“It is no secret that the career education sector is under attack by short sellers, trial lawyers, self-styled consumer advocates, and some traditional academics. Although they should know better, these critics use anecdotes to generalize and to make sweeping condemnations of our sector,” said Harris N. Miller, president and CEO of CCA. “They seize on admittedly flawed government data to make the most extreme statistical arguments. They exploit the same small cadre of so-called third party experts to generate critical comments. And they recycle old news to give currency to new allegations. In short, they twist the truth to serve their self-interest.”

It is important to understand that a short seller’s aim above all else is to make money on the decline of stock, and Miller urged that Eisman’s previous comments and his scheduled testimony on Thursday be viewed in that light. For instance, in a recent speech at the Ira Sohn Conference in New York – and in his prepared HELP testimony -- Eisman compared the for-profit education sector to the subprime mortgage lending marketplace, which Miller said was an unfair and unwarranted comparison.

“Comparing the for-profit career college sector to the subprime mortgage banking industry is as silly as it is simplistic,” said Miller. “The higher education dynamic is very different. First, there is no bubble to stimulate irrational behavior… Most students use federal loans and grants, but the lent portion must be repaid when the students graduate and begin work. The value of the student investment grows over time, but this happens the old fashioned way: they earn it by gaining the credentials and necessary skills, applying those skills in early stage jobs, and climbing the career ladder.

Mr. Miller’s entire speech will be viewed on Career.org. A transcript of his remarks is also available.

Career colleges serve an essential role in helping 2.8 million adults earn an education – underemployed and unemployed workers, single parents, military veterans and their families – to give them a foothold in the workforce, improve their lives and give back to local communities. In fact, in the current allied health worker shortage crisis, career colleges award 54 percent of allied healthcare degrees and certificates and last year awarded 10% of all US nursing degrees. The schools are heavily regulated by the triad of the Federal government, state government, and Federally approved accrediting bodies, and compete among themselves and with more than 3000 other accredited education institutions in the United States to recruit students.

“We welcome the Senate’s attention because our schools are changing higher education in America, and we expect a full and fair hearing for our students and the education they receive,” Miller said.

Webcast Information for Harris Miller's Speech Today on Steve Eisman's For-Profit College Testimony

The Senate Health, Education, Labor and Pensions (HELP) Committee is convening a hearing to examine the career college sector on Thursday, June 24, 2010. The Career College Association (CCA) has welcomed the hearing as an opportunity to examine the value and benefits of career and professional education in the United States; however, CCA questions why a short seller – Steven Eisman – is testifying before the Committee, especially when Department of Education Secretary Arne Duncan has not been invited to testify.

Wall Street short sellers, like Eisman, play an ambiguous – both positive and negative – role in society. Eisman's comments should be vigorously examined with an understanding that a short seller's aim above all else is to make money on the decline of stocks, not to protect students or taxpayers. In a speech at the National Press Club today (June 23) at 2 pm, CCA President and CEO Harris N. Miller will address Eisman's previous published and spoken remarks, as well as his submitted testimony.

If you would like to watch a webcast of the speech, Gambling on the Future of Higher Education -- Why Students Could Lose, live at 2 p.m., please go to: http://www.visualwebcaster.com/vwp/launch.asp?sid=127139&aid=128513.

CCA's Harris Miller to Give Speech at National Press Club on Steve Eisman Testimony

The Senate Health, Education, Labor and Pensions (HELP) Committee is convening a hearing to examine the career college sector on Thursday, June 24, 2010; however, the Career College Association questions why a short seller – Steven Eisman – is testifying.

Wall Street short sellers, like Eisman, play an ambiguous – both positive and negative – role in society. Eisman’s comments should be vigorously examined with an understanding that a short seller’s aim above all else is to make money on the decline of stocks. In a speech at the National Press Club Wednesday at 2 pm, CCA President and CEO Harris N. Miller will address Eisman’s previous published and spoken remarks, as well as his submitted testimony.

Career colleges serve an essential role in helping 2.8 million adults earn an education – underemployed and unemployed workers, single parents, military veterans and their families – to give them a foothold in the workforce, improve their lives and give back to local communities. In fact, in the current allied health worker shortage crisis, career colleges award 54 percent of allied healthcare degrees and certificates.

CCA President Harris Miller on Eisman Testimony
Gambling on the Future of Higher Education -- Why Students Could Lose
Wednesday, June 23, 2010, 2 pm EST
National Press Club, Winners Room
529 14th Street Northwest
Washington, DC 20045

Via Teleconference:
866-575-6534
Passcode: 7560748

The event will also be live Twittered. Follow CCA on Twitter: @CCANow.

Career College Association Expresses Surprise at Senate Hearings Witness List

The Career College Association yesterday said a Senate hearing later this week on private sector higher education is composed almost entirely of sector critics and, as a result, is unlikely to help the American people understand the important changes taking place in postsecondary education.

“What we will hear from one of the witnesses—a Wall Street short-seller born with a silver spoon in his mouth, who got his first big paycheck the old fashioned way, through his parents—will be self-serving attacks on non-traditional students designed to fatten his wallet, not to inform the American people on how best to get unemployed and underemployed Americans educated and back to work,” stated Harris N. Miller, CCA President and CEO. “We welcome oversight by the Senate Health, Education, Labor and Pensions Committee, but are surprised that Secretary of Education Arne Duncan or one of his lieutenants is not the primary witness to give the Committee a broad overview of higher education and our sector’s role in it.”

Miller continued: “We look forward to working with the HELP Committee on future hearings, bringing students, graduates, institutions, employers and postsecondary education experts--especially those whose comments are based on facts, not enriching their own bank accounts--into the conversation.”

Career College Association Welcomes GAO Assessment: Urges Delay on Controversial Regulatory Issues Until Assessment Completed

The Career College Association said it welcomed a Government Accountability Office (GAO) assessment of the private sector university and college system, saying that its institutions provide a critical pathway for more than 2.7 million students to receive a higher education and are essential to achieving President Obama’s goal of returning the United States to number one in higher education by 2020. CCA said that while it generally supports many of the proposed regulatory changes issued by the Department of Education last week to protect students, the Department should withdraw the proposals on which it failed to achieve consensus in the negotiated rulemaking until the GAO report is issued, especially in the areas of gainful employment and incentive compensation.

“It is time for analysis by anecdote to end,” said Harris N. Miller, CCA President and CEO. “Elitist Wall Street stock manipulators, rather than higher education experts, have been driving hyperbolic media coverage, creating the impression that outliers are the norm, and insulting millions of hardworking students and graduates in the process. We have every expectation that the GAO, using facts and figures, will provide a full and fair review. And we trust that GAO will compare our sector with other institutions that educate non-traditional students. Private sector colleges and universities, operating under the triad of regulation—federal and state governments and federally approved accreditors-- are equipping men and women from all walks of life to be successful in a globally competitive workforce, and the GAO report will confirm that

Miller noted that in requesting the report, Rep. George Miller (D-CA), Sen. Tom Harkin (D-IA), Sen. Richard Durbin (D-IL), Rep. Timothy Bishop (D-NY) and Rep. Ruben Hinojosa (D-TX) touched on issues of key importance, including educational quality, outcomes, study ability to repay loans, and oversight. “Change naturally triggers questions,” Harris Miller said, adding, “but the changes we bring to higher education translate into new employment opportunities for more Americans. We have a great story to tell and are pleased to share it with GAO just as we have on all other reports they prepared related to our sector.”

On delaying further action on controversial regulatory issues, Harris Miller said: “We have long maintained that the Department of Education’s metrics-based approach on gainful employment is a solution in search of a problem, without research to support it. In addition, ED’s draconian incentive compensation proposal was issued even though GAO—the agency the Congressional leaders are turning to for study and advice—reported earlier this year that reports of incentive compensation violations are 1) overblown, and 2) occurring among traditional schools, in addition to schools in our sector. Secretary Duncan has said repeatedly he wants to get the regulatory changes right, and waiting for the GAO to conduct its study is one way to further that goal.”

Why Wal-Mart Pairing With For-Profit Higher Education Is Good for Students

Despite some of the criticism, the marriage makes sense for all parties. Here are two good reasons explaining why:

First, as I have pointed out in earlier posts, we actually have no data to demonstrate that the education that for-profits provide is less effective than that at non-profits. For simplicity, I am willing to stipulate that the education provided at the top 200 of the approximately 4000 accredited non-profit colleges is superior to that provided at any of the non-profits, although there is no data to support that stipulation. However, I believe that a large fraction of the for-profits provide an education that is equal or superior to that provided by a similarly large fraction of the remaining 3800 accredited non-profit colleges. Many of the for-profits simply spend more developing courses, bringing in advanced pedagogy, and evaluating student outcomes than do most of the non-profits. So, there is no a priori reason to believe that the Wal-Mart students will be cheated in the quality of their instruction.

Secondly, while there is no doubt that at this time degrees from most for-profit institutions generally are viewed less favorably than degrees from most non-profit institutions, there are reasons to believe that view may be changing. In reality, many corporations are working with major for-profit higher education providers to offer advanced opportunities to their employees, including degree programs. For example, both Kaplan University and the University of Phoenix have programs focusing on this market. This has numerous consequences. Perhaps most importantly, the sheer number of students in this group assures that graduates of for-profit universities increasingly will be moving into responsible managerial positions in corporations all across America. As more of these graduates move into positions of responsibility, they will increase the respectability and brand value of the degrees. As some of the successful graduates move to other companies, they will take a respect for the brand with them to the new company. Equally significant, in companies that have such education programs, HR offices clearly will treat candidates with degrees from for-profit universities more positively.

Keiser University Opens Campus in China

South Florida Business Journal breaks the news:

The for-profit university is offering a Bachelor’s degree in business administration in Mandarin Chinese and it plans to add more programs for residences of China’s largest city. It’s located on the Jiaotong University campus.

Starting in August, students from China can transfer to Keiser’s 14 Florida campuses.

“This off-campus site will afford Keiser University the opportunity to expand its international education model, support the needs of a global economy and the demands for educated business professionals,” Keiser University Chancellor Arthur Keiser stated in a press release. 

“Research done prior to opening the off-campus site shows that Shanghai, China is a thriving metropolitan area teaming with innovation and a diverse employer base fueling a strong demand for highly skilled employees.”

Career College Association Reacts to Department of Education Proposed Rules

The Career College Association said Monday the Department of Education’s proposed rules appropriately focus on issues that cut across all sectors of higher education and, for the most part, have support from the higher education community by putting students first. CCA worked for several months to assist the Department of Education as new rules to better protect all students attending institutions of higher education were discussed and drafted.

CCA President Harris N. Miller said, “Secretary Duncan rightly listened to the concerns about gainful employment expressed by all sectors of higher education. We believe that his decision to focus on disclosure is the correct one. We look forward to working with him to continue to move this issue in a positive direction and to get it right for all students. We share the Department’s goal of making sure students are fully informed.”

Issues remain, however, on key regulatory topics. Miller said, “CCA and its member institutions will send robust comments on those elements of the proposed rules that harm students, including the Department’s decision to end all incentive compensation safe harbors without offering alternative guidance. Incentive compensation as it stands is an extreme proposal that needs to be thought through carefully to protect students and to make sure that it does not become a lawyers’ relief act.”

Student Debt Is a Higher Education Problem, Not a For-Profit Higher Education Problem

Over at Reason's Hit & Run blog, Katherine Mangu-Ward makes the point that student debt isn't an issue affecting only one sector of higher education:

It's appealing, in the abstract, to get federal money out of at least one gosh darned part of the education sector. But if the central concern is loan burden on graduates, focusing on the for-profit status of the schools in question is a red herring. Taking on massive debt to pay for higher education is hardly a problem exclusive to for-profit colleges. Heck, the "I can't live in Manhattan on the salary I'm earning from my debt-funded liberal arts degree" story is practically an independent genre these days. All kinds of schools use federal money to inflate tuition figures and pad the bottom line. The schools aren't the ones to blame, and non-profit private and public schools are just ask guilty in this regard.

Having concerns about the level of debt higher education students take on to pursue their degree or certification isn't an idle concern, but it's also not a problem exclusive to any single sector of higher education.

CCA Convention 2010 Video Blog: Day 3

CCA 2010 Convention Video Blog - Day 3 from Career College Association on Vimeo.

CCA Convention 2010 Video Blog: Day 2

CCA 2010 Convention Video Blog - Day 2 from Career College Association on Vimeo.

CCA Convention 2010 Video Blog: Day 1

CCA 2010 Convention Video Blog - Day 1 from Career College Association on Vimeo.

Career College Association Welcomes Harkin Senate Hearings on For-Profit Colleges

The Career College Association (CCA) said it welcomes hearings by the Senate Health Education Labor and Pensions (HELP) Committee on federal education spending at private sector institutions announced today by Committee Chairman Tom Harkin (D-Iowa).

“We welcome the HELP Committee hearings,” said CCA President Harris N. Miller. “The education landscape in America is shifting. Federal student aid in private sector education is an incredibly important way to provide postsecondary access for all.”

Miller continued: “Non-traditional students are the new tradition in higher education, and federal student aid is helping millions of working adults get the skills and abilities they need to compete in a global workforce. For these students to be successful, however, change is needed. Private sector institutions are bringing important innovations to postsecondary education, and we welcome the opportunity for a full and open exchange with the Committee. These hearings will give our inclusive educational institutions an opportunity to address myths with facts and figures.”

Career College Association Announces Name Change: APSCU

The Career College Association (CCA) Board of Directors has approved a motion changing the organization’s name to the Association of Private Sector Colleges and Universities (APSCU). Over the next few months, CCA will complete the process of changing its name to better represent students, institutions and the sector overall.

“This vote culminates a rigorous, multistep review process,” said CCA President Harris N. Miller. “In voting the change, the Board recognizes the evolution of career oriented education from its primarily trade school roots to a multi-dimensional, multi-faceted, multi-modal philosophy of higher education delivery that directly responds to the demands of 21st century students, employers, and the larger economy. The phrase “private sector” is synonymous with innovation in virtually every walk of life, and the public’s faith in private sector solutions to solve most of society’s biggest challenges will carry over into the realm of higher education too.

Atlanta Journal-Constitution Fails to Appreciate Value of For-Profit Colleges

In reference to “For-profit colleges reap big benefit from stimulus,” Atlanta Journal-Constitution, June 6, Jeremy Redmon and John Perry.

The almost 3000 private sector funded professional and career colleges and universities in Georgia and across the nation are educating a cohort of Americans who otherwise would have limited or no access to higher education, lower income and working adult students. Their education creates jobs because they learn specific skills in high demand, which is a fundamental purpose of the Federal stimulus funding. These students, many of them eligible for Pell grants because they are not affluent, are increasingly choosing schools in our sector. The students get the Pell funding: schools do not. Students vote with their feet.

Rep. Kathy Ashe says she would be “delighted” to have this money going to the public sector schools. Fine. Here’s the solution: Educate more economically disadvantaged students. Help them receive the aid to which they are entitled. Help them with a curriculum that cuts to the chase on skills and abilities. Help them overcome life challenges to stay in school and graduate. Help them find a relevant job after graduation. Do that, and Georgia will be helping its taxpayers “cash in” even more on stimulus spending.