For-Profit Sector Clips for K.

Jenkins
August 18, 2010
Articles:

Mentions of CCi:

Miller Questions Government's College Loan Metrics: Video

Bloomberg Video
August 17, 2010 10:55 AM ET

For-profit colleges may get less aid

Bloomberg
August 17, 2010
By John Lauerman and John Hechinger

U.S. education stocks set investors test

Reuters
August 17, 2010 2:25pm EDT
By Megha Mandavia and A.Ananthalakshmi

For-profit schools say loan data doesn't tell whole story

The Pittsburgh Post-Gazette Online
August 17, 2010
By Oliver Staley and John Hechinger, Bloomberg News

Private Institutions Offer Alternative Path To Careers

Gazettes.com
August 17, 2010 3:58 pm
By Darcy Leigh Richardson

Shares fall on student loan data

Miami Herald Online
August 17, 2010
BY TALI ARBEL Associated Press

For-Profit Schools See Continued Weakness On Loan Fears

Street insider.com
August 17, 2010 10:04 AM EDT

For-profit college stocks tank over student loans repayment data

Huliq.com
August 17, 2010
By Sandy Smith

For-Profit Colleges Under Fire

Epoch Times Online
August 17, 2010
By Antonio Perez

High school counselors needed to counter colleges' false claims

The Florida Times-Union Online
August 17, 2010 - 11:33pm
By Tonyaa Weathersbee

Mentions of For-Profit Sector:

Is There A For-Profit Education Bubble?

NPR.com
August 17, 2010
Transcript of Robert Siegel (host) and Jonathan Kaufamn (guest)

For-Profit schools feel more heat from DoE

International Business Times Online
August 17, 2010 11:57 PM EDT
By Amulya Nagaraj

Gainful Employment?
The Huffington Post Online
August 17, 2010 10:12 AM
By Randy Proto

Kahn Swick & Foti, LLC and Former Louisiana Attorney General Announce Investigation
into Strayer Education, Inc. –
Bradenton.com
August 17, 2010

Will Student Loan Debt Be The Next Bubble To Burst?

The Atlanta Post
August 17, 2010
By Charing Ball
Connecting the Dots: top news stories for Tuesday, August 17
The San Francisco Chronicle Online
August 17 2010 at 01:53 PM
By Erica Mu

College bills loom large after teary goodbyes

Times Herald-Record Online
August 18, 2010, 2:00 AM
By Meghan E. Murphy

For-profit Westwood College hit with lawsuit

The Denver Post Online
August 18, 2010, 1:37 AM MDT
By Allison Sherry

Traditional Schools Grow Online

THE BOSTON GLOBE ONLINE
AUGUST 18, 2010
BY D.C. DENISON

Thriving in the New Economy, Part 2

Benzinga.com
August 17, 2010, 5:44 p.m.
By Benzinga Staff Writer
Miller Questions Government's College Loan Metrics: Video
Bloomberg Video
August 17, 2010 10:55 AM ET

Harris Miller, president of the Career College Association, talks about student-loan trends at for-
profit colleges. Colleges owned by Career Education Corp., Corinthian Colleges Inc. and
Washington Post Co. have campuses where fewer than 20 percent of federal student loans are
being repaid, according to the U.S. Department of Education, which wants to use the data to
determine whether programs can remain eligible for aid. Miller speaks on Bloomberg
Television's "In the Loop With Betty Liu." (Source: Bloomberg)

Colleges owned by Career Education Corp., Corinthian Colleges Inc. and Washington Post Co.
have campuses where fewer than 20 percent of federal student loans are being repaid,
according to the U.S. Department of Education, which wants to use the data to determine
whether programs can remain eligible for aid. Miller speaks on Bloomberg Television's "In the
Loop With Betty Liu." (Source: Bloomberg)

Running time 02:31

For-profit colleges may get less aid
Bloomberg
August 17, 2010
By John Lauerman and John Hechinger

Colleges owned by Career Education Corp., Corinthian Colleges Inc., and Washington Post Co.
have campuses where fewer than 20 percent of federal student loans are being repaid,
according to the US Department of Education, which wants to use the data to determine
whether programs can remain eligible for aid. Nationally, for-profit colleges have a 36 percent
student-loan repayment rate, compared with 54 percent at public universities and 56 percent at
private nonprofits, according to an analysis of the Education Department data by the Institute for
College Access & Success, an nonprofit research and advocacy group based in Oakland, Calif.

Congress and the Obama administration are proposing tougher regulation and oversight of for-
profit colleges, which can rely on federal financial aid programs for as much as 90 percent of
their revenue. The education department released the data on Aug. 13 as it pushes for a rule
that could restrict or disqualify for-profit college programs from getting federal grants and loans if
their students have loan-repayment rates below 45 percent.

“What we know is that there are many for-profit schools that are doing a great job of educating
students, and we know there are some bad actors who have been perpetrating fraud and
deceit,’’ said Justin Hamilton, an education department spokesman. “We want to do everything
possible to protect students and save taxpayer dollars.’’

For-profit colleges have been under fire after a government report found that recruiters at 15
colleges misled students to boost enrollment. Senator Tom Harkin, an Iowa Democrat who has
held two hearings on for-profit universities, has said he plans to hold more before the end of the
year, and has demanded information from 30 companies. US Education Secretary Arne
Duncan, in an Aug. 13 letter to Harkin, said he was beefing up enforcement.

Federal grants and loans to for-profit colleges jumped to $26.5 billion in 2009 from $4.6 billion in
2000, according to the Education Department.

The agency said the proposed rule could cut funding to programs, rather than colleges, with low
repayment rates, so the university-level data wouldn’t necessarily trigger regulatory action.
U.S. education stocks set investors test
Reuters
Tue Aug 17, 2010 2:25pm EDT
By Megha Mandavia and A.Ananthalakshmi

Firms such as Apollo Group (APOL.O) and Strayer Education (STRA.O) saw rapid growth
during the recession as people went back to school to retool, but the sector has been plagued
with regulatory concerns since the Securities and Exchange Commission began investigations
last October into bellwether Apollo's revenue recognition practices.

The government's gainful employment proposal -- which calls for colleges to prove they prepare
students for jobs before they can receive federal aid -- and probes into enrollment and
recruitment practices have battered the sector.

The S&P 1500 Education Services sub-index .15GSPEDUS has almost halved since mid-April
to 28-month lows.

Some analysts recommend buying education stocks as they are cheap, but most remain
cautious as the regulatory concerns swirl.

Investors, too, have been betting against the stocks, with short positions in Strayer as high as
22 percent. About 14 percent of Capella Education Co's (CPLA.O) outstanding shares are
shorted. Sirius XM Radio (SIRI.O), one of the most shorted stocks on Nasdaq, has a short
interest of 5 percent.

BE CHOOSY OR BUY FOR LONG RUN

Analysts recommend Strayer, Capella and American Public Education (APEI.O) as these
companies have the least exposure to the proposed gainful employment rules.

Robert W. Baird analyst Amy Junker, who rates Strayer and Capella as "outperform," said these
firms were best placed to weather any additional regulation as they focus more on working
adults, and they have a clean regulatory history.

"We would not sell any of the stocks at current multiples, but think multiples could remain
compressed until there's more clarity on gainful employment and the outcome of the mid-term
elections in November," said Junker, who also has her top rating on American Public Education
and Grand Canyon (LOPE.O).

Education stocks were beaten down on Monday after the education department released data
on schools' loan repayment rates, which showed many may not qualify for federal student aid.

"Despite our lowered ratings, we believe considerable value exists for patient investors in many
of the education stocks today," said Barclays analyst Gary Bisbee, who on Tuesday cut his
rating on a bunch of education stocks.

He expects the gainful employment rule to have an earnings impact of 5-30 percent, compared
with the more than 50 percent hit priced into many of the stocks.
Oppenheimer said some stocks' valuations make for intriguing entry points for longer-term
investors. He rates Capella, DeVry (DV.N) and Lincoln Educational Services (LINC.O) as
outperform.

CAUTIOUS IN NEAR TERM

Some analysts said there was no upside potential for these stocks in the near term as the
regulatory overhang could drag on for months.

"I don't think investors need to be in this space right now," said RBC Capital Markets analyst
Robert Wetenhall, citing the regulatory issues, slowing enrollment growth and lack of
institutional sponsorship. He has "sell" ratings on Corinthian Colleges (COCO.O) and
Bridgepoint Education (BPI.N).

"We don't believe the sector is going to make up lost ground anytime soon," said Wetenhall,
adding that a falling market value would mean closet index funds are no longer required to own
these names, and shares could likely drift sideways or lower.

Sterne, Agee & Leach analyst Arvind Bhatia is advising investors to stay on the sidelines even
though the stocks are trading at low multiples, and these could drop further in 2011.

Apollo and DeVry, for example, trade around 7-8 times forecast earnings, compared with a
sector average of nearer 19.

"There are changes coming which will impact these companies significantly," said Bhatia, who
only likes American Public Education. Bhatia said he will wait for more clarity on regulations
before becoming positive on the sector.

"We're playing the game without fully understanding the rules of the game."
For-profit schools say loan data doesn't tell whole story
The Pittsburgh Post-Gazette Online
Tuesday, August 17, 2010
By Oliver Staley and John Hechinger, Bloomberg News

For-profit college stocks fell after the U.S. Department of Education released data that said
fewer than 36 percent of the colleges' students repaid federal loans, compared with 54 percent
at public universities.

Meanwhile, for-profit colleges - including Downtown-based Education Management Corp. -

protested that the government's calculations may not represent the complete picture.

Corinthian Colleges Inc., based in Santa Ana, Calif., plunged 22 percent to $5.22 at 4 p.m. after
the data showed one of its campuses had a repayment rate of less than 20 percent. Washington
Post Co., which owns Kaplan Inc., tumbled 8.1 percent to $315.65. An index of 12 education
stocks fell 7 percent.

Nationally, for-profit colleges have a 36 percent student-loan repayment rate, compared with 54
percent at public universities and 56 percent at private nonprofits, according to an analysis of
the Education Department data by the Institute for College Access & Success, an Oakland,
Calif., nonprofit research and advocacy group.

Education Management Corp. which owns The Art Institutes, Argosy University, Brown Mackie
College, South University and Western State University, immediately filed a response to the
data stating that it reflects only those students who are paying back principal on loans and does
not take into account those with deferments or alternative payment plans that allow students to
remain current without paying principal.

EDMC also pointed out in a Securities and Exchange Commission filing that for-profit colleges
enroll more at-risk students from poorer families who don't have the resources that students at
other schools have.

"We continue to believe the principal repayment test proposed by the department as part of the
gainful employment regulation is not necessarily reflective of the ability of our former student to
repay their federal student loans, the quality of the programs we offer or the outcomes that our
students achieve," Todd S. Nelson, Education Management's CEO, said in the filing.

The Aug. 13 data release continues a run of bad news for education stocks, said Gary Bisbee,
an analyst at Barclays Capital in New York. "The overhang on the stocks is likely to persist
longer than we had previously expected," wrote Mr. Bisbee, who downgraded Corinthian, ITT
Educational Services Inc. and Lincoln Educational Services in West Orange, N.J.

Strayer Education Inc. sank 18 percent to $163.26. The Arlington, Va.-based company said the
data was "significantly at odds with Strayer University's own internal analysis" and that it was
requesting a meeting to clarify the situation. In a regulatory filing, Strayer said its students'
repayment rate was 55.4 percent, not the 25 percent reported by the Department of Education.

The rates published by the Education Department may be skewed because they don't include
students who have consolidated their loans, said Harris Miller, president and CEO of the Career
College Association, a Washington-based trade group with 1,520 members.
"A lot of my members over the weekend were scratching their heads," Mr. Miller said in a phone
interview. "A lot of schools with low default rates were surprised to see how low their numbers
were, using the methodology of the department."

Congress and the Obama administration are proposing tougher regulation and oversight of for-
profit colleges, which can rely on federal financial-aid programs for as much as 90 percent of
their revenue. The Education Department released the data as it pushes for a rule that could
restrict or disqualify for-profit college programs from getting federal grants and loans if their
students have loan-repayment rates below 45 percent.

"What we know is that there are many for-profit schools that are doing a great job of educating
students, and we know there are some bad actors who have been perpetrating fraud and
deceit," said Justin Hamilton, an Education Department spokesman, in a telephone interview.
"We want to do everything possible to protect students and save taxpayer dollars."

For-profit colleges have been under fire after a government report found recruiters at 15
colleges misled students to boost enrollment. Sen. Tom Harkin, an Iowa Democrat who has
held two hearings on for-profit colleges, has said he planned to hold more sessions before the
end of the year, and has demanded information from 30 companies.
Private Institutions Offer Alternative Path To Careers
Gazettes.com
Tuesday, August 17, 2010 3:58 pm
By Darcy Leigh Richardson

Although their numbers may have dwindled in Long Beach, private colleges are remaining
competitive in today’s education market by attracting students who wish to pursue flexible,
career-specific programs of study.

With options ranging from online courses, night and weekend instruction, and internships and
externships during programs, private colleges have evolved to meet the scheduling demands of
students with a fast-paced lifestyle.

 Private college administrators say their student bodies are diverse, representing high school
graduates embarking on forays into the workforce, mothers and veterans seeking to reenter the
market, and those currently employed, unemployed or underemployed who desire a second
(and typically more high-paying) career.

According to the most recent figures from the federal Bureau of Labor Statistics (BLS), the
unemployment rate for the Long Beach area is 11.6%, nearly equal to 2009 figures. Private
college administrators say their schools have created partnerships with local employers to forge
career opportunities even before the student has graduated from the program.

WyoTech

 The Long Beach campus of WyoTech is accredited by the Accrediting Commission of Career
Schools and Colleges (ACCSC), recognized by the U.S. Department of Education as a qualified
accrediting agency. Students seeking training in automotive technology, electrical technology,
medical assisting, plumbing technology and residential heating, ventilation and air conditioning
(HVAC) can enroll in WyoTech’s 18-month courses.

In the Technology Park area of west Long Beach, 2161 Technology Place, the campus is
surrounded by port-related businesses. Students can earn associate’s degrees or certificates,
depending on their choice of programs.

Camee Edelbrock, a Corinthian Colleges spokesperson on behalf of WyoTech (Corinthian is

WyoTech schools’ parent company), said the cost of programs range from $15,400 to $30,000.
The Long Beach campus has approximately 1,500 students.

“WyoTech provides career placement services for its graduates,” Edelbrock said. “Each campus
career services department focuses on building relationships with local employers to facilitate
externship and job placements … the departments’ career placement representatives assist
students with everything from creating resumes to improving interviewing skills and presenting a
professional image.”
Despite the recession and a limited job market, in 2008, 78% of Corinthian College’s students
(including WyoTech and Everest schools) found employment in their fields of study, Edelbrock
said.

American University of Health Sciences

 For 16 years, the American University of Health Sciences (AUHS), a Christian private college,
has been leading international and minority students to success in nursing, clinical research and
pharmacy careers. The undergraduate and graduate school began as the American Institute of
Health Sciences, and later relocated to 1600 E. Hill St. in Signal Hill.

Carolene Parker, AUHS admissions director, said the university offers a 3-year Bachelor of
Science degree in nursing, which prepares students to enter the Registered Nurse (RN)
program of study with no waiting list or lottery.

Certification programs include pharmacy technician and research medical assistant. Graduate
students can pursue a Master of Science (MS) degree in Clinical Research. Parker said the MS
course offers a grant writing component, the only MS Clinical Research program in Southern
California with grant writing included. The school plans to offer a Doctorate degree in pharmacy
within the next year, Parker said.

Interested students can submit applications for the fall semester’s certificated courses until
Sept. 6. The fall semester begins Sept. 27, Parker said. Financial aid is available for qualified
students and scholarships.

“Our success rate is 98% in placing students with employers,” Parker said.

Embry-Riddle

The science and business ofaviation and aerospace are taught at Embry-Riddle Aeronautical
University, 5001 Airport Plaza Dr., Ste. 150. The university was founded 22 years after the
Wright brothers’ first flight in 1903, and the Long Beach location has been helping students soar
since the 1940s, said Rosemarie Elliott, director of academic support.

The school offers a Bachelor of Science degree in technology management and aviation
administration and three Masters degree programs (masters’ degrees in business
administration, project management and aeronautics).

 Courses are nine weeks long and cost $840 per course for undergraduate and between $1,300
and $1,500 for graduate courses of study. The next session starts Oct. 17 and continues until
Dec. 19. Elliott said approximately 250 students are enrolled in classes.

“Most students are working adults,” Elliott said. “We offer evening, weekend and online options.”

DeVry

With campuses stretching from Colton to Irvine and Sherman Oaks to Palmdale, DeVry
University is committed to remaining accessible to students — and has no plans to leave Long
Beach, one of three main campus sites in the Los Angeles metro area.
Scott Sand, president of DeVry’s Los Angeles Metro Region, said negotiations are ongoing for
DeVry’s upcoming move. The university has been in talks with developers at the Douglas Park
site, but other locations between 40,000 and 60,000 square feet are being considered within a
small radius of the more than 10-year-old campus at 3880 Kilroy Airport Way. Sand said the
campus will downsize to one-half its current 98,000 square feet.

Before other satellite campuses were added, DeVry served approximately 3,500 students at the
Long Beach campus, Sand said. An increased number of students enrolling in online courses
also affects the head count in classes.

 “Online course offerings is why we’re able to graduate students in a timely manner,” Sand said.
“Students will get the classes they need when they need it… Most people don’t want to spend
seven or eight years getting a degree.”

Some of DeVry’s most popular courses include networking communications management and
electronic engineering technology, Sand said. Evening and weekend courses are offered to
accommodate students’ schedules.

“Because we are career focused, we’ve always been a strong place for 35-year-olds thinking
about coming back to school and getting training,” Sand said. “We’re the career university…
We’re always going to ensure our facilities are congruent to needs of the Long Beach student
body.”

DeVry offers undergraduate and graduate programs in the Keller Graduate School of
Management, the College of Engineering & Information Sciences, the College of Health
Sciences, the College of Liberal Arts & Sciences, the College of Media Arts & Technology, and
the College of Business & Management. Federal and state financial aid, loans, and several
million dollars in scholarships are distributed to students annually, Sand said.

Ninety-one percent of DeVry graduates in California actively pursued and obtained employment
(including those who were already employed in education-related careers) within 180 days of
graduation in 2008, with the average annual reported compensation $46,783.

Other Options

• The University of Phoenix has returned to Long Beach. Although most of the associates’ and
bachelors’ degree classes are offered online, a university spokesperson said select classes are
ongoing at the Marriott Hotel located across the street from the campus, 5000 E. Spring St. Call
(800) 888-1968.

• The John Wesley International Barber & Beauty College, 717 Pine Ave., has been a staple of
the city’s cosmetology schools since 1992. Classes are on Tuesdays and students can attend
until they receive 1,600 hours for cosmetology and 1,500 hours for barber certification. Courses
are approximately $11,500. Call 435-7060.

• Newbridge College, 3799 E. Burnett St., offers medical training programs. The school is
certified and approved by the U.S. Department of Education to offer diploma programs and
federal student financial aid.
• Pacific Coast University School of Law, a night law school with 4-year programs, prepares
students to sit for the State Bar of California exam. It operates as a nonprofit school. Classes
are limited to 50 students. Call 961-8200.

• Charter College, 100 W. Broadway, offers pharmacy technician, massage therapy, medical
insurance coding and billing, medical and legal assisting, and computerized office specialist and
accounting specialist programs. Call 216-7500
Shares fall on student loan data
Miami Herald Online
 August 17, 2010
BY TALI ARBEL Associated Press

NEW YORK -- Shares of for-profit education companies slid Monday as government data
showed that many of their students aren't repaying school loans, which could imperil the ability
of their students to receive federal financial aid, the bulk of the schools' revenue.

Several schools contested the government's methodology, but that couldn't stop shares of the
companies from tumbling to their lowest points in a year or more.

For-profit schools offer a wide range of programs and certificates, from associate's degrees in
the culinary arts at Career Education Corp.'s Le Cordon Bleu to MBA degrees from the Apollo
Group's University of Phoenix.

The government released financial aid repayment data from more than 8,000 schools including
for-profit, private and public colleges, as an example of how it will decide to grant access to
government-backed financial aid. The Department of Education has been focusing on the
schools, vowing greater oversight and tougher rules.

The industry has been the subject of a string of high-profile hearings in the Senate and a report
by the Government Accountability Office that chronicled allegedly misleading and, in some
cases, fraudulent recruiting tactics.

The Kaplan College branch in Pembroke Pines, for example, has stopped enrolling new
students after federal investigators uncovered incidents of high pressure and potentially
fraudulent and misleading sales tactics, the Sun Sentinel reported.

But several companies say the government's complicated formula misrepresents their students'
repayment rates. The repayment rate is a key component of a proposed ``gainful employment
rule'' that would link student debt burdens and repayment rates to schools' access to federal
financial aid.

``The validity of the [DOE's] `data dump' is suspect, in our view, given the shockingly low
repayment rate for Strayer University,'' said Jeffrey Silber, an analyst with BMO Capital Markets.

Strayer Education has said in the past that it believed its programs would pass the
government's test and calculated its student debt repayment rate at 55.4 percent, rather than
the DOE's finding of 25 percent.

Some of the schools said the government's methodology was unfair.

Strayer said its own analysis did not match the government data. Washington Post-owned
Kaplan said the DOE did not include interest-only payments and consolidated loans in its
formula. Capella Education Co. CEO Kevin Gilligan said, in a statement, that the company's
analysis found that more than 45 percent of former students are paying back loans, rather than
the government's finding of 40 percent.
Under the proposed rules, schools would be ineligible to receive federal financial aid if fewer
than 35 percent of former students aren't paying the principal on their loans, and graduates are
spending more than 12 percent of their income to pay down student debt.

The Washington Post Co., which owns the Kaplan chain; ITT Educational Services; Strayer
Education; and Corinthian Colleges all had repayment rates below the key level of 35 percent.

Washington Post shares tumbled $27.83, or 8.1 percent, to close at $315.65 after hitting a fresh
low of $295.56 earlier in the session. ITT fell to a 52-week low of $54.22 before closing down
$9.40, or 14.6 percent, at $54.93; Strayer shares dropped $36.75, or 18.4 percent, to $163.26
after trading at an annual low of $161.11; and Corinthian slid $1.44, or 21.6 percent, to end at
$5.22, earlier trading at a 10-year low of $4.88.

Only four chains -- Universal Technical Institute, Grand Canyon Education, American Public
Education and Bridgepoint Education -- met or passed the threshold of a 45 percent repayment
rate, which would allow them continued unfettered access to government-backed student loans.

UTI's stock rose 9.9 percent; Bridgepoint rose 10.2 percent; Apollo, 5.2 percent; and American
Public Education, less than 1 percent.

Grand Canyon shares lost 1.5 percent.

Capella's shares fell 13 percent. Shares of DeVry, which planned to work with the DOE to clear
up inconsistencies in the data, lost 8.8 percent.
For-Profit Schools See Continued Weakness On Loan Fears
Street insider.com
August 17, 2010 10:04 AM EDT

Shares in the for-profit private education sector are continuing their slide lower today, following
a selloff yesterday on data from the Department of Education on 2009 loan repayment rates,
which showed that a number of them are in danger of running afoul of a proposed gainful
employment Notice of Proposed Rulemaking.

Shares of Corinthian Colleges Inc. (Nasdaq: COCO) are down 2.30%, Apollo Group Inc.
(Nasdaq: APOL) is 2.46% lower, Career Education Corp. (Nasdaq: CECO) is 1.02% down,
DeVry, Inc. (NYSE: DV) is 2.21% lower, Education Management Corporation (Nasdaq: EDMC)
is down 3.50%, Strayer Education Inc. (Nasdaq: STRA) is down 1.6%

The government was looking at repayment rates for the schools, which were at 36% recently,
compared to 56% for private nonprofit groups, and 54% at public state colleges and universities.

Federal aid for the schools would be cut if less than 45% of students are able to repay their
loans. Many for-profit schools could go out of business without federal funded loans.
For-profit college stocks tank over student loans repayment data
Huliq.com
August 17, 2010
By Sandy Smith

A new government report on student loan repayment data sent stocks of for-profit higher
education providers plunging today after it revealed abnormally low repayment rates for
graduates of those schools. The data raise the possibility that a number of for-profit schools and
colleges could lose some or all of their eligibility to receive Federal student loan proceeds -- an
action that could put some schools out of business and possibly even threaten the fiscal health
of one of the nation's leading daily newspapers.

The report from the Department of Education, released after the markets closed Friday, showed
that for-profit schools had repayment rates one-third lower than those of their nonprofit
counterparts. On average, only 36% of students at for-profit schools were repaying their student
loans, compared with 54% of public college and university students and 56% of students at
private nonprofit institutions.

New rules proposed by the Education Department would place any for-profit school with a
repayment rate below 35% at risk of losing all student loan eligibility. Schools with repayment
rates below 45% could have their access to student loan proceeds restricted.

Neither outcome would be automatic, for the formula used to determine eligibility will also take
other factors such as student debt-to-income ratio into account. But the mere threat of an
eligibility cutoff under the new rules was enough to send investors fleeing from for-profit
education companies.

Washington Post Co. could suffer under new student loans eligibility rules

Among the companies that could be hurt by the new rules: the Washington Post Co., parent of
Kaplan, Inc. Kaplan's postsecondary institutions had a weighted average repayment rate of only
29%. In a statement to its shareholders Monday, the Post Co. said that a number of Kaplan
programs could lose their eligibility under the new rules. Those rules, the company said, would
have "a materially adverse effect" on Kaplan's future revenues and earnings. Kaplan provided
58% of the Washington Post Co.'s revenue last year, while the company's newspapers and
magazines contributed only 19%.

The damage could be even worse at other for-profit college operators, for some schools derive
as much as 90 percent of their revenue -- the maximum allowed under Federal law -- from
student loan proceeds.

The carnage on Wall Street reflected investor nervousness over that threat. The Post Co. lost
8% of its value on Monday, closing at $315.65. Other companies fell harder, though: Capella
Education fell 13% to $60.94; ITT Educational Services lost 14.6% to close at $54.93; Strayer
Education fell 18% to $163.26, and Corinthian Colleges Inc. plunged 22%, closing at $5.22.

Some for-profit schools dispute loan repayment data

Some of the schools posting dismal repayment rates disputed the methodology the Education
Department used to arrive at those rates. Strayer, for instance, noted that a large number of its
students have consolidated their loans under programs that allow them to pay only the interest
on the outstanding loans; students doing this depress the repayment rate under the
government's methodology.

Strayer said in its regulatory filing that after adjusting for the effects of the consolidations, its
repayment rate was actually 55.4%.

The new rules are scheduled to take effect in 2012.

For-Profit Colleges Under Fire
Epoch Times Online
Aug 17, 2010
By Antonio Perez

NEW YORK—Shares of companies running for-profit colleges have taken a tumble this week as
Wall Street analysts cut their stock ratings following a government report last week questioning
the industry’s quality of service.

U.S. Department of Education data showed that 53 percent of for-profit education institutions
had poor student loan repayment rates among their students—less than 35 percent of their
students paid student-loan principal on time.

Among the top for-profit education companies are Corinthian Colleges Inc., Lincoln Educational
Services Corp., and Apollo Group Inc., which runs the University of Phoenix, and The
Washington Post Co., which runs Kaplan University.

This week, investment bank Barclays Capital Inc. downgraded its ratings on Corinthian ITT, and
Lincoln to “Equal Weight,” citing possible political pressure from Washington to reform the
industry.

“While the fundamental operating environment remains generally positive, the court of public
opinion and sentiment toward the group has turned highly negative, with continued uncertainty
over pending regulatory changes and the prospects of negative legislation from the Senate
Health Education, Labor, & Pensions (HELP) Committee, which is holding a series of hearings
focused on for-profit colleges,” wrote Barclays analyst Gary Bisbee in a research report.

At the heart of the matter is the federal Gainful Employment regulation, which determines if
higher education institutions are eligible to receive federal loans under Title IV. The Gainful
Employment proposals will require repayment rate information and salary information at a
program level to determine eligibility to provide Title IV loans.
High school counselors needed to counter colleges' false claims
The Florida Times-Union Online
August 17, 2010 - 11:33pm
By Tonyaa Weathersbee

It's the kind of whopper that only the desperate and naive would swallow.

Federal investigators looking into alleged abuses at for-profit colleges caught an admissions
officer at the Kaplan College branch in Pembroke Pines telling an applicant that the proprietary
school had the same accreditation as the University of Florida and Harvard.

Yeah, right.

UF is a flagship university, accredited by the Southern Association of Colleges and Schools -

the regional accreditation board whose scrutiny continues to be resisted by proprietary schools
such as Kaplan. Harvard is the nation's top Ivy League school; an intensely selective,
prestigious school that well-to-do parents begin preparing their children for while they are in
diapers.

Sad endings

Yet, such preposterous claims often fail to raise a red flag for people who are clamoring for a
better job and a better life.

Sadly enough, what most of them wind up with is more debt - and more broken dreams.

That's why the Government Accountability Office recently stepped in to investigate proprietary
schools. Hard times and a need to find an edge in the marketplace have led to explosive
enrollments at the schools where students can wind up borrowing more than $30,000 a year to
attend.

Investigators found problems at all 15 of the schools that they checked out. Three of those
schools - The University of Phoenix, Kaplan College and Everest University - have locations in
Jacksonville. Problems ranged from high-pressure sales pitches, to fraud and
misrepresentation.

Yet, the fact that some for-profit recruiters are able to attract students by making outlandish
claims points to the need for more oversight of such schools.

Counselors needed

And it points to the need for more guidance counselors in public high schools.

Brutal budget cuts are forcing school systems around the country to grapple with shortages of
high school guidance counselors. This school year in Jacksonville, the ratio of students to
counselors is 574 to 1, according to Jill Johnson, spokeswoman for the Duval County school
system.
Last year, that ratio was 521 to 1.

According to the American School Counselor Association, there should be no more than 250
students for every counselor.

That means that it's difficult for students to get much face-time with the person who can help
guide them through the process of picking a college or a career.

Chances are, many of those students will never have contact with a counselor - and will likely
be more vulnerable to buy into promises of a quick degree and a high-paying job at the end.

Many of the people who wind up at the hands of unscrupulous recruiters are, more than likely,
people who struggled or were unfocused in high school, or people who got caught in the
recession and who need to train for a new career quickly. But if more high school guidance
counselors were available, they might at least be able to help some of them select a reputable
for-profit school.

A legitimate purpose

Not all proprietary schools are out to fleece students - and for many students, especially those
who need a flexible class schedule, they serve a real purpose.

And if the counselors wind up talking to more students, that alone could be enough to supply
them with the tools they need to ferret out suspicious claims. They could be the ones to tell
students that the chances are slim and none that they'll come out of a culinary training program
making $80,000 a year.

Of course, desperation will continue to cause many people to be taken in by for-profit school
promises. But more exposure to school guidance counselors could help many students avoid
that fate by showing them that if they wait too late to get serious about their lives, someone will
be there waiting to take advantage of what they didn't learn - and to stick them with the bill.

Along with shattered dreams.

Is There A For-Profit Education Bubble?
NPR.com
August 17, 2010
Transcript of Robert Siegel (host) and Jonathan Kaufamn (guest)

New data from the Department of Education examines the repayment of student loans at for-
profit colleges. Is the sequel to the subprime mortgage crisis a subprime education crisis?
Robert Siegel talks to Jonathan Kaufman, education editor of Bloomberg News.

ROBERT SIEGEL, host:

Is the sequel to the subprime mortgage crisis a subprime education crisis? The shares of
several companies that own for-profit colleges and universities slid yesterday when the
Department of Education reported on student loans and who is not repaying them. The
nonpayment rates for people who attended some for-profits are so high they could jeopardize
access to future loans for students at those for-profits.

Joining us is Jonathan Kaufman, who's education editor at Bloomberg News. Thank you very
much for joining us.

Mr. JONATHAN KAUFMAN (Education Editor, Bloomberg News): Thank you.

SIEGEL: And first, according to the Department of Education, what is a tolerable rate of
nonpayment of student loans for a college, and where are the for-profits in that - in regard to
that rate?

Mr. KAUFMAN: Well, the tolerance is actually pretty high. The Education Department has said
that if only 45 percent of your graduates are repaying their loans, that's okay. But what we found
out on Friday is that for-profit colleges overall only have a 36 percent repayment rate, and some
campuses, the rate is as low as nine or 10 percent.

SIEGEL: Some of the for-profits we're talking about include Kaplan University, which is owned
by The Washington Post Company; the University of Phoenix; Strayer University. Strayer
Education claims that the way they tally up their numbers, they come up with a repayment rate
of 55 percent, and the Department of Education figures it's only 25 percent. Do you understand
disparities that large?

Mr. KAUFMAN: Well, I think everyone is trying to understand that better. I think in the end, the
government is going to make the call because it's the government's money, it's taxpayer money.
But the investigations we've been able to do up to now suggest that those numbers are correct.
But they're clearly in dispute.

SIEGEL: You say it's taxpayer money. Who's on the hook for those unpaid loans?

Mr. KAUFMAN: Well, essentially, taxpayers in the U.S. government. This money, it's the
student's obligation to pay it back, and that's why the government is so concerned because
what they're seeing is that the amount of money that for-profit colleges have gotten has soared.
In 2000, it was about $4 billion total in student aid going to for-profit colleges. Now, it's about
$26, $27 billion. And they're concerned that if these repayment rates are so low, in the end, the
government will be stuck with the bill.

SIEGEL: Anyone who's watched any commercial television in the past few years knows that
these are institutions that advertise very, very heavily.

Mr. KAUFMAN: They are. And in a sense, I think one way to understand this is that for-profit
colleges really are a business. So if you respond to one of those ads on the Internet or call the
800 number, you will get people calling you. They're really selling their product. They're not so
much in a business, as we think of, as a college admissions counselor trying to tell you why you
should go to a certain school.

SIEGEL: The comparison to housing is getting irresistible here. Higher education, like
homeownership, is commonly seen as a measure of economic and social progress. People are
getting a hard sell the way they might from a mortgage broker. They're getting in over their
heads in debt to pay a premium for education, and then they can't repay it. Do you buy the
comparison?

Mr. KAUFMAN: Well, I think that certainly the government is worried about that, and
investigations that we've done suggested that's true, too. Because there are two things to
remember here: One is by going to a for-profit college, you're paying a tremendous premium to
take a course there, and you're borrowing more money to pay the bill.

Now, for-profit colleges will say that's because they're more convenient. They have better
technology. But still, their prices are much higher. The second thing is, is that there's a huge
debate about how valuable for-profit college degrees are. Very often, students will sign up for
degrees at these for-profit colleges. They graduate and they discover that the degrees aren't
worth very much. And that's where the money issue becomes the problem because not only are
students upset about that, but then if they can't get a job, they can't pay back the loans, and the
taxpayer is stuck with the bill.

SIEGEL: Jonathan Kaufman, thank you very much for talking with us.

Mr. KAUFMAN: Thank you.

For-Profit schools feel more heat from DoE
International Business Times Online
August 17, 2010 11:57 PM EDT
By Amulya Nagaraj

The latest report by the U.S. Department of Education regarding student repayment rates as
seen in the for-profit education companies led to more fears about how strong the regulatory
authorities will be policing the sector.

The for-profit education sector has been plagued with such concerns all year as the DoE and
the schools are involved in a "negotiated rulemaking process," in which the Department is trying
to come up with new, more efficient rules to regulate the sector and stop several practices that
people regard as "unfair."

Among the proposals, the DoE requires universities to have at least 45 percent repayment rate
to be eligible to receive federal loans. The Department also expects students not to spend more
than 12 percent of their income in repaying loans.

In the latest report, the DoE reported that the Apollo Group Inc's University of Phoenix, one of
the largest universities in the U.S., had an estimated repayment rate of 44 percent. Its peers
such as Strayer and Capella fell below the required threshold with 24 percent and 40 percent
respectively.

Strayer and Capella, however, disputed the findings.

"The data and analysis released related to Strayer University are at odds with the Company's
internal analysis conducted in light of the guidance issued by the Department," Strayer said in a
filing with the U.S. Securities and Exchange Commission on Monday.

Capella's statement followed the sentiment. The company stated that it conducted its own
analysis after DoE's data was released and has concluded that "Those programs would
continue to qualify for federal student aid participation and have a repayment rate of over 45
percent."

If these regulations take hold, there could be several rules imposed on the sector which could
potentially impact the companies' revenues and margins.

During the recession, several of these schools, which are open to everyone, had an "open
admission" policy that saw people rushing through the doors as they hoped a better degree
would help them secure a better job.

While this helped boost revenues, it also resulted in slightly higher default rates and drew the
attention of regulatory authorities. Several complaints about the quality of education provided as
well as the methods used to attract people into the school were raised.

As investors were attracted to the sector which was booming even during weak markets, people
began complaining that some of the enrollment counselors who are responsible to give
information to students and help them find the correct program would mislead them.
Last week, the Government Accountability Office released a report stating that several
universities provided their undercover applicants incorrect or incomplete information regarding
the programs they were applying for.

The DoE is currently proposing rules wherein the universities provide data to students about
their graduation and placement rates.

However, the proposals regarding the 'gainful employment' rule - measuring the debt repayment
rates against the employment possibilities of a particular program - are still being debated.
Gainful Employment?
The Huffington Post Online
August 17, 2010 10:12 AM
By Randy Proto

Millions of college students are getting ready to go back to school. Millions more adult students
attending year-round institutions are about to enter their next term. Among the common
questions: Will this all be worth it? Having a clearer picture would sure be nice.

The U.S. Department of Education is trying to give students that clearer picture and protection
from making what it deems could be wrong choices. How? With its new regulation called
"Gainful Employment."

It would apply a formula to programs in career-oriented majors, like healthcare, business and
education to name a few, to decide which ones lead to 'Gainful Employment.' Those that do not
would be eliminated. Students would also get concrete information about graduation rates,
employment rates, potential salaries in their chosen field, loan debt info and the like before they
choose their school. This information should help students analyze their risk/reward scenario.

The disclosure requirement is an excellent idea; it helps students compare their options. It
should be implemented at all schools. As for setting standards to see if programs yield Gainful
Employment? It could be a good idea, if the regulation's measurements and mechanisms are
derived correctly. But that's not easy.

For example, one key factor in recent draft regulations - a specially calculated federal student-
loan repayment rate - shows many fine and varied institutions from Alabama State University to
Harvard University Medical School dramatically failing that metric. This points to the proposed
approach being somehow flawed.

To be crafted correctly, the formulas or other measures established must account for
differences in: student populations served, programmatic goals, national economic conditions
and many other factors. The regulation must provide a path for viable programs to improve
performance quickly. Otherwise, it will eliminate needed educational capacity, only to have to
fund immediately rebuilding it.

It's a difficult policy discussion, with high stakes for the workforce, students, institutions and our
economy. The end result will be a defining moment in higher education policy and have broad
and enduring implications for students and the economy.

But, let's assume functional metrics and measurement tests can be crafted. That would be a
great protection for all students, right? Not exactly. As it's currently envisioned, this regulation
will only apply to students attending for-profit career colleges and to the small percentage of
other students enrolled in non-degree programs at public and private colleges and universities.

That leaves roughly 7.5 million additional students enrolled in career-oriented degree majors at
public and private institutions out of the mix, and devoid of its protections. Why leave any
students and programs out of its reach? If the proposed regulation is a good idea and provides
the anticipated benefits and protections, it should be broadly applied.
All students with career majors are entitled to "Gainful Employment," however it's ultimately
defined --and should be covered by it. Why? Because the vast majority of students who choose
career-oriented majors instead of academic majors do so to find employment in the field in
which they have been educated, or a related one.

It makes sense that if programs don't operate at a reasonable rate of success for the
populations they serve and with an appropriate benefit to students and society, then they should
not be supported by taxpayers.

But creating metrics that are required of only some institutions while others are permitted to fail
them with no penalty will result in unintended consequences. That approach will certainly
entrench some interests and disenfranchise others. In the end, the very constituents Gainful
Employment is supposed to protect- students and taxpayers alike - will be the ones hurt the
most by a flawed or selective implementation.

Education reform is difficult. And while we all like simple solutions, they rarely work in complex
situations. Robert Zemsky, a participant on the Spellings Commission, writes that reform
requires one or more "dislodging events." With so many entrenched interests, events must
affect the vast majority of institutions to be catalysts for positive change.

Gainful Employment can be the basis for a meaningful discussion of improved effectiveness and
better disclosure of outcomes and other important information throughout post-secondary
education. A variation of it could empower all students with career-oriented majors to make
better choices among a strengthened, more transparent mosaic of schools.

This is a real opportunity for higher education. But only if it is 'Gainful Employment' for all
students.
Kahn Swick & Foti, LLC and Former Louisiana Attorney General Announce Investigation
into Strayer Education, Inc. –
Bradenton.com
August 17, 2010

Former Attorney General of Louisiana, Charles C. Foti, Esq. and the law firm of Kahn Swick &
Foti, LLC (“KSF”) announce the commencement of an investigation into Strayer Education, Inc.
("STRA" or the "Company") (Nasdaq: STRA) to determine whether it has violated federal
securities laws by issuing false and misleading statements to its shareholders.

STRA shares tumbled $36.75, or 18.4%, to close at $163.26 per share today, after the U.S.
Department of Education (“DOE”) released data on how rapidly students repay their federal
student loans, a key factor that could affect the ability of STRA to receive government-backed
student loans. According to the DOE, STRA’s loan repayment rate was below the federal
guideline of 35%.

Today’s news follows reports by the U.S. Government Accountability Office (“GAO”) that
implicated for-profit colleges in an investigation alleging that prospective students were misled
about their future earning power and job prospects.

KSF has been leading the charge nationally on behalf of shareholders against publicly traded
for-profit colleges based upon similar allegations, and has filed lawsuits against the following
companies: Education Management Corporation, American Public Education, Inc., Lincoln
Educational Services Corp., and Apollo Group, Inc.

If you have information that would assist KSF in its investigation, or would like to discuss your
legal rights, you may, without obligation or cost to you, e-mail or call KSF Director of Client
Relations, Neil Rothstein, Esq. (neil.rothstein@ksfcounsel.com), toll free at 877-694-9510, or via
cell phone 330-860-4092, or KSF Managing Partner, Lewis Kahn (lewis.kahn@ksfcounsel.com),
toll free 1-866-467-1400, ext. 200, after hours via cell phone 504-301-7900. KSF attorneys have
significant experience in representing both institutional and individual shareholders in securities
fraud litigation nationwide. KSF encourages both institutional and individual purchasers of STRA
to contact the firm to discuss the investigation.
Will Student Loan Debt Be The Next Bubble To Burst?
The Atlanta Post
August 17, 2010
By Charing Ball

Over $36 thousand.  No, that’s not my income, in fact that’s more than I will make this year. $36
thousand is how much I owe in student loans.

Ten years and three months removed my graduating from Virginia Union University, I am
nowhere closer to paying down the debt as loans composed most of my financial aid. Like many
Americans, I have exhausted all deferments, forbearances and modifications options and am
caught between dogging phone calls from my loan provider and digging between seat cushions,
just to scrape together enough to remain current.

As a first generation college grad, I once looked at my degree as a way to escape poverty by
opening doors to better career options and more money.  However, when I add up how much
I’ve been paying in rent, utilities, car insurance, health insurance, food and student loans, and
subtract that from my public service salary plus the money I earned through writing and other
side ventures, my current finance fails to make dollars and sense.

According to a recent study by the College Board, I am in plenty of good – or unlucky –

company as almost one-out-of-five graduates with bachelor degrees will not be able to make
payments on the average undergraduate loan debt, which now stands at a whopping $30,500
(pre-interest). If that’s not disheartening enough, consider that for the first time ever, student
loan debt now outranks credit card debt.

Let me say that again; Americans now have accrued more debt by pursuing higher education
than by using their credit cards. To be exact – $605.6 billion in federal student loans outstanding
and $167.8 billion in outstanding private student loans. The news is even more troubling for both
the African American and Latino communities, who borrow disaportionately to pay for private
nonprofit or for-profit college than a public four-year college.

How did this happen?

Well, there are a number of variables that have contributed to this perfect storm of debt:
According to the College Board study, borrowing has doubled over the past decade, to roughly
$85 billion in new student loans in the 2007–08 academic year, mainly to keep up with the rising
college cost, which too has ballooned at twice the rate of inflation.

When students have exhausted all other forms of federal and scholarship aid including Pell
Grants and scholarship, they often resort to federally-back direct loans as well as private
student lending, which made up for about 25 percent of all student loans and often come with
higher interest rates.

The rule of thumb has always been that graduates with bachelor degrees makes on average a
million dollars more than those with just a diploma.  However, the million you’re suppose to
make is off-set by the reality of a, on average, $46,700 four-year cost of tuition (including fees,
books, room and board) at a public school and $99,900 at a private institution (you know, your
Harvards, Yales and most HBCUs).  And while the median income for a worker, who is fortunate
enough to get a job in this economy, with a bachelor’s degree is around $46k, you have to
remember that average college grads don’t pull even that with the average high school grads
income level until age 33.

It’s no wonder that the default rate climbed to 7.2 percent in 2009 (that rate is almost three times
as much at for-profit universities). In an effort to give kids a chance in the workforce, especially
when many jobs are now requiring at least a two-year degree, families are borrowing more than
they can afford to pay back their loans and are being penalized severely for it.

Earlier this year, President Obama signed into law several loan reform programs, which would
add more money to Pell Grants, legislate the caps of future graduates annual payment at 10
percent of their income and eliminate fees paid to private banks to act as intermediaries in
providing loans. Currently, Congress is weighing legislation to allow borrowers to wipe out
private student loans in bankruptcy, which currently can only be discharged through the
impossible task of proving “undue hardship.”

But this might not be enough to help the thousands of graduates such as myself, who are trying
to keep ahead of the debt. Is student loan debt the next financial bubble to burst?  All indicators
are suggesting that it’s almost certain that student loan debt will go the way of the housing
market.

And while there is no easy fix for the student loan crisis in this current structure, a combination
of across the board caps in college costs plus an expansive student loan forgiveness program
for those of us, whom are already out in the workforce, could go along way from keeping this
from happening.

If we can bail out the banks, than we can forgive graduates of their student loan debts. And
while you can foreclose on a house, repo a car, you can’t take back an education.
Connecting the Dots: top news stories for Tuesday, August 17
The San Francisco Chronicle Online
August 17 2010 at 01:53 PM
By Erica Mu

Things are hush-hush around the Obama Administration, but word has it that expanded
travel to Cuba is on the horizon. Not everyone is happy about the potential move, so don't plan
your Havana nights until after midterm elections...

Something everyone does seem to be happy about is the $1.2 billion in federal money
being sent to support California Schools, but educators shouldn't hold their breath. Senate
President Pro Tem Darrell Steinberg has indicated that state funding may decrease to schools
in order to shore up California's $19 billion deficit...

For-profit colleges are earning their own share of headlines today, much to their dismay.
Investors are calling for more government regulations after the Department of Education
released a report claiming that, while 25 percent of federal loans are designated for for-profit
colleges, two-thirds of their students don't pay back their loans...

To get to college, you've got to graduate high school or earn a GED. Yet only 47% of
black male high school seniors enrolled in public schools graduated in the 2007-2008
school year, according to the Schott Foundation for Public Education. The report concludes
that the students are essentially being "set up to fail" without targeted investments, support and
resources...

Now that test scores are in, we know that only about half of California students are
proficient in Math or English. However, several East Bay districts have been making gains...

Elementary school students can't get away with truancy, according to San Francisco
District Attorney Kamala Harris. She's expanding the city's "Truancy Court" to include students
in all grade levels, not just high school students...

In 2005, California courts ruled that the state's prison system had to be racially
desegregated. Five years later? The nation's largest prison system is...still segregated...

San Francisco public defender Jeff Adachi is under scrutiny again. His department has
seen steady increases in budget and staff each year, but Adachi has still managed to outsource
$2.2 million worth of cases...

The city of San Francisco just released a website that offers guidelines on green
alternatives and eco-friendly products. The city claims that it can leverage the website to get
manufacturers to divulge the chemicals that end up in their products...

Small farms, meet the big city. Changes in legislation could mean that urban farmers could
legally sell their produce in San Francisco. Now that's a San Francisco treat!
College bills loom large after teary goodbyes
Times Herald-Record Online
August 18, 2010, 2:00 AM
By Meghan E. Murphy

Kassandra Andersen was running around Walden trying to say goodbye to everyone Tuesday.

Today, she will leave for Carson-Newman College in Tennessee.

Her posts on Facebook take me back to the trip I made exactly 10 years ago this fall, from
Kansas City to Chicago in a dark blue conversion van full of towels, clothes and a papasan
chair to unload in my dorm room at Northwestern University.

I remember that my mom didn't cry, because I was the last one to leave the nest. And I
remember the spring conversations with my dad, trying to convince me to attend the University
of Missouri at Columbia, where I received a scholarship.

A decade later, as I scrimp to finally pay off those tuition bills, I still wonder if I made the right
decision. My classes and professors were all top-notch, but were they ultimately worth the
price tag?

Students today seem more aware than my generation was of money and debt. My farmer
friend's daughter is spending her first two years at Dutchess Community College, before going
for a four-year degree and a fashion career.

The U.S. News & World Report's 2011 college rankings released this week lauds a list of
places where students graduated with the least debt. Two SUNY schools — Binghamton
University and the University at Buffalo — were the two in our state to make the list.

Still, despite all the headlines and how-to articles, too many students are leaving college with
big bills to pay because it's increasingly expensive.

On Friday, the U.S. Department of Education released a list of student loan repayment rates.
Among those who went to for-profit colleges, only 36 percent were making payments on the
principal of their loans. The numbers weren't much better for public, private or nonprofit
schools, whose repayment rates hovered just above 50 percent, according to the Institute for
College Access and Success.

But for Kassandra and all those college freshmen-to-be, there is some good news.

In March, President Barack Obama signed a law that stopped federal subsidies for private
banks that issued student loans, saving an estimated $61 billion over 10 years. As of July, all
student loans will go through the federal Direct Loan program, where no middleman will profit.

Last month, the Department of Education also announced rules that take away federal
financial aid to some colleges with low loan repayment rates. Experts say this will most heavily
affect for-profit colleges, whose stocks fell sharply Tuesday in response to the repayment rates
study.

I'm relieved that I can send my young friends off, knowing banks and other for-profits will have
a harder time preying on students' stretched wallets.
There's still a lot of work to do to make college affordable, but we're moving in the right
direction.

And this is not the week to worry about public policy, anyway. Instead, let's get whisked away
by tearful goodbyes, happy hellos and the excitement of a new beginning.
For-profit Westwood College hit with lawsuit
The Denver Post Online
August 18, 2010, 1:37 AM MDT
By Allison Sherry

Westwood College misrepresented the value of its degrees and inflated potential post-
graduation salaries to lure prospective students, a lawsuit filed against the Denver-based school
alleges.

The suit, filed in federal court, comes as the Obama administration is attempting to stiffen rules
around for-profit schools' marketing tactics and how much debt students accrue.

A recent federal government report found 15 schools — including a Westwood campus in Texas
— were deceptive when recruiting students.

And a U.S. Senate education panel is determining whether new laws are needed to ensure for-
profits are spending federal dollars wisely.

The lawsuit alleges Westwood admissions representatives repeatedly told students that credits
would transfer to other schools and that they could earn tens of thousands of dollars more than
was likely.

The private, for-profit school has 17 campuses nationwide and an online school. Like most such
schools, almost 90 percent of its revenue comes from federally subsidized student aid.

"I spent three years of my life in school and I've wasted two years trying to find some position in
my field," said Krystle Bernal, 25, the lead plaintiff from Denver who owes $75,000 for a fashion
merchandising degree and works as a bank teller for $12 an hour. "It's a waste. No one will take
my credits. . . . If I wanted to start over, I'd have to start from scratch."

Westwood College calls the suit an "attack" by a predatory law firm. The Florida firm that filed
the suit Aug. 11 has three other cases open against Westwood — two against its Wisconsin and
Texas online schools and another filed in California state court.

"The law firm's continued diminution of the hard work and education earned by thousands of
satisfied Westwood College graduates and existing students injures the very persons the
lawyers purport to represent," the college said in a statement.

Lawyers representing the students hope a judge certifies the case as a class-action suit.

Jonathan Cohen, an attorney with the Tampa-based James Hoyer law firm, said the firm has
been contacted by 730 students and 50 former employees interested in sharing what happened
to them.

"These are not the acts of a few bad apples. This is systemic," Cohen said. "It's an epidemic . . .
and they are all being injured in the same way."

Westwood has 25,000 students enrolled in physical and online campuses nationwide.
The Government Accountability Office released a report Aug. 3 that found deceptive practices at
15 for-profit colleges when federal investigators, posing as potential students, visited campuses
earlier this summer.

On hidden camera, one Westwood College admissions rep urged an investigator to lie on his
federal financial aid form.

In response, the school has gotten rid of incentive-based pay for admissions representatives,
which rewarded them based on enrollment numbers.

Employees will undergo training, and a third-party auditor will call back enrolling students to
make sure they understood the terms of the agreement, the company said.

Westwood officials say they are also cooperating with the Colorado attorney general's office,
which launched an investigation after receiving Colorado student complaints from the Florida
lawyers.

The Denver Post reported in January about the aggressive recruitment tactics used by for-profit
schools and other complaints. Students told The Post that schools misled them about whether
credits would transfer to other schools.

Tuition rates were high — bachelor's degrees usually run between $50,000 and $75,000, and
associate's cost between $30,000 and $40,000, The Post found. And almost 25 percent of
students who attended for-profit schools were in default of their federal loans in the first three
years they are required to make payment, according to The Post's story.

Most public colleges had default rates below 10 percent.

Amanda Krol decided to get involved with the Westwood lawsuit after she graduated with a
bachelor's in 2009.

When Krol was shopping for online degree programs in 2004, an admissions representative told
her all her credits would transfer to other colleges and she could make $100,000 a year working
for Disney or the FBI with a technology degree, according to court documents.

She ultimately switched her major to criminal justice, and the now-24-year-old owes $86,000 in
loans and can't find a job in her field.

"I was 17 at the time, and I was just looking for a school to go to," said Krol, a plaintiff in the
case. She first got a job with the Transportation Security Administration, a job she says did not
require her degree. She now works for a family member in customer service.

"I look at this degree like a piece of paper and nothing more. . . . I was just another sale for
them."
Traditional Schools Grow Online
THE BOSTON GLOBE ONLINE
AUGUST 18, 2010
BY D.C. DENISON

When Cheryl Killoran, a registered nurse from Worcester, wanted a master’s degree to
strengthen her resume, she did as millions of other prospective students have done and
searched online. After considering two of the major Internet players, the University of Phoenix
and Walden University, Killoran opted for UMassOnline.

For the University of Massachusetts, enrolling Killoran is a win against the pioneering Internet
providers that still dominate the online education sector. UMass is one of several Bay State
brick-and-mortar colleges whose aggressive expansion into the virtual classroom is finally
paying off. Students seem to prefer the mix of real and virtual campuses at traditional colleges,
as well as the status conferred by a degree from an established brand.

“I liked that it was local, and that it offered online and classroom instruction,’’ Killoran said. “The
name UMass means something to me.’’

Killoran, who works at UMass Memorial Medical Center, took three courses that combined
online and classroom instruction, and one course that was taught completely online. In June,
she received her master’s of science, with a specialty as a nurse educator. She said there were
no special incentives by the hospital for her to choose UMassOnline over other programs.

Online offerings for college and professional students are growing dramatically. In the fall 2008
term, the most recent available statistics, 4.6 million students took at least one online course, a
17 percent increase from the previous year, according to the Sloan Report on Online Learning.
In fall 2008, 1 in 4 enrolled students were taking an online course.

The best-known online players include the University of Phoenix, Walden, and Capella
University, with the for-profit Phoenix’s current enrollment of 476,500 students making it the
biggest university in North America.

But the brick-and-mortar competition is catching up, from the likes of Northeastern University,
Lesley University, and Boston University, while smaller institutions, such as Southern New
Hampshire University, in Manchester, are promoting online programs, too.

“It’s hard to think of a college that’s not building its online capability,’’ said Carol Aslanian, a
senior vice president of market research at EducationDynamics LLC, a marketing firm that
specializes in higher education.

In a typical online course, students download the educational materials and interact with the
instructor and other students via online discussion groups. Assignments and tests are submitted
electronically. Many courses also webcast video and audio lectures.

Although the private, for-profit colleges, such as the University of Phoenix, are perhaps the best-
known online educators, there are so many online programs that traditional colleges are now
teaching the majority of them.
“Three-quarters of the students who are taking online courses are taking them at public
institutions, like community colleges,’’ said Jeff Seaman, codirector of Babson Survey Research
Group, which produced the Sloan report.

In building these online programs, many colleges are promoting features the for-profit online
universities can’t match, chiefly a wide variety of hybrid programs in which students alternate
between online and classroom courses.

The for-profit schools are constrained by their small campuses — often just a few floors in an
office building. Local boards of education often prevent these out-of-state, for-profit institutions
from offering classroom instruction in many fields. Massachusetts colleges also promote the fact
that degrees and certificates from their online programs are indistinguishable from those
awarded on campus, taking advantage of their academic brands, which have been burnished
for decades.

The payoff for these schools is stable or even expanded enrollments, adding valuable revenue
streams at a time when many are dealing with budget shortfalls.

At the front of the pack is the nearly 10-year-old UMassOnline.

“UMass is one of the real leaders in online education,’’ said John Bourne, executive director of
the Sloan Consortium.

UMassOnline has received support from the school’s top administrators; its founding chief
executive, Jack Wilson, went on to be president of the 66,000-student UMass system. Under
Wilson, the program grew steadily. It now offers 100 accredited degree and certificate programs
and had 45,815 students and revenue of $56.2 million in the most recent fiscal year.

Wilson, who will be retiring in June 2011, said two mandates fueled the development of the
program: “To serve students who couldn’t get to one of our campuses, and to generate
revenues for UMass at a time when other revenues were vulnerable. So we got a double hit out
of it.’’

Meanwhile, University of Phoenix continues to grow. It has three facilities strategically placed in
technology and business centers in Greater Boston — in Burlington, Braintree, and
Westborough — where it teaches classroom-based courses that complement its online
offerings.

Combined, these Boston-area facilities have 450 students who take classroom courses; an
additional 3,800 Massachusetts students are taking Phoenix’s online courses. The most popular
programs are bachelor’s of science in business management, master’s of business
administration, and bachelor’s of science in information technology.

Josh Chumley, the campus director for the University of Phoenix’s three local outlets,
acknowledged increased competition from Massachusetts schools, but said his institution
“remains the pioneer in adult learning. There are some great institutions in the state, but it’s
really about the adult student experience, and that’s where we excel.’’

When Angela Perito, a working mother who lives in Quincy, decided to get a college degree five
years ago, she chose the University of Phoenix because it was more flexible than many of the
local colleges, allowing her to take one course at a time that met just one night a week. Perito
was also able to take classes year-round, instead of following the traditional academic schedule.

“They are really tuned to the adult learner,’’ she said. “I really appreciated their customer
service.’’

For Phoenix, UMassOnline, and other players new and established, extensive and sophisticated
marketing campaigns have been key to winning enrollment. And it doesn’t appear any of the
schools will lack for students. Seaman, codirector of the Babson Survey Research Group, said
the online learning market has doubled since fall 2002.

“We keep expecting it to plateau every year,’’ Seaman said. “Instead it keeps growing. We
haven’t hit a plateau yet.’’
Thriving in the New Economy, Part 2
Benzinga.com
August 17, 2010, 5:44 p.m.
By Benzinga Staff Writer

The following is an excerpt from Lori Ann LaRocco's new book, Thriving in the New Economy:
Lessons from Today's Top Business Minds. Benzinga will post the complete eighth chapter of
her book over the next week in several installments. This is the second installment.

Learning from Mistakes

Everyone makes mistakes when circumstances change rapidly, so we of course made some
during the past 18 months. How did we react? On the margin, we tried to make the portfolios we
managed more resistant to the Great Recession of 2009. We reduced our investments in
businesses that used leverage or required access to capital markets. We reduced our
investments in businesses that provide consumers with nonessential products and services. We
increased our investments in education, health care, and infrastructure and were even more
opportunistic than usual when purchasing investments. Despite the recession, at year-end
2008, we expected more than half the companies in which we had invested to have higher
earnings in 2009 than they did in 2008. We have also recognized losses that we could use to
shelter future investment earnings.

No Sleep

I speak with our employees; I speak with executives of companies in which we invest; and, I
speak with my family and with my friends. My best friends are individuals with whom I've been
close nearly my entire life. One of my best friends, Jack, is a doctor who now lives in Palo Alto.
We've been friends since I was 11 or 12 years old. A few months ago, he said to me, “Ronnie, I
have been investing with you for 30 years. Because of that, I am fine and have a lot of money;
but after this year about half as much as I had. I could easily live on that; but I just can't live on
nothing.” Jack is one of the most laid-back people I know, but he wasn't sleeping well. I told him
that although I am rarely upset by market movements and economic forecasts, there were times
when I also didn't sleep well. My wife and my closest colleagues, both of whom are usually fairly
hard to upset, have also had a difficult time sleeping. Regardless, during most of this period I
have been in very good spirits and have viewed events as providing us with what I have called
the best investment opportunities of my lifetime.

Looking for Leadership

After Lehman Brothers collapsed, I told our researchers that our country was going to emerge
from this difficult period and that it was more important than ever to focus on research instead of
worrying about what is unpredictable. We research businesses. We analyze companies and
study people. We try to find people with whom we want to invest, and who we think are smart,
hard-working, and honest, and we bet on them. Find great businesses with really big
opportunities and people who can make those businesses become a lot larger. It doesn't matter
how great the opportunity is; unless you find someone who is going to realize that opportunity
for the business, it's not going to happen. There couldn't be a better time to do research, I told
our staff, than when there is so much turmoil and uncertainty—and so many are concerned with
losing their jobs that they're not doing their jobs. If we can't find great investment ideas now, I
remarked, we'll never be able to find great investment ideas.

Realizing Opportunities

We have been investing in education companies since 1990. The idea when we started
investing in for-profit colleges 19 years ago was that they awarded you the same accredited
degree that you would receive when you went to a state college or the top private colleges and
universities. Students could attend for-profit colleges for less than it would cost to go to a state
college. Not only was it less expensive, but it was easier to gain admission.

Two examples of company leadership that attracted us were DeVry's Ron Taylor and Strayer
Education's Rob Silberman. The market value of DeVry in 1990, when we began to invest in
that business, was about $100 million. It has since grown more than thirty-fold, to more than $3
billion. DeVry was even selected to replace General Motors Corporation in the S&P 500 Stock
Index! DeVry's Ron Taylor and Strayer Education's Rob Silberman care about whether their
students graduate and can get jobs when they do, earning twice as much as they could before
they attended those colleges. Neither executive was attempting to maximize their enrollments
and short-term profits; they were simply trying to make sure their students were receiving a
high-quality education. Many of DeVry's students were the first in their families to attend college.
Often the children of immigrants or minorities who were the product of an inadequate high
school education, they were unlikely to be successful.

DeVry provided them with courses in remedial reading, English as a first language, and math
skills that should have been taught in high school or maybe even grammar school. They made
sure that their students would actually have the skills they needed to succeed in college. Strayer
requires that its students take laboratory and science courses to make certain they receive a
well-rounded education. Although some of these programs were not profitable, they gave
students tools to be successful both in college and upon graduation.

Steve Wynn is a CEO with whom I have been investing since 1980. I was introduced to Steve
by Jay Pritzker, the founder of Global Hyatt Corporation. “Steve Wynn? What kind of name is
that for a guy in casinos? Is he a comic strip character?” I wanted to know. Jay said, “No. No,
this is a guy you have to meet. He's the best operator in his industry.” Well, I met Steve in 1980
and have been investing with him since. We invested about $135 million in 2001 in Wynn
Resorts, have received perhaps $80 million in dividends and had earned more than $1 billion
before we gave up about 35 percent of that amount since November 2007.

Why do we think Steve is a great manager? One of Baron Funds’ outside directors, Alex
Yemenidjian, is a mutual friend of Steve's and mine. As someone who previously worked for
Kirk Kerkorian as chairman of MGM Grand, the casino hotel business, and MGM Studios, Alex
claims the only guy who really gets it right in Las Vegas is Steve Wynn. That is because Steve
wants to be certain that when his guests visit his hotels, they are treated well and want to return.
Wynn Las Vegas is different than other properties, Alex explains, because when you stay there,
you feel like you are staying at a country inn run by its proprietor who lives upstairs. Steve does
indeed live there, knows all the people who work for him, and ensures that they provide the
services he would expect to provide to friends and family guests coming to visit him.

An example of this was back in the 1970s, a wealthy individual from Japan visited Steve's
Atlantic City casino hotel and requested a line of credit, which Steve approved. They gave that
individual a $10 or $15 million credit line, which, in the 1970s, was an extraordinary amount of
money. It was also a lot of money to lose if the customer won a substantial amount of money.
Well, the individual won $10 million that weekend. When Steve's hotel guest arrived home in
Tokyo, there was a Rolls-Royce in his driveway, wrapped in a pink ribbon with a note from
Steve attached. “Thank you very much for visiting our casino. We look forward to serving you
again.” Well, that person returned to Steve's Golden Nugget a couple of weeks later. He lost all
those winnings and an additional $15 million.

Steve knows that is the way you treat people if you want them to always stay in your hotel, and
he is highly regarded in his community. He takes good care of his employees, who in return take
good care of his customers. If you are not concerned about your reputation in your community,
you won't attract great employees who will treat your customers well. And it doesn't really matter
how much your earnings increase in any given quarter; you are ultimately going to fail. Steve is
the perfect example of someone who has the vision to run a successful hospitality business.

Excerpted with permission from the publisher, John Wiley & Sons, from Thriving in the New
Economy by Lori Ann LaRocco. Copyright (c) 2010 by Lori Ann LaRocco.