2/7/2017
Trade school defends recruiting of homeless | Houston Chronicle Archives Easy Printing
Houston Chronicle MAY 31, 1989
Trade school defends recruiting of homeless NANCY STANCILL Staff The director of Elkins Institute Tuesday defended the trade school's recruiting of homeless people from other cities and said those students have been propelled by cultural factors rather than financial need to seek free lunches at a downtown food pantry. Darwich Sayed said Elkins has recruited 145 homeless people from Dallas, San Antonio and New Orleans since midApril and has provided the students with sufficient money to purchase food while their federal loans are being processed. But shortly after Sayed spoke at a news conference, about 20 students from Elkins and another trade school, American Masonry Institute, showed up once again to collect sack lunches at St. Paul's United Methodist Church food pantry. And a Texas assistant attorney general said officials of both schools were subpoenaed Tuesday to give statements under oath on Thursday about whether their recruiting practices have hurt students. ``We'll be able to get a better picture of whether they have engaged in deceptive trade practices,'' said Juliet Romero of the consumer protection division in Houston, which is investigating the schools' recruiting. She said investigators from the Houston office interviewed students Tuesday at the church and talked to the food pantry's director, Bobbie Kidd. Kidd said the students are still telling the same story. ``These people were hungry, and they all said there wasn't enough money for food,'' said Kidd. The plight of the hungry students detailed in the Chronicle recently drew the attention of the Texas Education Agency and the Texas Guaranteed Student Loan Corp., which also are investigating. Kidd said several Elkins students told her Tuesday that the school has not provided them with money since the $50 they received when they got off the bus nearly two weeks ago. But Sayed said school records indicate that students recruited out of town have gotten living expense checks ranging from $110 to $288 since their arrival up to a month ago. Sayed said some of the students recruited from homeless shelters do not know how to budget and cannot handle large sums of money, an opinion shared by Linda Owens, Elkins' financial aid director. ``We discovered when we gave them $100 up front they bought TVs and watches,'' Owens said. Sayed shrugged when asked why the students found it necessary to seek aid from the food pantry and other area social service organizations. ``What is it, a group culture no matter what you give them?'' Sayed said. Sayed said the school decided to stop recruiting homeless people after bringing in a bus load from New Orleans on May 19. Of the 145 that were recruited over the last month, he said, 40 were given bus tickets to return home, 23 are on academic probation, and 82 are still attending class. http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF1D51AA695C
1/2
2/7/2017
Trade school defends recruiting of homeless | Houston Chronicle Archives Easy Printing
``I was initially skeptical about the homeless students, and I certainly am more so, given the negative publicity we have received,'' he said. However, he added, ``We cannot treat these people as the lepers of the city, or as the fire that burns anyone that touches them, or as the hapless lot.'' He said eight of the students have gotten parttime jobs, and all have been provided with furnished apartments. But he conceded that the living quarters do not include cooking equipment, sheets, towels or any of the amenities students say they must purchase out of modest living allowances. Sayed said students are being charged tuition ranging from $4,200 to $5,400 for Elkins' six and nine month programs, and most have applied for government grants and loans exceeding $8,000. The school offers programs to train electronic technicians, medical clerks and data entry specialists. After tuition and other school costs are taken out, students will get living expenses ranging from $90 to $275 monthly, he said. Sayed acknowledged that an Elkins representative had advised students to get free meals at the food pantry, which is near the Elkins building at 2100 Travis, and said he has not discussed the matter with officials at the charity. Kidd said she called the school several weeks ago, but no one called her back. Sayed said he never told the school's recruiters to visit shelters for the homeless and said they apparently did so because it was an easy place to recruit. He said he decided to stop recruiting homeless people because ``we have taken our share.'' Copyright 1989 Houston Chronicle
http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF1D51AA695C
2/2
2/7/2017
2 major lenders deal trade schools a blow | Houston Chronicle Archives Easy Printing
Houston Chronicle MAY 23, 1989
2 major lenders deal trade schools a blow NANCY STANCILL Staff The top two lenders in the Texas guaranteed student loan program are refusing to do business with schools that have high default rates under new policies expected to send many trade schools scrambling for alternatives, officials said Monday. Officials of two Texas thrifts that last year made 86,822 guaranteed student loans worth $222.7 million said the soaring student loan default rate particularly at forprofit trade and business schools has dictated that they weed out schools with the worst default problems. ``We are afraid that in some of the schools, students aren't getting their money's worth,'' said Phillip Vincent, senior vice president of University Savings Association. ``Most trade schools are doing a good job. It's just a few bad apples out there.'' Charles Teeple, president of Austinbased Windsor Savings Association, said Windsor is notifying some schools that it will no longer make loans to their students. He declined to provide details but said he's concerned about the fate of the federally guaranteed program. ``Ultimately in a loan default, somebody has to pay,'' he said. ``With my political hat on, I can see that if the cost gets too high, the program can be in jeopardy.'' Joe McCormick, executive director of the Texas Guaranteed Student Loan Corp., the state loan guarantee agency, said that one of the schools being dropped by Windsor Savings is Hargest Vocational and Technical College in Houston. Hargest, which had a 51 percent default rate as of the end of March, was suspended from the student loan program for five weeks earlier in the year, but TGSLC reinstated the school after it promised to reduce its defaults. Hargest Executive Director Glensford Craig declined to discuss Windsor's action but indicated that the school will find another lender. ``We have no choice,'' he said. McCormick said he has discussed the situation with Hargest officials and will help the school and others in its predicament find other lenders. ``All the banks are looking at different criteria that they might consider to address the problem of high default schools,'' he said. ``It's going to be a difficult thing as time goes by.'' Because TGSLC is considered by federal regulations as a lender of last resort, McCormick said he is obligated to either lend money to an eligible institution or try to make arrangements for student loan financing. Many schools have arrangements to process their loans through several lenders, but those with high default rates are generally hardpressed to find more than one. Hargest's previous lender dropped the school when it was suspended in January, and Windsor Savings has filled the void since Hargest was reinstated three months ago.
http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF181849C875
1/2
2/7/2017
2 major lenders deal trade schools a blow | Houston Chronicle Archives Easy Printing
Hargest officials have said more than 90 percent of its students take out guaranteed student loans and without participation in the loan program, it would have to close. The new Windsor Savings guidelines would exclude any school from the program with a default rate of more than 30 percent, officials say. Teeple declined to elaborate on the guidelines but acknowledged that many lenders fear that with the ballooning default rates, the federal government will end its policy of fully insuring such loans. University Savings' Vincent said the thrift's new policy is intended to protect the integrity of the student loan program. ``We are very sensitive to the default problem,'' he said. ``We want to make sure that we're offering a community service that the students are going to get some benefit out of.'' Vincent said the new guidelines ``try to evaluate all schools based on several factors default rate, refund and cancellation rate and the term of the program.'' For example, he said, students who enroll in programs lasting only a few months at schools that have poor administrative records would be considered risky for loans. Vincent said University Savings has dropped a number of schools and is evaluating others, he said. Teeple said his decision followed a similar action recently by Citibank, a large New York bank. Vincent said University Savings began looking more critically at schools a year ago. Several other large lenders said they are also considering changes. U.S. Education Secretary Lauro Cavazos is expected to issue new regulations later this month. Copyright 1989 Houston Chronicle
http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF181849C875
2/2
2/7/2017
Action on loans | Houston Chronicle Archives Easy Printing
Houston Chronicle JUNE 4, 1989
Action on loans Staff At last, the federal government is acting to curb abuses in the governmentguaranteed student loan program, abuses that carry a $1.8 billion price tag for taxpayers. The Chronicle in numerous articles has pointed out problems at some forprofit technical schools. Students complain that they are not getting the education promised and wind up in debt. Homeless people are bused from other states, enrolled in school and then show up at food pantries. The loan default rate at some Texas schools is a scandal. One beauty college's default rate is 80 percent. Sixteen private trade schools have loan default rates exceeding 60 percent. Seventysix schools have default rates of more than 30 percent, according to current figures. This is one of those cases when one must not throw the baby out with the bath water. About 500 schools participate. Some private technical schools are excellent, giving young people new careers. Community colleges and universities make good use of guaranteed student loans. There is an inherent risk in this type of program, a risk deliberately taken to help students. But a loan default rate over 30 percent is a sign of trouble and anything over 50 percent calls for drastic action. Our compliments to Secretary of Education Lauro Cavazos for establishing new rules which will become even stricter as time passes. The Texas Guaranteed Student Loan Corp. now has new authority to end abuses, and must do so expeditiously. Copyright 1989 Houston Chronicle
http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF1F9EF9B27B
1/1
2/7/2017 Doing a disappearing act with students' dreams
Texcel trade schools apparently cheated thousands | Houston Chronicle Archives Easy Print...
Houston Chronicle MAY 21, 1989
Doing a disappearing act with students' dreams Texcel trade schools apparently cheated thousands NANCY STANCILL Staff Entrepreneur Bill Merrill called his chain of trade schools Texcel, suggesting a standard of statewide excellence. But the name turned out to be a cruel joke on legions of Texas students. And when the schools closed last year, it seemed that Texcel excelled mostly in disappearing acts. Merrill and millions of dollars in student loan money are unaccounted for. Texcel was a catchy name that appealed to Merrill's canny marketing instincts. When the brash Houston businessman opened his first Texcel Career Center in 1986, he bragged he had found a gold mine. And as he tapped the rich vein of easy federal student aid, Merrill expanded his empire with nine schools stretching from Port Arthur to Austin. Texcel centers sprang up near freeway exits and strip shopping centers to mine the seemingly endless lode of lowincome students. Student loans were flowing so freely in 1987 that Merrill rewarded himself and a few top staffers with a lavish Las Vegas gambling trip. But last summer, state officials discovered that Texcel was running an unlicensed school on Parker Road in north Houston. The security school unlicensed, unaccredited and not approved for disbursing federal aid cheated hundreds of Houston students who now owe thousands of dollars in student loans for security officer training the state won't accept for certification. The unlicensed school brought to light other festering regulatory and financial problems. The federal government finding similar irregularities in four other Texcel schools dropped Texcel from the student loan program, and the Merrill empire crumpled in a tangle of unpaid bills and unkept promises. Now even his bankruptcy lawyers are looking for the stocky, smoothtalking Merrill. The 47yearold Texcel tycoon missed a key Houston court hearing more than a month ago, and his whereabouts are unknown. Chronicle attempts to contact Merrill were unsuccessful. And eight months after the schools closed, investigators from three government agencies are focusing on Merrill. An audit just released by the Inspector General's Office of the U.S. Department of Education says Merrill owes $3 million in student loans unlawfully disbursed from five Texcel campuses that were unlicensed, unaccredited or both. Auditors uncovered a trail of deception, finding that Texcel had gained nearly 1,000 student loans by falsely stating that those students were attending class at two locations that had state and federal approval. In reality, students were spread among five ineligible centers from Austin to Pasadena. The audit recommended a $500,000 fine. Merrill has not responded to the audit. Further action could include civil lawsuits or criminal charges, federal officials said. http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF16D3852F5F
1/5
2/7/2017 Doing a disappearing act with students' dreams
Texcel trade schools apparently cheated thousands | Houston Chronicle Archives Easy Print...
The Texas attorney general's office and the State Board of Private Investigators and Private Security Agencies also are investigating. Records examined by investigators show that Texcel received about $12.5 million in federal grants and loans during its short, lucrative life from 198688. Yet records indicate that less than $4 million was spent on the educational operation. Supported by the federal money, the chain processed thousands of students through expensive programs state authorities eventually criticized as shoddy. The company's assets appear to be depleted. Amid the fallout, Merrill's corporation, called Broussards Schools Inc., filed bankruptcy proceedings a few months ago, listing 140 creditors and debts approaching $1 million. Beyond the investigations and legal proceedings, the magnitude of the Texcel debacle illustrates how the state's fragmented regulatory system leaves trade school students unprotected. Previous Houston Chronicle stories have detailed widespread loan defaults by students from Texas trade schools and sketchy state regulation that permits poor teaching and other endemic problems. In the Texcel case, a sizable chain was able to operate on the edge of legality for nearly two years because none of the three agencies regulating it had the total picture of how poorly the chain was running, state officials said. ``If one person had been looking at all of the schools, certainly the one that sneaked in there and wasn't licensed by anybody would have been caught,'' said Joe Price, who heads the Texas Education Agency's division of proprietary schools. TEA regulated two Texcel schools that offered a variety of subjects. As it turned out, the Parker Road school was able to operate without a license for at least six months turning out hundreds of students before drawing the scrutiny of the private investigators' board, which regulates security schools. But even if the agency had known about the school's existence, it would have been hard to shut it down, said Ken Nicolas, a board spokesman. Ironically, the board has no jurisdiction over an unlicensed school because it may only regulate licensed schools, Nicolas said. Nothing in the law prohibits an unlicensed school. The law authorizes the board only to refuse to certify the credentials of students from those schools. So when graduates of the Parker Road school began applying to the state board last summer for security officer certification, the board was obliged to turned them away, Nicolas said. Typical of the students who were hurt is Jesse Sanchez, 35, who lives in a housing project in east Houston. Sanchez was waiting in the unemployment line last summer when two Texcel recruiters wooed him with promises of a lucrative career as a security officer. All he had to do was walk next door, where Texcel had conveniently located its stripcenter security school next to the Texas Employment Commission office. He was soon signed up for a $3,200 student loan to underwrite Texcel's 300hour security course. Midway through the course, the Parker Road location mysteriously closed down and Sanchez and the other students were shuttled across town to another Texcel center where they finished the course. http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF16D3852F5F
2/5
2/7/2017 Doing a disappearing act with students' dreams
Texcel trade schools apparently cheated thousands | Houston Chronicle Archives Easy Print...
Then Sanchez applied for a job and found out that the state would not certify his expensive Texcel training. Nicolas said the Parker Road licensing problem prompted the board to begin investigating other Texcel security schools. All Texcel locations closed down in September, but the agency has continued an investigation that is expected to be completed shortly, he said. Nicolas said the board also is investigating complaints from students that Texcel and other security schools charged exorbitant prices for 300hour security courses when the students could qualify for state certification with lowcost, 30hour courses. Nicolas said the board could permanently bar Texcel or its principals from operating again in Texas and levy fines if the investigation shows violations at the licensed sites. But Nicolas said the best the board can do for the students who graduated at the unlicensed location is to advise them to file a lawsuit or a complaint with the attorney general's office. William O. Goodman, assistant chief of the attorney general's consumer protection division, said his office will investigate the licensing problem. ``In my judgment it would be deceptive trade practices for a company to operate if they're not registered,'' he said. But in the judgment of former students, employees and business associates of Texcel, the state's concern is too little, too late. ``The people who are really suffering are the poor kids who went there and studied so hard to become professional,'' said Leo Torres, who worked as the Parker Road school's director of training. ``The people who really need to be punished are probably taking a vacation in South America,'' he said. Torres, 50, who lives here and is unemployed, blames Merrill and several upperlevel administrators in the Texcel chain. He said the Parker Road campus administrators were told that they should process guaranteed student loans by using the licensing number assigned to a Texcel campus on Wayside. Torres said that when state board officials began questioning graduates' credentials last summer, he realized he had been tricked into deceiving the federal government. ``By that time we had already run seven or eight classes through there. We ran a real good school with real good intentions, but it was a waste of time for everybody,'' Torres said. Some former students described the Parker Road location as makeshift, saying it had minimum equipment and only one restroom for dozens of students. ``It was crowded, it was noisy and our feet hurt because we marched around the parking lot in our tennies,'' said Jesse Sanchez. And as Texcel was cranking up the Parker Road location early last year, complaints were beginning to mount at the TEA about the chain's schools at 8211 Channelside and in Port Arthur. TEA files include letters from Texcel employees complaining of bounced paychecks, angry suppliers and students who were not provided with basic equipment for courses.
http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF16D3852F5F
3/5
2/7/2017 Doing a disappearing act with students' dreams
Texcel trade schools apparently cheated thousands | Houston Chronicle Archives Easy Print...
During the good times, investigators have learned, Merrill hosted a May 1987 Las Vegas gambling trip for some of his close associates. But those good times didn't roll down to rank and file employees. Clo and Bill Durant of Groves taught at the Port Arthur location and complained of difficulties getting paid. Finally, Clo Durant recalled, they traveled to Houston in a lastditch effort to shame Merrill into paying them back wages and reimburse them for money they had spent buying supplies. They confronted Merrill in his office without success. ``My husband and I both felt like he was just a con man,'' said Clo Durant. ``He was very calm about the whole matter. He didn't seem upset that he couldn't pay us.'' TEA officials issued several critical inspection reports after finding that the two Texcel sites it regulated lacked such basic necessities as books and proper lighting. One report filed last year said Texcel should be denied any new applications ``under the ownership of Bill Merrill and any new courses requested be denied until it can be shown that corporate has the finances and desire to offer training of good quality to the students of Texas.'' Merrill responded by complaining to the TEA that his financial enemies had set him up. ``I am going to take care of my business the best that I know how and will depend on the integrity of the various agencies to fairly judge me on my own actions and merit and to consider the source when confronted by slander,'' Merrill said in a letter to TEA. TEA records are unclear as to how the issue was resolved, but when Texcel closed its doors it was in good standing with TEA, records indicate. ``We thought they had worked their way out of the problems,'' Price recalled. ``When they went under, it was something of a jolt to us. ``Merrill called us one day and said they were going to get a hearing with the federal government and everything was going to be fine. The next day they were all closed.'' And as late as last summer, the Texas Cosmetology Commission was unaware of any serious fissures in the Texcel empire. When Merrill abruptly transferred ownership of his Pasadena cosmetology campus last summer to Neal Sumner, a business associate, the commission did not ask many questions. Sumner, who was on probation for conspiracy to defraud the federal government, changed the Pasadena school's name to American Institute of Technology. It operated amid chronic financial problems until it closed a few months ago, leaving 51 students stranded, as detailed earlier in the Chronicle. Several other Texcel schools also offered cosmetology, but the commission's inspections director, Larry Perkins, said field inspectors never detected any difficulties. ``We weren't aware at all that they were shaky or had financial problems,'' he said. ``The problem in a nutshell is that there's no networking of the agencies, accreditation boards, education department or loan institutions that deal with the schools.'' And though cosmetology officials did not know it, the Southern Association of Colleges and Schools began looking critically at Texcel last summer. http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF16D3852F5F
4/5
2/7/2017 Doing a disappearing act with students' dreams
Texcel trade schools apparently cheated thousands | Houston Chronicle Archives Easy Print...
The accrediting agency issued a letter in August citing the chain for failing to seek accreditation for several branches and failing to submit an independent financial audit. The accrediting agency formally dropped accreditation in October. October was when Jesse Sanchez discovered he had received a worthless education from Texcel. By that time, he had gotten a security officer job at minimum wages. His modest job was threatened when the state refused to recognize his Texcel certificate, and Sanchez eventually had to go back to school to get the required credential. He's licensed now but bitter and hardpressed to pay back his $3,200 loan on meager wages. ``I'm real upset for what they did. When I graduated, I was so excited. Then I walked in real big with my Texcel certificate and found it wasn't worth anything.'' Copyright 1989 Houston Chronicle
http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF16D3852F5F
5/5
2/7/2017
Panel probing recruiting by trade school | Houston Chronicle Archives Easy Printing
Houston Chronicle JULY 28, 1989
Panel probing recruiting by trade school NANCY STANCILL Staff SAN ANTONIO A national accrediting commission for trade schools is investigating the Houston based American Masonry Institute for its outoftown recruiting of homeless people, the head of one of the nation's largest accrediting associations said Thursday. Stephen J. Blair, president of the Washington, D.C.based National Association of Trade and Technical Schools, said its independent accrediting commission began investigating AMI after reading news stories about its recruiting practices. He said the commission dispatched a team to visit AMI and is awaiting the school's response to legal papers asking it to explain why its accreditation should not be dropped. The commission is expected to consider the matter in October. Addressing the Texas Association of Private Schools, Blair said the homeless recruiting is like ``the woman on welfare driving the Cadillac'' a potent symbol of abuse that could hurt the majority of private career schools that don't engage in such practices. ``That's why 95 percent of you are in jeopardy,'' he said. The Texas Guaranteed Student Loan Corp., Texas Education Agency and Texas attorney general are also investigating AMI, and last week the guarantee agency suspended AMI from the student loan program for 30 days while it investigates allegations of mismanagement. AMI is still operating, but was notified by TEA this week its new enrollments were being suspended for 90 days because of evidence that more than 150 loans were made to students recruited by unlicensed and unbonded recruiters. AMI and another Houston trade school, Elkins Institute, have bused hundreds of homeless and jobless students to Houston from Dallas, New Orleans and other cities in recent months. The recruiting practices came under scrutiny when the Houston Chronicle reported some of the students were showing up hungry at social service agencies. After being terminated from the student loan program last week, Elkins notified TEA of plans to close today. AMI is accredited by NATTS as a branch of West Texas Barber Styling College in Amarillo and its possible loss of accreditation would also put its parent's status in jeopardy. Trade schools must be accredited by a recognized national agency to participate in the student loan program. AMI officials could not be reached. Blair said he does not know the motivations behind AMI's recruiting of homeless people, but said, ``It sets a bad precedent in that people view it as an abuse.'' He said that for any school to succeed in a program to train the homeless, ``it would take a heavy commitment of ancillary and support services. Homeless people generally have a long history of personal problems.''
http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF40ED60D410
1/2
2/7/2017
Panel probing recruiting by trade school | Houston Chronicle Archives Easy Printing
Blair urged the 300 members of the state trade school association to be more active in weeding out problems in the industry. ``We all have to make sure that those who dance too close to the line are encouraged to go into the aluminum siding business,'' he said. The trade school owners and operators gave a cool reception to TGSLC executive director Joe McCormick as he briefed them on the highlights of a new report on proprietary schools called ``School or Scandal?'' The guarantee agency, he said, is concerned that 50 percent of the default claims it is paying this year have gone for students in the forprofit vocational schools. Such schools make up 61 percent of the agency's loan volume this year, he said. McCormick said he has stepped up reviews of all schools' administration of loan programs. ``We cannot deny that there are schools out there with no other desire than to make a buck,'' he said. McCormick also cautioned that some private career schools with good programs may be charging too much. Copyright 1989 Houston Chronicle
http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF40ED60D410
2/2
2/7/2017 Signed up, sold out: Recruiting for trade schools
Community college's gentle procedures quite a contrast | Houston Chronicle Archives Easy ...
Houston Chronicle JUNE 13, 1989
Signed up, sold out: Recruiting for trade schools Community college's gentle procedures quite a contrast NANCY STANCILL Staff The 59 billboards went up in May showing a black student, a white student and a Hispanic student decked out in caps and gowns. The message reinforced by the students' happy smiles reads, ``Community colleges: A great decision.'' The advertisement, paid for by nine area community colleges, is tasteful and understated. Some critics of community colleges' lowkey marketing techniques say it's almost too subtle. Texas community colleges' gentle brand of marketing contrasts with the aggressive sales techniques used by forprofit vocational schools. Like trade schools, community colleges offer a wide array of vocationaltechnical programs designed to put people to work. But community colleges, fearing that legislators and other state officials would accuse them of squandering taxpayer dollars on huckstering, have been slow to market aggressively. And some officials say the state's lowincome and minority students are the biggest losers when state schools follow a hesitant marketing course. ``How could a private school that has to charge very high tuition be able to survive down the street from wellestablished community colleges? That question has to be asked,'' said Joe McCormick, executive director of the Texas Guaranteed Student Loan Corp. ``Community colleges are not being as aggressive, not advertising and not stirring up customers as trade schools do.'' McCormick said he would welcome more competition between community colleges and private trade schools. Community colleges have some clear advantages over forprofit schools. They are supported by a combination of state funds and local taxes, which enables them to charge tuition that's generally one fifth to onetenth the tuition at private trade schools. State officials also point out that community colleges and the statefunded Texas State Technical Institute (TSTI) are highly regulated. Courses, facilities and credentials of instructors must meet rigorous standards imposed by the Texas Higher Education Coordinating Board. Under the state's weak proprietary school law, trade schools are required only to meet ``minimum standards'' that officials of the major regulatory agency the Texas Education Agency concede are inadequate to ensure quality at each school. Despite the lower tuition and greater quality assurance offered by community colleges, Texas proprietary (forprofit) schools are proliferating in number and size, said officials. Joe Price, head of the Texas Education Agency's division of proprietary schools, said about 400 schools enrolling more than 70,000 students are currently licensed by TEA. At least 200 other trade and technical schools are registered with other state regulatory agencies. http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF2629D02F33
1/3
2/7/2017 Signed up, sold out: Recruiting for trade schools
Community college's gentle procedures quite a contrast | Houston Chronicle Archives Easy ...
Four years ago, TEA licensed about 230 proprietary schools. Community colleges also have reported substantial enrollment increases over the last decade. Forty nine community colleges and four TSTI campuses enroll more than 350,000 students in vocational technical and academic courses, up from 257,000 in 1980, according to the Texas Higher Education Coordinating Board. Despite healthy overall growth, some community college officials said they need to reach more students, particularly minorities. ``We're doing fair,'' said Cecil Groves, chancellor of TSTI's four campuses in Waco, Amarillo, Sweetwater and Harlingen. The campuses enroll 7,500 students, about 30 percent of them black and Hispanic. ``Technical education has not attracted the number of minorities it should, given the high starting salaries of our graduates,'' Groves said. ``We're looking at how to get the message out. The public pays for this education with their taxes, and they ought to take advantage of it.'' Larry Stanley, president of College of the Mainland, said the Texas City community college is also debating ways to attract more minorities and lowincome students. ``One thing we're going to do more vigorously is to make financial aid information more available to the general public,'' Stanley said. ``Lowincome students tend to be the students who don't think of college as an alternative.'' Like the state's other community colleges, College of the Mainland doesn't hire recruiters, though it has instructors who occasionally recruit in specific subject areas at high schools. And Stanley doesn't believe that community colleges should blanket the airwaves with the kinds of hardsell advertising that trade schools do, particularly on daytime and latenight television. ``I find some of it offensive and misleading,'' he said. J.B. Whiteley, president of Houston Community College, said he's not impressed with trade school advertisements and doesn't wish to emulate them. ``We may have a spot every now and then, but we don't bombard you with it,'' said Whiteley. ``Our biggest marketing tool is successful students. They do the job for us.'' Rodney Allbright, president of Alvin Community College, agreed with that viewpoint, saying Alvin's most potent weapon in attracting students is ``word of mouth. ``We get students who have been at proprietary schools coming to us,'' he said. But Allbright said he's hesitant to go headtohead with private trade schools. ``I don't know whether that would be ethical, to compare ourselves to them,'' he said. One reason some students choose the private trade schools over community colleges is the colleges' insistence that students take remedial academic courses if they need to. Sometimes, community college requirements can stretch a technical course an additional six months, but officials said it's a good policy. ``Many of the trade schools have a very narrowly focused program. One of the appeals they promote is that they don't bother with socalled frills. Their job is to get the student up to speed on a piece of equipment and get them in the job market,'' said Higher Education Commissioner Kenneth Ashworth. http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF2629D02F33
2/3
2/7/2017 Signed up, sold out: Recruiting for trade schools
Community college's gentle procedures quite a contrast | Houston Chronicle Archives Easy ...
``Of course, the community colleges believe that you ought to also be capable of reading an instruction manual, doing computations and moving beyond the training they have so you can grow into the next job.'' However, some community college officials said they're beginning to fashion a few programs that can be completed in a shorter time frame. ``The trade schools have made the point that there's obviously a need for people to be trained quickly, get a job and come back later for more education,'' said Joe Airola, chancellor of the North Harris County College District. Airola said the college experimented recently with a shorterterm diesel mechanics program that ran all day and was very successful. ``Nineteen graduated, and all 19 have jobs,'' he said. ``We're probably going to do that in other programs.'' Nellie Thorogood, president of North Harris County College's East Campus in Kingwood, said community colleges offer a better chance of success than do trade schools for students who are starting out with educational deficiencies. ``Trade schools don't have enough student life and support services the things that help people stay in school,'' said Thorogood, who formerly was the state's assistant commissioner for community colleges and technical education. Now, as a college president, she said she is conscious of the need to reach out to more lowincome and minority students and is trying to do so with church and community groups. ``We just don't have a sales force to attach oneonone to students,'' she said. ``If I were approached by a recruiter and I was living inside the Loop in Houston, Texas, it might be the first time anybody would tell me that I could go further than high school.'' But officials predict that despite the lack of a sales force, community colleges will become more aggressive in their marketing techniques. Steve Lestarjette, who chairs the public relations committee of the Gulf Coast Consortium of community colleges, said the billboard ad was a first for the nine colleges. The consortium is pooling its resources for imagebuilding advertising that schools can back up with more specific marketing. He said the consortium's advertisements for next year probably will be much more direct. ``We're going to go headtohead with the proprietary schools, as close to direct competition as you can get,'' he predicted. Copyright 1989 Houston Chronicle
http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF2629D02F33
3/3
2/7/2017
Signed up, sold out: Recruiting for trade schools
Promises mislead the jobless | Houston Chronicle Archives Easy Printing
Houston Chronicle JUNE 11, 1989
Signed up, sold out: Recruiting for trade schools Promises mislead the jobless NANCY STANCILL Staff Are you stuck without a future? Do you lack the skills to get a good job? Are you ready to change your life in a big way right now? ... Don't miss the bus! Be there, or be nowhere! American Masonry Institute flier The flier was a siren song for New Orleans' down and out. And as the circular changed hands among the city's jobless and marginally employed, recruiters from the Houston trade school closed in for the capture. Beckoned by promises of fancy apartments with Jacuzzis, medicaland dental care, and immediate money to live on, scores of lowincome men and women signed up for thousands of dollars in student loans. And the bus began rolling toward American Masonry Institute in Houston. But the reality broke the promise. And after American Masonry students, and another outoftown group recruited by Elkins Institute, showed up hungry at a downtown food pantry, three state agencies began investigating the two schools' recruiting methods, and the Texas Guaranteed Student Loan Corp. suspended Elkins from the student loan program. Making misleading promises to homeless people was one of many abusive and sometimes illegal practices the Houston Chronicle found in a sixweek investigation of recruiting by forprofit trade schools in Texas. And while some schools recruit selectively, others engage in activities more appropriate for selling used cars than educational programs. Trade school recruiting is lightly regulated and barely monitored by state agencies, and widespread abuses promote human misery, encourage consumer fraud and bilk taxpayers who underwrite the guaranteed student loan program. Some findings: Most trade schools use commissioned salespeople usually in large numbers who sometimes lure unsophisticated students from shelters, blood banks, streets, unemployment lines and other places gullible or desperate people are likely to gather. In discussing financial assistance with prospects, recruiters trying to make heavy quotas often blur the distinction between government grants and loans that must be repaid, and are instructed to use sales techniques that shame people for being poor and undereducated. Federal regulations require that schools use admissions tests toscreen for an ``ability to benefit'' when prospective students lack high school credentials. But some schools routinely manipulate the testing so that almost no students who qualify for federal aid are turned down even if they can barely read and write. Houston public high schools have been unwitting partners in the selling of forprofit schools. Trade schools recruiters use motivational speeches to get inside schools, where they make contacts with students, collect addresses and phone numbers, and schedule home visits to make aggressive pitches to the student and other family members. Hargest Vocational and Technical College, a Houston trade school once suspended from the student loan program because of its students' high default rate, received thousands of dollars for training http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF24D5FE167D
1/5
2/7/2017
Signed up, sold out: Recruiting for trade schools
Promises mislead the jobless | Houston Chronicle Archives Easy Printing
recruiters some of whom it then hired under a federally funded job training contract approved by the city of Houston. Community colleges, which offer technical training programs at a fraction of proprietary school prices, use soft marketing techniques that often fail to attract lowincome people who could benefit from the cheaper programs and who instead are often drawn to the forprofit schools. A recent group of Elkins recruits heard the school's pitch at a Salvation Army shelter in Dallas. ``They were painting us a pretty picture and not giving us any time to think about it,'' said an Elkins student who was recruited at the shelter. ``It was a hurryup thing.'' The Dallas man was one of about 250 students bused to Houston by Elkins and AMI in April and May. Like many of the others, he was forced to seek free food and other social services after arriving, finding out that schools don't always fulfill a recruiter's promises. Dennis Parker, a 38yearold unemployed cook, signed up with Elkins in New Orleans and sold his household belongings to move here for a new life. But the living conditions were so bad that he returned to New Orleans six days later, broke and disillusioned. ``I should have been more suspicious,'' he said. ``They were recruiting out of supermarkets and off the streets, but once we got here, they were treating people really shabbily.'' Betty Range, president of the Council of Houston Area Proprietary Schools, said: ``The owners and directors that I've talked to were outraged by the way Elkins was recruiting. We don't want bad schools any more than anyone else does.'' The recruiting by Elkins and AMI have convinced several state officials that state law should ban use of commissioned salespeople as trade school recruiters. U.S. Education Secretary Lauro Cavazos also suggested similar federal legislation as a part of a major reform package to manage the $1.8 billion student loan default problem. ``If you have a quality program at a quality school, you don't have to stoop to those commercialized techniques. You don't have to buy students,'' said Joe McCormick, executive director of the Texas Guaranteed Student Loan Corp. McCormick said the homeless recruiting by the two Houston schools was a ``bizarre first'' in an overheated Texas trade school business climate. ``It really wasn't a program for the homeless. It was a quick and dirty way to increase the body count at the schools.'' And McCormick said the prognosis for guaranteed student loans made under those conditions is poor. ``I think every one of them will default. I don't think we'll collect any money on any of those kids.'' William O. Goodman, an assistant attorney general in the consumer protection division, called trade school recruiters ``bounty hunters. They're recruiting student loans and not recruiting students.'' Joe Price, who heads the Texas Education Agency's division of proprietary schools, said recruiting practices will be part of a major study ordered by the Legislature on the state's proprietary (forprofit) schools. TEA regulates about 400 of the schools and other agencies monitor another 200. Price said the schools last year registered about 2,150 recruiters called admissions representatives with TEA. State law requires that each recruiter be registered and covered by a $1,000 bond. http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF24D5FE167D
2/5
2/7/2017
Signed up, sold out: Recruiting for trade schools
Promises mislead the jobless | Houston Chronicle Archives Easy Printing
Beyond those basic requirements, he said, the regulations are difficult for the TEA to monitor. ``Basically, we say that the admissions representatives have to tell the truth. They can't glorify the schools. ``I'm sure you see the problem with that. If you don't have a witness, you can't prove what a recruiter said. Our better schools keep a very close rein on representatives. You have to. You have to monitor them all the time.'' Price said placing admission representatives on salary rather than commission or requiring that schools pay the commission only after a student has been in school for at least half the program would quell most of the abuses. ``Whenever you put a person on commission and the person realizes that the amount of money he receives is based on numbers, you put a tremendous pressure on him to get large numbers of students. His livelihood comes from the turnover and not the quality.'' Some trade schools have begun to reform recruiting practices, said Range. Her school, Doolin Technical College, keeps its recruiters on salary and pays smaller commissions. Another Houston school, Universal Technical Institute, pays commissions on a progressive basis, with the last payment when a student graduates. ``They don't get all their money when the student signs on the dotted line,'' said Roger Hawthorne, a recruiting director at Universal. ``We're not here just to accept bodies that walk in the door.'' But the trade school officials acknowledge that many in their industry don't live by those scruples. Price said TEA has been able to prove misrepresentation by a recruiter in only half a dozen cases mostly when a recruiter told several students the same thing. He said complaints are relatively few but many times, students express dissatisfaction with a trade school by dropping out and defaulting on their loans. Many large Texas trade schools use 20 or more recruiters, usually divided between admissions representatives who work the phones and meet with prospective students at the school, and ``outside recruiters'' who visit prospects at their homes. Outside recruiters told the Chronicle they collect prospect names from everyone, but the most common source is other students. Students are often paid $50 or more apiece if people they've referred sign up and recruiters can make up to $600 for each successful sale. Recruiters who worked at three Houston schools said their institutions also hire students to collect names from such places as unemployment lines and grocery stores, sometimes using bogus surveys to obtain addresses and phone numbers. Then the information is turned over to recruiters to make more seasoned pitches by phone or visit. Recruiters often score a sale by marketing an alluring package touting a program they claim will lead to high earnings, a fancy apartment and money to live on. But sometimes they emphasize the small federal grant the student will receive and pass lightly over the fact that the student will owe up to $6,000 in loans that must be repaid. And sometimes as the outoftown students recruited by Elkins and AMI found out the setup turns out to be not quite as it was described. The money may not be enough to live on, the apartments arranged by the school may not be furnished. Some schools have shoddy equipment or poor instructors. http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF24D5FE167D
3/5
2/7/2017
Signed up, sold out: Recruiting for trade schools
Promises mislead the jobless | Houston Chronicle Archives Easy Printing
But by then, it's often too late. The student has signed up for loans, moved or given up a job and already owes at least some money. Federal regulations prohibit recruiters from distributing student loan applications and from administering ``ability to benefit'' tests that students without high school credentials must pass before they are admitted. But those regulations aren't always followed. Students recently recruited by Elkins have told the Chronicle and state officials that the recruiters administered the admissions test and handed out student loan applications in New Orleans, San Antonio and Dallas. Those functions are supposed to be performed at the school by its financial aid administrators. Elkins officials have been unavailable for comment on that charge. Recruiters, students and former school officials also say they've seen admissions tests manipulated so that almost no prospects no matter how poor their educational background are turned away. For example, a former school director recounted how one Houston school tests mathematics and English competence using national, juniorhigh level tests. But the school requires a combined score of 70 meaning that a student could score 35 out of a possible 100 points on each test and still get in. Others said that recruiters give prospective students the test with answers penciled in or drill them on questions missed and tell them to retest in a week. The result is that students sign up for programs for which they are poorly qualified. Then they get discouraged and drop out. One lucrative practice at a handful of Houston schools is to employ recruiters who offer their services to area high schools as ``motivational speakers.'' The recruiter strikes up an acquaintance with a school principal or other official and gains an invitation to speak to student groups. The recruiter refrains from making a direct pitch during the speech but uses the opportunity to make contacts and collect addresses and phone numbers. Then the recruiter visits the student and his parents later. Universal's Hawthorne said his school has two admissions representatives who work the high schools as motivational speakers. He said schools in the Houston, Aldine and Pasadena districts have welcomed the speakers. The trade school, which has two other campuses in Arizona and Illinois, has recruiters in 38 states, Hawthorne said. Many are assigned to high schools. Marilyn FinerCollins, a Houston Independent School District guidance and counseling administrator, said school principals make the decisions on motivational speakers and are supposed to ensure that speakers are not plugging commercial products or ventures. ``That really sounds interesting,'' she said of the trade school marketing technique. FinerCollins said she finds such practices questionable. Texas Higher Education Commissioner Kenneth Ashworth said he worries that trade school recruiters do not match a person's skills and interests with an appropriate program. If the student has a bad experience, it could turn him off higher education for the rest of his life. ``If we could be assured that every recruiter and every school was recruiting people to help the students and not to help the balance sheet for the school or profits for the owners, then I would have http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF24D5FE167D
4/5
2/7/2017
Signed up, sold out: Recruiting for trade schools
Promises mislead the jobless | Houston Chronicle Archives Easy Printing
no problem. But the evidence shows quite the contrary.'' Copyright 1989 Houston Chronicle
http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF24D5FE167D
5/5
2/7/2017
Signed up, sold out: Recruiting for trade schools
Television ads selling dreams, not the program | Houston Chronicle Archives Easy Printing
Houston Chronicle JUNE 12, 1989
Signed up, sold out: Recruiting for trade schools Television ads selling dreams, not the program NANCY STANCILL Staff Betty and Robert are trade school recruiters. They're good at it and it's driving them crazy with guilt. The two veteran admissions representatives, as they're called in the business, work for two large and wellestablished trade schools in Houston. They've also worked at other forprofit vocational schools here. They agreed to talk candidly to the Houston Chronicle on the condition that their real names not be used. They both say they need their jobs, but sometimes have trouble sleeping at night. ``Admissions representatives prey on the weaknesses of lowincome people. So many people are being exploited. It's really sad,'' said Betty, 32. ``In technical schools, they talk about education as a business,'' said Robert. ``Nobody's addressing the business of education.'' Robert, 38, softspoken and articulate, said, ``There's got to be a way out of this mess. Everyone's affected by it. Because of the laissezfaire attitude in tech education, people can't produce what is required of them.'' Both recruiters are black. They said they worry that minorities particularly are affected by the marketing tactics of the trade schools. It begins with the barrage of daytime television advertising aimed at welfare mothers and unemployed men. ``The advertising is not selling the school program. It's selling dreams. You're going to go to the office and wear a tie. You're going to be successful. Most students are not ready to achieve that, but the dream will put them thousands and thousands of dollars into debt,'' said Robert. The two recruiters said they have standards, that they refuse to sign up people who can't read and write or who have other obvious educational handicaps. But many recruiters lack such scruples, they said. ``I saw an admissions manager who enrolled a girl in Galveston who was truly mentally retarded. But she had money,'' said Betty. ``I was asked to go out and interview a 77yearold man and his wife. I refused,'' said Robert. Betty said she attended a trade school and was unhappy with the education she received. She drifted into sales and ironically wound up working for trade schools as a recruiter. She said she volunteers with a nonprofit career counseling organization in her spare time to assuage her guilt feelings. Robert said he became a recruiter by answering one of the plentiful advertisements for such jobs and sometimes dreams of the difference he could make by operating his own school. He said the schools sometimes motivate recruiters by dangling management possibilities before them. http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF25A1FCC98D
1/3
2/7/2017
Signed up, sold out: Recruiting for trade schools
Television ads selling dreams, not the program | Houston Chronicle Archives Easy Printing
``The admissions reps are also sold a dream, a dream of big money,'' he said. Both recruiters said their schools constantly pressure them to bring in more students. The average quota for a recruiter, they said, is about a dozen students enrolled each month. Betty said her school uses about 20 recruiters. If they all met their quotas, the school potentially could gain 240 students a month. ``If you don't make quota, you don't last long,'' she said. ``But you're good if you stay in this business a year.'' Betty said she usually just about makes her monthly quota, though she sometimes can sell her school's program to each of the three or four prospective students she interviews a day. ``The schools find people to work the unemployment and welfare lines, the Fiesta stores. They give out little surveys that say things like, `If you could change your career, what would you do?' Those people just get names and phone numbers. Then the schools send us the persuaders to persuade them,'' she explained. ``The emphasis is on signing them up, getting them in and getting them to stay six days so the schools can get their loan money. We go into people's homes and sell them. And each and every application you get, you always get referrals,'' Robert said. ``So the system perpetuates itself.'' Robert said the schools teach recruiters a variety of techniques, but the ``reverse sell'' is probably the most effective. ``You beat people up and make them feel bad,'' he said. ``You take a student who generally has bad grades, who is unmotivated and whose prognosis is poor at best. You go into that person's home in the presence of his parents and do a reverse sell.ng he wants.'' Betty said her school's recruiters have a sales meeting once a week where they discuss obstacles they have encountered to successful sales and techniques to counteract them. The techniques involve shaming a person who is poor and uneducated into signing up for programs that probably won't help the person, but will put him or her deeper into debt. In a recent sales meeting, she said they discussed how to sell the school to a welfare mother of three children who lives on $150 a month. One recruiter suggested telling the woman she would only wind up as a prostitute with a fourth child if she didn't grab the chance to go to the school. ``Our manager said that was great and nobody could understand why I was upset,'' Betty recalled. The recruiters said using motivational speakers to gain entrance to the high schools is a technique used by many of the schools. ``We go in and talk to them about life,'' Robert said. ``While the school principal knows they're affiliated with technical schools, they're convinced the recruiters are here to help.'' But both recruiters said few of their number actually care about students, though they are experts at feigning concern. ``Students think the reps care about them but if you walk in the office, you'll hear them saying, `Let's flip a coin on who goes out on this call. I'm not talking to any more braindead people today,''' said Betty. http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF25A1FCC98D
2/3
2/7/2017
Signed up, sold out: Recruiting for trade schools
Television ads selling dreams, not the program | Houston Chronicle Archives Easy Printing
Betty said recruiters entice students by telling them they'll be paid while they're in school and that the school will arrange for an apartment, parttime job, transportation and any other needs. Betty said many of the recruiters have sold cars or other merchandise and seem to regard students as just another commodity. But others, she said, are former teachers who took the job believing that they could make a difference in young people's lives. ``There are a lot of bad feelings because they can't reconcile the harm they've caused,'' said Betty. But a good recruiter making between $300 and $600 for each student recruited can make $30,000$50,000 a year, they said. The recruiters said they believe it is up to the Texas Education Agency to reform the trade school admissions process. ``It's fashionable to pick on the recruiter, but the recruiter is only the extension of management,'' said Robert. ``TEA should become more active, have representatives on site more often. When the schools do something that's not in the guidelines, TEA should shut them down. ``What the Better Business Bureau is to business and industry, TEA should be to tech schools.'' TEA officials have said they are hampered in monitoring proprietary schools by a slim regulatory staff and weak state laws. And some admissions officials at other schools, including Universal Technical Institute's Roger Hawthorne, said they recruit selectively for their programs. ``We have very stringent standards. It's in our best interest to enroll only students who are going to be successful,'' said Hawthorne. But the recruiters are less than optimistic, given the money that schools can make from hardsell recruiting tactics. They said they usually don't see students they recruit after the student enters school. But they're haunted by visions of disillusioned dropouts. ``I know that education is the key to success,'' said Betty. ``If they're sold a dream and it blows up in their face, will they ever try again?'' Copyright 1989 Houston Chronicle
http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF25A1FCC98D
3/3
2/7/2017
State official vows to shut schools with high default rates | Houston Chronicle Archives Easy Printing
Houston Chronicle JUNE 2, 1989
State official vows to shut schools with high default rates NANCY STANCILL Staff The executive director of the state's student loan guarantee agency Thursday vowed to ``eliminate flybynight schools'' across Texas under new federal initiatives aimed at reducing soaring default rates at private trade schools. Joe McCormick hailed a plan by Education Secretary Lauro Cavazos that gives the Texas Guaranteed Student Loan Corp. authority for the first time to begin closing a school whose default rate exceeds 60 percent. McCormick did not indicate any immediate targets, but said he welcomes ``additional clout'' to initiate action. Until now, he said, guarantee agencies could not act on a school's default rate alone, but had to prove poor administration to suspend or terminate a school from the loan program. Also, he said, the agency will be better armed to take regulatory aim at the 76 schools in Texas that, as of March 31, had student loan default rates of more than 30 percent. ``Of the 500 schools in Texas that participate in the student loan program, only 76 have default rates of more than 30 percent and 65 of those are proprietary schools. And 40 of the 65 are beauty colleges,'' McCormick said. He cited current figures, while default rates reported by the Department of Education Thursday were based on 1986 data. Students at proprietary schools in Texas forprofit business and technical schools have a 32 percent overall default rate, twice as high as the 15.7 percent overall rate for Texas students, the Chronicle reported earlier this year. McCormick said six of the highdefault proprietary schools are located in the Houston area, although two of them Texcel Career Centers and Southern Bible College are permanently closed. Their default history, however, is recorded as long as the loans are unpaid. He said other Houstonarea trade and technical schools with default rates above 30 percent are Hargest Vocational and Technical College, Baytown Technical Institute, Universal Technical Institute and Superior Training Services. Hargest, which has a 51 percent default rate, was suspended by TGSLC for five weeks earlier this year. It was reinstated in the federal loan program after submitting a default management plan and promising to improve administrative practices. The other 75 schools in Texas with default rates above 30 percent also will be required to develop and submit default management plans under the Cavazos initiative, McCormick said. Also, he said, those schools will be required to develop a prorated refund policy for students who drop out early in their programs. The state of Texas requires similar action. ``This will discourage schools from having high dropout rates,'' McCormick said. http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF1E4DA483E7
1/2
2/7/2017
State official vows to shut schools with high default rates | Houston Chronicle Archives Easy Printing
Cavazos Thursday prescribed tougher monitoring and a series of increasingly stricter actions on schools with default rates above 20 percent in an attempt to reduce the $1.8 billion default burden on taxpayers. ``There are some unscrupulous and uncaring institutions out there who are taking advantage of a program designed to help our students,'' Cavazos said at a Washington news conference. ``We must weed out unethical schools and other program participants whose sole purpose is to profit at the expense of our students and taxpayers. Abuses have become so rampant that `let the buyer beware' will no longer suffice as public policy in education,'' he said. It was Cavazos' first major policy statement on the troubled student loan program since he became education secretary last fall. Cavazos is the former president of Texas Tech University. McCormick welcomed other statements by Cavazos calling for legislative action, particularly a proposal to prohibit using commissioned sales representatives to recruit students. He said using recruiters who work on commission led to recent instances in which two Houston trade schools bused in several hundred students including homeless and jobless people from New Orleans, San Antonio and Dallas. The guarantee agency as well as the Texas attorney general and Texas Education Agency are investigating the recruiting practices of Elkins Institute and American Masonry Institute after their students began showing up hungry at a food pantry and other agencies. McCormick said using paid employees instead of commissioned people to recruit would lessen the pressure on recruiters to lure students by the head, whether they are qualified or not. Also, he said, such recruiting practices as the ``bizarre'' ones recently practiced by the two Houston schools would be lessened by a stronger ``ability to benefit'' provision, which would impose stricter testing before students without high school credentials would be admitted to such schools and given loans. Other suggested legislation by Cavazos would allow lenders to set up graduated payments for student loans, which would give people more latitude in paying lower payments in the early years of the loans. McCormick said such an action would help prevent future defaults. The Education Department Thursday reported student loan default rates based on the 1986 fiscal year. Those figures showed that 16 private trade schools in Texas had student loan default rates of more than 60 percent. A total of 71 of the 228 schools on the agency's list had default rates exceeding 40 percent, including trade schools, and public and private two and fouryear institutions. In Texas in 1986, the Waco Beauty College ranked No. 1 with a default rate of 80 percent 40 of the 50 students who had to begin repaying their loans in 1986 had defaulted, the Education Department said. Stephani Crenshaw, an instructor at the Waco Beauty College, told The Associated Press that the school's default rate could be blamed on the city's sluggish economy and on unscrupulous students who quit attending classes as soon as they obtained their loans. Copyright 1989 Houston Chronicle
http://nl.newsbank.com/nlsearch/we/Archives?p_action=print&p_docid=0ED7AF1E4DA483E7
2/2
