Enclosed in this packet is preliminary research into the use of stimulus funds for Rhodes College in the Central Florida area. We have provided a summary of the results of our findings thus far and source links and/or hard copies of the relevant documents.

This research began as a simple inquiry into how the stimulus money was being spent in our geographic region. Noticing the significant amount that was granted to Rhodes College, we embarked up on what has proven to be an eye-opening investigation.

We are citizens who are concerned with the extraordinary levels of waste, fraud, and abuse at the federal level. Rhodes College and its parent corporation, Corinthian College, deserve further scrutiny. It is our hope that this report will encourage you, in your capacity, to conduct an in-depth investigation of this matter so that more can be discovered.

Please contact Linda O’Keefe for further information at [email protected]

Sincerely,

Linda O’Keefe
Bernadine Galate
Suki Carder

Corinthian College: The ACORN of Education?

The Department of Education, under the Recovery and Reinvestment Act of 2009, is responsible for the distribution of $44 billion to stimulate the economy by saving or creating jobs. But, one has to wonder if the Department of Education is being a good steward of these funds when it is giving billions to the major players of the post-secondary, for-profit education industry that is plagued by waste, fraud and abuse of government funds. Government watchdog agencies are calling for better oversight in this field. But, is the Department of Education listening?

Our inquiry began a listing at www.Recovery.gov, where we discovered that Rhodes College, Inc. of Orlando, Florida was listed as a recipient of over $9 million of stimulus-linked funding in the form of grants. While we were not able to find a website or phonebook listing for “Rhodes College, Inc” (other than Rhodes College of Tennessee which is not affiliated), we discovered that three other colleges were listed at the same address as Rhodes College, Inc. They are Orlando College, Florida Metropolitan University and Everest University. All of these, we found, were operated by a parent company called Corinthian College, Inc.

Corinthian College, Inc., founded in 1995, is the second largest for-profit college, or “proprietary” school, in the post-secondary education industry. It owns the following schools: Rhodes College, Inc., Everest College, Everest Institute, Everest University, Everest Online, Everest-Canada, Bryman College, Titan Schools, National Institute of Technology, Florida Career College, WyoTech, Tampa College, Orlando College, and, as of October 20, 2009, Heald College.

Corinthian College, Inc. (CCi) operates over 125 schools in the U.S. and Canada and has a student enrollment of 86,000 students. CCi is a publicly traded company (NASDAQ: COCO).

Restrictions on proprietary schools, such as CCi, were lessened by the College Access and Opportunity Act of 2005. This act eliminated the “90-10” rule of 1992. The 90-10 rule required that at least 10% of for-profit schools’ revenue came from sources other than the federal student-loan program. With the elimination of this stipulation, proprietary schools have expanded at a rapid rate.

According to the most recent data, students at proprietary colleges received more than $16 billion in federal loans, grants and other aid during the 2007-2008 school year. But, proprietary schools have a higher loan default rate and lower graduation rate than nonprofit schools. And, these rates are worsening.

Class action lawsuits have been brought against CCi in Texas, Florida and California. In 2005, after the Florida State Attorney General got involved, CCi agreed to settle a class action lawsuit for misleading students about their ability to transfer credits to public colleges. In August of 2007, CCi paid $6.5 million to avoid a lawsuit by the State of California for misleading students about job-placement and career opportunities after graduation. In August of 2009, thirteen students in Texas have filed a lawsuit against CCi for false advertisement regarding job placement, education quality and misrepresentation of college credits.

Not only are the students targeting CCi! Recently, the shareholders brought legal action against CCi for violations of the federal securities laws.

CCi is not the only proprietary school with legal problems. Alta, Apollo Group, and ITT have also had lawsuits filed against them for similar reasons.

After an 18 month review, the U.S. Government Accountability Office (GAO) released a report in August 2009 calling for more oversight from the Department of Education to avoid the waste, fraud and abuse of federal financial aid in the post-secondary education proprietary industry. The report even found 2 schools guilty of changing failing admittance test scores so that prospective students would qualify for government grants, as well as the changing of failing grades to keep the students in school and thus receiving more government grant money. The Department of Education is expecting to implement new rules. When?

Even with these questionable practices, proprietary colleges continue to receive unprecedented government funding under the Recovery and Reinvestment Act of 2009. Because the Department of Education is not providing proper and timely oversight, we are calling for taxpayer watchdog agencies, concerned U.S congress members, media, and state governments to put a stop to this waste and abuse of taxpayers’ money! NOW!

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Sources:

“Proprietary Schools: Department of Education Oversight Needed to Help Ensure Only Eligible Students Receive Federal Student Aid” by the United States Government Accountability Office (GAO-09-600); August 2009; http://www.gao.gov/products/GAO-09-600 .

“Agency Urges Crackdown on For-Profit Schools, Test Administrators” by Gene Trainor [email protected]; Star-Telegram; October 7, 2009; http://www.star-telegram.com/238/story/1669908.html .

“For-Profit Colleges’ Increased Lending Prompts Concerns” by Justin Pope; Community College Week; September 7, 2009; USAToday; http://www.usatoday.com/news/education/2009-08-15-profit-college-lending_N.htm .

“School Chain to Settle Lawsuit-Corinthian Colleges Plans to Pay $6.5 million Over Claims it Inflated its Job-Placement Record” by Henry Weinstein; Los Angeles Times; August 1, 2007; http://articles.latimes.com/2007/aug/01/local/me-corinthian1.

“Bad Education” by Jeffrey Billman; Orlando Weekly; April 14, 2005. “Washington Post Buys $60M shares of Corinthian Colleges” by Erin Killian; Washington Business Journal; February 18, 2008; http://washington.bizjournals.com/washington/stories/2008/02/18/daily1.html.

“Stimulus Wreckage: Despite Having been Accused of Deceptive Business Practices By the Attorney General, Former Students, and Ex-Employees, Corinthian Colleges are Getting Millions in Federal Stimulus Dollars” by Matt Smith; SF Weekly; September 30, 2009; http://www.sfweekly.com/2009-09-30/news/stimulus-wreckage

“Corinthian Colleges Expects Continuing Growth in New Students to Drive Profit, Sales in 2010”; Breaking News 24/7; August 25, 2010; http://blog.taragana.com/n/corinthian-colleges-expects-continuing-growth-in-new-students-to-drive-profit-sales-in-2010-149200

“Texas college Doesn’t Need No Education” by Holly Lafon; NBC Local Media; August 28, 2009, http://www.nbcdfw.com/news/local-beat/Texas-College-Doesnt-Need-No-Education-55791542.html

“Washington Post buys $60M shares of Corinthian College” by Erin Killian; Washington Business Journal; February 18, 2008. http://www.nbcdfw.com/news/local-beat/Texas-College-Doesnt-Need-No-Education-55791542.html

Corinthian College, Inc. www.cci.edu

Listing on Recovery.gov:

RHODES COLLEGES INC AWARD OVERVIEW

Agency Name: Department of Education
Project Location: ORANGE Award Number: P063P081264
Project Location – State: FL Funding Amount: $14,739
Project Location – Zip Code: 328105606
Ending Date: 09/30/2014
Congressional District: 08
Amount: $9,638,826

RECIPIENT INFORMATION (AWARD)

Recipient Name: RHODES COLLEGES INC
Recipient Address: 5421 DIPLOMAT CIR
Recipient City: ORLANDO
Recipient State: FL
Recipient Zip Code: 328105606
Congressional District: FL-08

DESCRIPTION OF WORK/SERVICE PERFORMED:

Grant Program

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