Investor Who Criticizes For-Profit Colleges Will Help Indebted Student

Courtesy of Yasmine Issa

Yasmine Issa speaks with Sen. Tom Harkin of Iowa at last week's Senate hearing on for-profit colleges.
June 28, 2010

Senators skeptical of for-profit education found an ideal poster child for their showdown with the industry last week: a single mother named Yasmine Issa who testified that attending a career college had left her unable to find a job in her field and saddled with debt.

Turns out Ms. Issa will gain more from the experience than a chance to warn others to avoid her fate.

Steven Eisman, a hedge-fund manager who delivered a scathing assessment of for-profit education at the same Senate hearing, announced on Monday that he would pay off Ms. Issa's $17,300 debt.

Monday's news follows an unusual "challenge" that Mr. Eisman laid down after the Senate hearing. The hedge-fund manager had called up a Chronicle reporter on Friday to say he would pay half of Ms. Issa's loans if the Career College Association, a trade group that represents institutions like the one she attended, would cover the other half.

Harris N. Miller, president of the association, did not directly respond to the specifics of Mr. Eisman's challenge when asked for comment by The Chronicle. Instead, he issued a 348-word statement describing how his group is "working with public policy leadership in Washington every day to continue to find ways to improve student-lending policies." He also attacked Mr. Eisman's motives, saying he stands to gain by talking down for-profit colleges at the Senate hearings.

"While one has to have sympathy for any student or former student or parent having problems repaying his/her debts," Mr. Miller wrote in an e-mail, "one also has to have sympathy for the 2.8 million students whose educations Mr. Eisman so blithely and blindly disparages for his own financial benefit."

Mr. Eisman, told of Mr. Miller's reply, said on Monday that he would pay off Ms. Issa's whole debt if he had not heard anything else from the association by the end of the week.

"Clearly CCA cares more about keeping the status quo than helping people harmed by the very bad actors they admit exist," Mr. Eisman said in an e-mail.

The Career College Association reported revenues of $5.4-million in the fiscal year ending June 30, 2008, according to the most recent tax records available. Mr. Miller was paid $325,000 during that period.

'Something So Good ... Out of Something Bad'

Ms. Issa, 28, took out the federal student loans while studying to be an ultrasound technician at a Sanford-Brown Institute campus in White Plains, N.Y., near her home in Yonkers. According to her written testimony, she learned the institute's ultrasound program was not accredited only after completing her studies. Good Housekeeping magazine featured her story in a June article, "School of Hard Knocks." That brought Ms. Issa to the attention of Sen. Tom Harkin's staff, she said, who asked if she would testify during the Health, Education, Labor, and Pensions Committee hearing on for-profit colleges.

"I'm in awe," Ms. Issa said Monday in response to Mr. Eisman's offer. "I just never thought that something so good could come out of something bad that I went through."

She added, "It's stressful having to think about paying rent and bills and things for my children, and having a huge loan to pay with interest building up. So this is just definitely a load off my shoulders."

Ms. Issa said she remains determined to find a job in the ultrasound field.

In the Good Housekeeping article, Sanford-Brown's parent company, Career Education Corporation, defended the quality of the institutes' training and declared that "hundreds and hundreds" of graduates had found ultrasound jobs.

Mr. Eisman, who made a fortune betting against subprime mortgages, has emerged recently as a vocal critic of for-profit colleges. In his prepared testimony, he likened for-profit education to the real-estate market before the collapse, with easy credit driving prices ever higher and large defaults looming.

Asked last week whether he would make a lot of money from the collapse of for-profit education companies, he replied: "My investors and I would make money. But that would be dwarfed by the amount of money saved by the taxpayer."