Hollywood is a town built on illusions, and the Los Angeles Recording School sits at its center, a stone’s throw from the big-name studios its graduates dream of working for.
The for-profit college, which has trained thousands of students to be recording engineers, says it placed more than 70 percent of its recent graduates in jobs related to their degrees. But a new class-action lawsuit says those numbers are a fantasy designed to dupe prospective students and its accreditor, the Accrediting Council for Continuing Education and Training.
According to the suit, which was filed by a pair of former students last year, the college used “deceptive tactics and tricks” to make its placement rates appear higher than they were. It counted sales jobs at Apple and the Guitar Center as “creative positions” and offered gift cards to students who signed forms stating they were self-employed. It required its graduates to get business cards, then gave the cards to its accreditor as evidence the students were working.
“They were telling the public that they had a placement rate of 70 percent, but they had ways of getting around that,” said Sarah Woolston, a graduate and former career-services employee at the college.
The college, which is now in the process of closing, is fighting the lawsuit and denies any wrongdoing. In a statement, it said it “stands proudly behind the education it offers and remains focused on inspiring students with the experience and knowledge that they need to pursue a career in the entertainment industry.”
The allegations against the Los Angeles Recording School come as a growing number of for-profit colleges face lawsuits and investigations into their job-placement practices.
This month, Career Education Corporation, one of the largest for-profit providers, told investors that it had found “improper placement determinations” at some of its health-education and art-and-design colleges. The following day, federal agents raided two campuses of another institution, American Commercial College, seizing files related to its job-placement numbers.
In September, Attorney General Jack Conway of Kentucky filed a consumer-protection lawsuit accusing National College, a for-profit college with several branches in the state, of inflating its job-placement numbers.
Of course, the scrutiny isn’t limited to the for-profit sector. Law schools are being sued by graduates who say they were misled about their job prospects, and their accreditor, the American Bar Association, is tightening its controls over placement data. A recent report by a pair of Washington research groups criticizes public and private colleges for providing prospective students with anecdotal “success stories” rather than hard statistics.
Still, the complaints against for-profit colleges go back further, and are much more widespread, than the suits against law schools. The allegations strike at the heart of career colleges, whose very purpose is to prepare students for jobs.
The lawsuits are also raising doubts about regulators’ ability to detect job-placement fraud. In many of the recent cases involving for-profits, the alleged deception went unnoticed by the state agencies and accreditors overseeing the colleges. When regulators did find problems, they were often slow to act, offering the colleges multiple chances to improve. By the time the council finally withdrew the accreditation of the Los Angeles Recording School, in April (a decision it later reversed), the college had been in and out of trouble for more than a decade. In the previous five years, it had met the accreditors’ 70-percent placement benchmark only once.
‘Asleep at the Switch’
For the most part, the federal government has left it up to states and accreditors to set and enforce job-placement standards. The one exception is for very short-term programs, which are required to place at least 70 percent of their graduates in jobs to be eligible to award federal student aid. That rule applies to programs at only 135 institutions, the majority of them small trade schools and community colleges.
Most of the national accrediting agencies, which oversee the bulk of career colleges, have also set their benchmarks at 70 percent. Their standards of proof, however, are significantly more lax than the Education Department’s.
Under the federal “70 percent” rule, colleges must document placements with written statements from employers, signed copies of state and federal income-tax forms, and evidence of payments of Social Security taxes. Accreditors, by contrast, often allow colleges to use student and employer surveys, business-directory listings, Web sites, and business cards as evidence of employment.
The federal government requires colleges to have their placement rates audited annually by a certified public accountant. Accreditors call a sample of employers and graduates—usually about 10 percent—to confirm job placements; a majority of accreditors check the numbers only every three to five years, as part of a college’s reaccreditation.
Anthony S. Bieda, director of external affairs for the Accrediting Council for Independent Colleges and Schools, the largest national accreditor, said agencies like his don’t have the resources to verify every single placement. Accrediting agencies tend to have relatively small staffs, and rely on volunteers for much of their work.
“To some degree it’s an honor system,” he said. “Is it a perfect system? No. But it’s working reasonably the way it’s designed.”
Mr. Bieda’s organization accredits National College, which is accused of publishing significantly higher job-placement numbers on its Web site than the numbers it reported to its accreditor. Asked why the council didn’t notice that discrepancy, he said it doesn’t monitor colleges’ Web sites in between accreditation renewals.
A spokesman for National College, Chuck Steenburgh, said the attorney general’s suit is based on “a disingenuous comparison” of two different rates: one calculated for the college’s accreditor, and the other for internal purposes.
Career Education Corporation, which recently disclosed errors in its job-placement reporting, stumbled upon the problems at its art and health colleges by accident, while gathering documents to respond to a subpoena from the New York attorney general. It reported its discovery to the independent-colleges council and to the attorney general, who was investigating the company as part of a multistate investigation into for-profit colleges.
In an e-mail message, Mr. Bieda said the accreditor was “in the middle of an intense review of Career Education Corporation placement data and reporting practices” and would take action if it finds “widespread patterns of noncompliance.”
Critics say accreditors have failed to protect students and taxpayers from programs that lure students with false promises of employment.
“Accreditors have been asleep at the switch while abuses have occurred right under their noses,” said Stephen Burd, of the New America Foundation, who has chronicled the recent scandals involving job placements in his blog, Higher Ed Watch.
Missed Problems
State regulators, too, often miss problems, as recent allegations involving a pair of Texas colleges show.
In the first case, a career-services adviser at Everest College’s Arlington, Tex., campus called an employee hot line to report that colleagues were fabricating placements at a paper company owned by a friend of the career-services director.
The falsifications, which had begun three years earlier, had gone unnoticed by the college’s accreditor, the independent-colleges council, and its state regulator, the Texas Workforce Commission, even though Everest’s parent company, Corinthian Colleges, had been in trouble over job-placement rates before. Four years ago, the company paid $6.5-million to settle a lawsuit by the California attorney general that accused it of overstating the percentage of students who obtained employment and of exaggerating their starting salaries.
After investigating the employee complaint, the company reported the fraud to the state commission and recalculated its job-placement rate. The revisions brought the numbers for three of its programs to between 31 and 45 percent, well below the commission’s benchmark of 60 percent.
Yet the commission continued to report the old numbers for several months, saying it would update its disclosures after the college reported its data for 2009 and 2010. In the interim, the college provided prospective students with two sets of disclosures—the “official” statistics originally reported to the commission, and the corrected numbers.
A similar situation occurred at ATI Enterprises Inc, a chain of for-profit colleges accredited by the Accrediting Commission of Career Schools and Colleges, with thousands of students spread across four states. Last year a Dallas television station reported that ATI was lying to the work-force commission about its job-placement rates, claiming to have placed dozens of students in nonexistent jobs.
After the stories were broadcast, the state agency revoked certificates of approval for 22 programs owned by ATI and put all of its institutions on conditional approval pending a third-party review of its 2011 numbers. The accrediting commission put all of the Texas campuses on probation shortly thereafter.
Asked why state regulators hadn’t caught the problems sooner, Mark Lavergne, the commission’s spokesman, said it had taken action when it “became aware of the misreporting.”
Mr. Lavergne said the commission reviews colleges’ job-placement calculations and occupational titles to verify that their math is correct and that jobs are related to graduates’ training. In some cases, it will cross-check colleges’ reports against the state’s wage-and-employment database. But the commission does not verify a set percentage of reports, as most accreditors do, and it had never before withdrawn its approval over a misreporting of placement rates.
Since learning of the fabrications at Everest College and ATI, the commission has “increased its focus on ensuring the accuracy of reported outcomes,” Mr. Lavergne said. In September it issued proposed rules that would require colleges to submit annual outcome reports in electronic form, to make cross-checks easier.
Already there are signs the agency is cracking down. Last month it announced that it would revoke the approvals of two campuses of American Commercial College after discovering that the college’s employment claims did not match state records. It ordered three other campuses to stop enrolling students pending a third-party review of the college’s placement numbers.
Slow to ‘Pull the Cord’
Such harsh sanctions are relatively rare. Accreditors and state regulators are notoriously slow to punish colleges, preferring remediation over penalties.
Typically, when a college fails to meet an accreditor’s job-placement standard, it’s required to develop a self-improvement plan and submit updates on its progress. If the college continues to fall short, it may be ordered to demonstrate why its accreditation should not be revoked—a directive known as “show cause.”
The Accrediting Council for Continuing Education and Training, the Los Angeles Recording School’s accreditor, issues a “show cause” if a college’s placement rate falls below 56 percent. It is the only national accreditor with such a trigger.
From 2006 to 2011, the council put the recording school on show-cause status three times for having a placement rate below 50 percent.
But it wasn’t until 2011, when the college’s rate fell to 17 percent for full-time students, that the council finally withdrew its accreditation. The college appealed, saying its actual rate was much higher—it just hadn’t been properly documented—and the accreditor agreed to let the college resign. The college’s owners will continue to offer an associate degree in recording arts through the Los Angeles Film School.
Anne D. Neal, who sits on the federal panel that advises the U.S. education secretary on accreditation issues, says one reason accreditors are slow to “pull the cord on schools” is that their “self-improvement focus often outweighs the quality-assurance role.”
Ms. Neal, who is president of the American Council of Trustees and Alumni, says accreditors’ reliance on peer review “does not serve public accountability.”
“The president of University A reviewing University B knows very well that the tables will be turned and acts accordingly,” she said.
Another reason accreditors may be loath to punish colleges is that they don’t see themselves as enforcement agencies.
In 1994 the Education Department’s inspector general investigated five accreditors and found that none used low placement rates as the “sole basis” for penalizing a program.
In its report, the inspector general wrote that accrediting agencies were “reluctant” to use placement rates to evaluate colleges “because they do not view their role as government regulators.” The agencies suggested that the department define outcome measures and establish performance standards—an idea the inspector general initially embraced.
But the department rejected the idea, arguing that its role was to hold accreditors and state agencies responsible for complying with federal regulations, and the inspector general struck the recommendation from its final report.
Who Counts?
The Web site of the Los Angeles Recording School is slick, full of graphics and interactive features. Click on “campus tour,” and you see pictures of students working with high-tech equipment in studios overlooking palm trees. A “mini mixer” invites prospective students to “grab some samples” and “create your own personal jams.”
Under “Scout LA,” there’s a map of Hollywood with Warner Brothers and Paramount Studios in one corner, the storied Roosevelt Hotel in another, and the Los Angeles Recording School smack dab in the middle, marking the “center of Hollywood.”
But it’s harder to find any information about the programs the recording school offers. Click on “program overview,” and you get a message telling you to contact an admissions representative; scroll down to “curriculum” and “courses,” and you get an error message: “undefined.”
The “career development” link is more robust, promising to help students “navigate through the industry” and “ensure they have the skills they need to secure employment, build a career, and sustain it effectively.”
At issue in the lawsuit against the Los Angeles Recording School is the question of whether the college is keeping that promise.
The allegations in the case are similar to those made by former career-services advisers at some of the nation’s largest for-profit companies, including Kaplan and Education Management Corporation. In each case, the former employees accuse the colleges of stretching job placements and pressuring students to sign forms that allow the college to count them as placed or exclude them from the statistics.
The most-high-profile claim involves Kathleen A. Bittel, a former career-services adviser in the Art Institute of Pittsburgh’s online division, who testified before the U.S. Senate last year. She told members of Congress that she had been forced to call students working in unrelated fields and try to convince them that they were using their skills at least 25 percent of the time—the threshold for a placement.
In a letter to members of Congress, Ms. Bittel said the college spent more time “justifying the unrelated employment currently held by graduates than in actually finding them jobs in their fields.” Once, she wrote, she had persuaded a graduate with a bachelor’s in game art and design, who was making $8.90 an hour selling video games, that he was using his education to assist customers.
After the hearing, Education Management Corporation issued a statement saying it had investigated Ms. Bittel’s allegations and “found no support for these claims.” In an e-mail, Jacquelyn P. Muller, a spokeswoman for the company, said the college takes its commitment to help graduates find work seriously and does not tolerate employees who falsify data.
On its Web site, the Art Institutes of Pittsburgh’s online division boasts that nearly 90 percent of its graduates obtain work within six months of graduation.
Jenny McCoy, 26, is part of that statistic. Shortly after she graduated from the Art Institute Online with a digital-design diploma, in 2010, she was hired by a company that creates neon displays. It was an entry-level, low-wage job that didn’t require a college credential, but Ms. McCoy, who was newly pregnant, saw it as a steppingstone to work designing signs.
When she started, however, she was put to work cutting vinyl letters and removing the gluey residue left behind on old signs. The machines that heated up the vinyl gave off noxious fumes, and the cans that contained the denatured alcohol read “very hazardous,” and “wear a mask.” She quit after a day, fearing for her baby’s health.
She went back to Ms. Bittel, her career-services adviser, and asked for help finding a new job. But by then she had been counted as placed, and Ms. Bittel’s supervisors told her to focus on finding jobs for her other graduates.
“They were done with her at that point,” Ms. Bittel said.
