‘Fail State’ Confronts For-Profits and Laments the Disinvestment in Publics

Alex Shebanow is an unlikely scourge of for-profit education. He’s not an academic or a professional policy wonk. He isn’t even 30 yet. But as director of the new documentary film Fail State, he goes after for-profit colleges with a ferocity that belies an otherwise gentle demeanor.

Mr. Shebanow’s directorial debut tells two stories that will be at least somewhat familiar to anyone who works in higher education: the rise of the for-profit sector and state disinvestment in public institutions. By combining those two narratives, the film illuminates a third: the ebb and flow of federal policy that has, at times, enabled both. The most memorable characters are the students he interviews, who have racked up tens of thousands of dollars in debt to go to for-profit colleges and say they paid for worthless credentials. Several tell stories of being manipulated and duped by recruiters.

Mr. Shebanow didn’t intend to take on for-profit higher education, but the “unconscionable” practices of many institutions seized his interest. He spoke to The Chronicle about his film, which is now playing at festivals, his personal attachment to community colleges, and higher-education financial aid 2.0.

•

Why did you want to make this film?

I started it as a student-loan-debt documentary. Student-loan debt is a big discussion amongst my friends and I — millennials. Why there was so much debt. Why college cost as much as it did. My team and I began exploring this issue, and then, in June 2014, Corinthian Colleges began its collapse. I said, OK, there’s something really interesting about this. You have a multiple-billion-dollar-a-year company winding down into bankruptcy.

I spent that summer researching the entire industry, pulling everything I could. There was a specific article on the former Kentucky Attorney General Jack Conway, who had recently settled a suit with QuinStreet Inc. and a thing called GIBill.com, which was a lead-generation website that effectively masqueraded as a government website. That was the triggering moment.

The default would have been, Let’s just make a film on for-profit colleges. But I was struggling to figure out why for-profits succeeded as well as they did. I think in the early 2000s they had 3 percent of the student population. By 2010 they had 10 percent. We were talking huge growth, and I wanted to know why.

I had to look at the higher-education ecosystem as a whole. I saw one storyline where we had for-profits exploding, but on the other hand we were disinvesting in our publics — and they were turning away students or weren’t capable of educating the students that they were designed to educate. For-profits were kind of lying in the brush, waiting to take these students in.

What was your introduction to for-profit colleges?

College Inc., on Frontline. It came out in 2010. I remember watching it and being taken aback.

I also remember in high school getting pamphlets from Full Sail University. I’ve always wanted to do film, and they had these amazing cameras. I was really gaga over that. I remember thinking about applying. And there’d be the ITT Technical Institute commercials on daytime TV. They’ve always been there, but where I grew up — upper middle class, basic suburban community — the expectation was that I’d go to more traditional higher education.

You attended the University of Southern California. Did you graduate from there?

I am actually a community-college alum. That’s part of why I say the film is a big love letter to our publics and community colleges.

I wasn’t a very good student until I got to Foothill College, where I had some inspirational professors who made a huge impact on my life and really got me to open up and look at the world and look at the world’s problems. I transferred to USC and finished my undergraduate degree there in English literature with an emphasis in creative writing and a minor in film.

What do you bring to this subject as an outsider that someone who works in higher education maybe doesn’t see?

I’m a storyteller. So a lot of the stuff that I’ve been dealing with is about people’s lives. All they wanted to do was better themselves: get an education and get a skill and be able to get a career rather than a job. That story is kind of wrapped up with the American dream, and I gravitated heavily toward that.

I wanted to create a film where the centerpiece is these students’ lives, but when we step back, we’re looking at the whole system and how Wall Street banks and private-equity firms are buying for-profit colleges, transforming their recruiting forces, recruiting large swaths of students, and not giving them the value or the return that they promised.

The film talks a lot about recruiting techniques at for-profits. For example, what is “the pain funnel”?

Sandler Training developed this technique through which you could basically ask a series of questions that were designed to emotionally break down a prospective client or the prospective student. And ITT Tech, among a few other colleges, would employ this tactic to coerce applicants into enrolling.

We interviewed a whistle-blower in Florida who was trained to use this. The recruiter would ask questions that were embarrassing to the person. It would be like, How does it feel that, in your current job, you’re unable to buy presents for your children on Christmas? And the prospective student would start breaking down on the phone, saying, It’s really embarrassing that I can’t get presents for my kid. It’s embarrassing that my friends have good jobs, and they’re buying homes, and I’m barely able to provide for my kid. The recruiter would talk about all these feelings for a good bit, and then the turn would be, Well, how are you going to fix that? Basically, the recruiter is leading the prospective student on to the point where the answer is: Enroll in my college.

In our film, we have one student who was definitely led through this process. Her daughter was murdered, and the recruiter found out about that on the phone and used it to get her to enroll.

You must have reached out to for-profit colleges for their side of the story. How did that go?

We reached out to as many people that we could find contact information for, including the congressional representatives. We got a lot of no’s, a lot of no responses. I did speak with one for-profit-college executive, and there were a few others that, over the years, I tried to get to come on camera — to basically whistle-blow. But we didn’t get anywhere.

You have mentioned needing to rethink the film after an initial test screening. Why?

In an ideal world, people would have a full understanding of the different sectors of higher education. But we just kind of jumped right in. And some of the comments that we were getting back were, What are for-profits?

It was a philosophical change in the editing room for us: OK, we have to break it down. We ended up creating a 10-minute sequence where we’re going through what the GI Bill was, what the 1965 Higher Education Act was, and then the 1972 reauthorization of the Higher Education Act that created the Pell Grant, and how this created the system that we have today.

The other big moment for us was during the election. We were working under the assumption that the for-profit industry was in decline, and that the point we were trying to make the audience was, Be alert, there are still actors out there that do not have your interest at heart. And then when Trump won, we went into the edit room the next day. We realized that the for-profit sector liked what happened and was basically planning to return to their golden age.

You seem to suggest that the Pell Grant’s portability may have enabled predatory practices by some for-profit colleges. Do you think the Pell Grant needs to be reformed?

In 1972, we had a big philosophical change on how to give financial aid to students. You had the Milton Friedman school, thinking that if you were to effectively voucherize federal financial aid, give the money to the students, that they could take it to public or private colleges — the student knows best — and you would create a more equitable marketplace.

The Pell Grant has done incredible good — no one can deny that. It opened the doors to higher education to people that probably wouldn’t have gone to college, or couldn’t have afforded college. But our contention is that, because we’re giving all this money to students, for bad actors it basically put a target on those students.

The problem today is that we have all this financial-aid money sloshing around, and there’s no effective oversight or regulation of it. Most institutions are doing an amazing job with that money, and they’re doing good by their students. But then with a lot of the students, the for-profits view them as dollar signs with a heartbeat. We think the discussion should be, How can we create a higher-education financial-aid system 2.0?

This interview has been edited for length and clarity.

Lee Gardner writes about the management of colleges and universities, higher-education marketing, and other topics. Follow him on Twitter @_lee_g, or email him at lee.gardner@chronicle.com.