Anthem Education, Shady For-Profit College, Welcomed With $350,000 in Tax Breaks
On Tuesday, Gov. Rick Scott's offices sent out a news release that declared, "Gov. Scott Announces Anthem Education Expansion in Fort Lauderdale, 70 New Jobs."
It explained that the for-profit college will be locating its "North American headquarters" to Fort Lauderdale, spending $300,000 on a building and furniture, and creating 70 jobs with salaries that average more than $50,000.
It also noted -- low down in the report -- that Anthem was lured with "a Qualified Target Industry (QTI) tax refund totaling of $350,000 ($280,000 from the state and $70,000 from the city)" though it won't receive the money until "jobs goals and other contractual requirements are met."
Scott said, "Florida is known for educational excellence and job creation -- and Anthem Education's expansion in Fort Lauderdale is more proof of our success. With more than 320,000 jobs created in the last two years, our strategies of cutting taxes, paying down debt, and investing in K-12 education are paving the way for more opportunities for Florida families." Fort Lauderdale Mayor Jack Seiler, Florida Secretary of Commerce Gray Swoope, and Greater Fort Lauderdale Alliance CEO Council Chairman Ray Ferrero Jr. also babbled about how great it was to have Anthem.
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It seemed a little ironic for the governor -- a guy who has refused federal funds for Medicaid expansion and high-speed rail -- to talk about Anthem in the same breath as "educational excellence," "cutting down taxes," and "paying down debt," because according to a congressional report that featured the school, federal taxpayer money is what props up Anthem (the school got $112 million in 2010) and other for-profit colleges, and the students who come out of its programs get a questionable education, only to be frequently saddled with debt.
Not only does the school's own website emphasize its spa over its computer science and health-care tracks (see toolbar -- though, hey, manicures by students are only $10!), but there are dozens of complaints on RipoffReport.com. Online commenters who say they are disgruntled students say it's "a scam, not a school" and accuse the company of "being sneaky and only car[ing] about money." The school was founded under a different name, High-Tech Institute (which faced a lawsuit from dissatisfied students and allegations of sexual harassment ), and has operated under various brand names, including Anthem College and Morrison University. In 2012, it was acquired by Florida Career College.
A 2012 Senate report titled "For Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success" summarizes a two-year investigation that revealed how $32 billion a year in federal money is funneled via student loans and grants into for-profit colleges, yet more than half the students leave programs without earning degrees. The report has an entire 17-page section on Anthem.
The report explains that for-profit colleges find vulnerable students, strong-arm them to enroll, and push them to apply for federal grant and loan money and sometimes additional private loans on top of that. The school pockets the money. Students, however, often end up in debt, with dubious degrees and credits that frequently cannot be transferred to state or private colleges.
About Anthem specifically, the report noted that the school derived 81.9 percent of its revenue from federal funds (maybe more, since that wasn't counting funds from veterans' programs), devoted 19.3 percent of its income to marketing and recruiting, and operated at a loss for at least two years. Data from 2008 indicated that 21.5 percent of students were defaulting on their loans.
The report said that the cost of tuition at Anthem was "more than triple" of a comparable degree from an accredited state college. The report also noted Anthem's "aggressive recruiting tactics" and "misleading recruiting tactics." Undercover investigators found that one Anthem recruiter misled a prospective student into believing that she could not speak with a financial aid officer until after enrolling and that another worker fudged documents to make an applicant look poorer and consequently qualify for a federal grant.
An internal memo suggested that the company preyed on the disadvantaged, listing the "characteristics of [a] typical student" as "Single parent, Economically Disadvantaged, Unemployed or underemployed, Individuals that lack an outside support system, Low Self Confidence, Low Self Esteem, Have a desire to prove to themselves and family their success."
In May 2007, the Accrediting Commission of Career Schools and Colleges of Technology (ACCSCT) pulled High-Tech Institute's accreditation. Today, the school's Florida branches are accredited only by the Accrediting Council of Independent Colleges & Schools, which accredits many similar for-profit schools.
The congressional report noted that in many cases, students' credits earned at Anthem would not carry over to state universities nor community colleges and concluded that Anthem's "high student loan default rates suggest that students completing its programs may not be able to obtain employment or salaries that enable them to repay the student loan debt they incur."
Still, Anthem is not the college most egregiously taking advantage of the government's student loan programs. A 15-page section of the report focusing on Fort Lauderdale-based Keiser explains that that school -- sold to Everglades College Inc., another Keiser family property, in 2011 -- has been even sneakier, converting to a nonprofit, thereby avoiding paying taxes, circumventing regulation, and becoming eligible for even more federal funds.
Mayor Seiler, when asked whether he had concerns that Anthem's income consisted of federal tax money and whether there would be conditions put on Anthem's grant money given the concerns in the Senate report, said, "I was not aware of what you are referring to. This was a company with 34 campuses in 14 states. The assumption was that this is a company that's doing things the right way. I had no reason to believe differently. The proposal said they've operated in Florida since the early '80s and have 34 campuses in 14 states, that they are going to generate a lot of jobs here in Fort Lauderdale, and that these are good-paying jobs. My goal is to bring jobs to Fort Lauderdale. Our unemployment rate is 5.7 -- lowest unemployment rates in the state. I focus my effort on creating jobs and keeping jobs."
He asked for and was sent links to the report but did not offer any further comment.
Rick Scott's office did not return a call for comment.
UPDATE May 3: Yesterday, a representative from Rick Scott's office referred comments to Enterprise Florida.
Enterprise Florida spokesperson Stuart Doyle explained the process by which Anthem got its incentive. "There are steps we go through to make that award or to qualify a company," he said. "We work with companies and look at jobs they propose to bring to a community, the capital investment they would be making into that community. If it passes the test, we would recommend that company for an incentive. Enterprise Florida does the background, the homework, to see if it can bring in the jobs it says that it can. We make a recommendation to the state, then the state does its own research through the Department of Economic Opportunity. In our vetting process, we didn't come across [the Senate report]. This was nothing that we were aware of. Obviously they qualified; whatever we had in our vetting process did not disqualify them."
He noted that there was no indication that Anthem had been hit with any criminal charges, and did not know whether there might be any conditions put on the grant given the concerns in the Senate report.
"Of course, many companies large and small have issues," he said, but Enterprise Florida tries to welcome business that "would do business ethically, legally, meet business goals, and come up with a good plan to advance themselves in state and grow jobs in the state."
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