Shady For-Profit College Welcomed With $350,000 in Tax Breaks
Last Tuesday, Gov. Rick Scott's office sent out a news release gloating that Anthem Education, a for-profit college, will be locating its "North American headquarters" in 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 that Anthem had been lured with "a Qualified Target Industry (QTI) tax refund totaling $350,000 ($280,000 from the state and $70,000 from the city)."
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.
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 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 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 (though, hey, manicures by students are only $10!) but in 2012, after a two-year investigation, the Senate released a report titled "For Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success" that shows 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 a 17-page section on just 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. The report noted that Anthem derived 81.9 percent of its revenue from federal funds (maybe more, since that wasn't counting funds from veterans' programs). Data from 2008 indicated that 21.5 percent of students were defaulting on their loans.
The report said the cost of tuition at Anthem was "more than triple" that 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 she could not speak with a financial aid officer until after enrolling and that another worker fudged documents to make an applicant look poorer so he would 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."
The congressional report noted that in many cases, credits earned at Anthem would not carry over to state universities or 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, asked 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 rate in the state. I focus my effort on creating jobs and keeping jobs."
Rick Scott's office referred comments to Enterprise Florida, whose spokesperson, Stuart Doyle, said the Senate report "was nothing that we were aware of. Obviously [Anthem] qualified [for incentives]; whatever we had in our vetting process did not disqualify them."
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