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the Office of Education plans to do about it," said Harley Dirks, staff director of the Senate Education Appropriation Committee. "We're not playing games down here; we mean business."
The Federal education officer in charge of accrediting agencies, initially told The Globe the government cannot remove a school from participation in the insured-loan program. John R. Proffitt said current law was too vague to give the US education commissioner this power.
However, Atty. Harold Jenkins of the office of general counsel of the US Department of Health, Education and Welfare told The Globe that according to a law passed two years ago, the education commissioner has the power "to remove a school from the approved list."
Proffitt subsequently agreed: "I guess no one has really been ready to bite the bullet against these schools. Maybe now we are."
The three associations that dominate the proprietary school industry are well represented in Washington. Their two spokesmen, Bernard J. Ehrlich for the trade and correspondence schools and Richard Fulton for the business schools, have friends in the right places in both Congress and the executive departments, and their activities have kept their associations in power despite growing complaints.
Ehrlich, a strong voice for the profit-making schools for more than 20 years, calls President Nixon his friend and every year like clockwork a presidential message is read at the correspondence schools' conference.
Although Fulton is newer to the business, having been hired as executive director for the business schools after Ehrlich resigned the position, he is also well connected in Washington.
A former aide to the late Louisiana Sen. Allen J. Ellender, Fulton used his connections to have removed from a 1972 Federal bill a provision which would have stripped from the three associations the sole power to accredit proprietary schools and allow states to share the responsibility.
Fulton agrees he had a hand in having the proposal changed, but said his role was limited to responding to a request for his opinion from the US Office of Education's accreditation division.
The head of that division, John R. Proffitt, however, disagrees with Fulton: "It was obviously a self-serving thing for him (Fulton) to do . . . That change was made without consulting us," Proffitt said.
In an interview, Proffitt called both Ehrlich and Fulton "effective lobbyists. They lobby Congress by the usual means, cultivating key people, watching over legislation that concerns them."
However, neither Ehrlich or Fulton are registered with either branch of Congress as lobbyists. Both men hedged when asked if their Washington activities for the association included lobbying. "I've done some; well, I don't know how you would define a lobbyist," Ehrlich said. Fulton meanwhile said, "All I can say is when I'm invited to give an opinion or testify, I will respond and I have done so in the past. There's a great difference between that and aggressively going forward."
The associations which the two men represent have an iron-grip on the proprietary school industry. Accreditation is the lifeline of a profitmaking school. If the school is not accredited by one of the three associations, it cannot participate in the wealth of Federal programs which have reaped profits in the past for the schools.
The performance of the associations was found by The Globe to be deficient in their two major functions: the investigation of a school seeking accreditation and the subsequent policing of schools which have received accreditation. The linchpin of the original investigation is an evaluation of the school filled out and submitted by the school owner himself. A check on the evaluation report is made by an accrediting team whose members are cleared by the school itself before they enter its doors.
The Spotlight Team found numerous accredited correspondence and trade schools apparently violating the associations' standards regarding truthful and fair advertising, selection of salesmen with utmost care, adequate testing and counseling of students, fair and equitable refund policies and acceptance of only properly qualified students.
Proffitt, who decided for the Federal government which association is recognized to accredit the schools in its field, is taking a hard look at the performance
of the three associations. "They're the best we got, because they're all we got," he said. At the least, he said, the associations should be stripped of one of their two major functions, the policing of their member schools, a job which even Atty. Ehrlich says is not being done.
Proffitt also says the associations should require all schools to make public their dropout and job placement rates and asked both NATTS and National Home Study Council to provide The Globe the rates "in the public interest.” The industry vehemently clashed with him on this consumer-oriented issue and put off Proffitt's request. William A. Goddard, executive director of NATTS says the figures should not be released because "truth can be misleading."
FEDERAL TRADE COMMISSION
The only national effort to protect and inform the public about unscrupulous practices by private vocational schools is being made by the Federal Trade Commission (FTC). The $80,000 FTC program which also includes detailed investigation of the operations of 400 of the 10,000 profit-making schools in the nation, was found by The Globe to be an over-promoted sham.
This is not the first time the FTC has launched a clean-up effort against vocational schools. In 1972, it said it intended to sue three major computer schools under the Federal Trade Commission Act for deceptive and unfair advertising and sales practices. The news gained national attention, but now, almost two years later, the cases are still being "negotiated," no suits have been filed and at least one of the schools, Electronic Computer Programming Institute, is still engaged in the allegedly deceptive acts.
But the FTC claims this is an all-out effort. As one spokesman told The Globe : "We feel only a small number of the schools actually have successful graduates." The FTC began its program last summer with a debilitating compromise. A public brochure severely critical of the industry and its accrediting associations was replaced with a watered-down version after concerted industry opposition. The brochure-93,000 copies of which had to be scrapped at the taxpayers' expense-warned prospective students of schools that promote their memberships in associations such as "NATTS, ACOS, NHSC, CAC, TOPPS." This struck a raw nerve and industry pressure caused the caveat to be dropped from the second brochure.
The brochure ended with a recommendation to the public to contact the FTC in Washington or its regional offices if it wanted further information. The Spotlight Team took them up on this and asked to see complaints concerning various vocational schools.
Martin Dolan, assistant dierctor of the FTC Boston office said The Globe could not see complaints nor would he divulge if a school was under investigation. A lawyer for The Globe formally petitioned the FTC board in Washington in December for the complaints.
Without making a formal determination on The Globe's original request for records it had on 14 schools, the agency, after months of delay, finally provided some documents from a 20-year-old case against one school. A lawyer for the FTC said it would go to court to keep industry-supplied data out of the public's hands.
The FTC in the meantime has made another public pronouncement. Printed in newspapers throughout the country, the FTC statement last month promised the public greater access to its proceedings and the "wealth of information" it collects on advertising, business practices and frauds.
SCHOOL ABUSES UNCHECKED BY BAY STATE REGULATORS
The profit-making vocational school industry has gone virtually unregulated and the public left unprotected in Massachusetts because of the desultory performance of two state Education Department officials.
Schools are operating without required state licenses; salesmen are roaming house to house without proper credentials; advertisements are being shown on television and in newspapers without being cleared for deception and teachers are instructing without being registered with the state.
These apparent violations of state laws were uncovered by the Globe Spotlight Team in its investigation of proprietary (or profit-making) schools, which included evaluating the roles of state Education Department supervisors Joseph J. DeRosa and Donald A. Carbone.
These two men are responsible for the licensing of Massachusetts' 86 private trade and business schools and 13 correspondence schools and supervising the school's salesmen.
Overwhelmed by paper work, the two officials have been forced to be content with issuing the licenses without ensuring the quality of the schools' education and the honesty of their salesmen.
The interests of the students have been placed, as Carbone candidly admits, "on the low ebb . . . Our public is the school owner."
But Massachusetts is not the only state with poor licensing of the schools. John Proffitt, head of the Federal Accreditation Division in the U.S. Office of Education, said that three out of every four states have either no or inadequate licensing procedures. "This is a major reason for the low quality of schools in operation today," Proffitt said.
Massachusetts, Proffitt estimated, should have between 12 and 20 persons responsible for the licensing of the private vocational schools in the state. Carbone agrees. He says proper implementation of the 1972 Massachusetts law requiring annual licensing of business schools would require as many as 12 more inspectors.
The 1972 Massachusetts law also required the licensing of all salesmen who sell business school courses in the homes of prospective students. A check in December showed that only four salesmen from one school in New Bedford had been approved in the law's 18-month existence.
Although they had been in the homes of Spotlight Team members soliciting for business courses, salesmen for the Boston schools of Career Academy and the Electronic Computer Programming Institute had not been licensed.
While misrepresentation by business and correspondence school salesmen was found to be a systemic problem, no proprietary school salesman has ever had his license revoked in Massachusetts, according to DeRosa and Carbone.
Nor have the two state regulators ever revoked the license of a school, and they are unable to say on what grounds they could take such action. "We're here to work with the schools, not zap them," Carbone said.
In contrast, the state of Ohio enacted a proprietary-school licensing law in 1972 which has resulted in 96 schools being closed down and about 25 salesmen losing their licenses for lying to students.
Frank N. Alvanese, the Ohio state official responsible for implementing the law, is a tough regulator who says: "The student's welfare is our primary concern. We insist these schools be both legal and ethical. If they're dragging their feet, we put them out of business," Alvanese said.
Months ago, Carbone recommended to his Education Department superiors that two Boston Schools-Fashion Signatures and Juliet Gibson-be denied licenses to operate. However, his recommendation was caught in bureaucratic red tape and the schools' doors remained open even though they were unlicensed. "I've got to go through channels on these matters," Carbone said when asked why the schools had been allowed to remain open. "I can't step out of line or you know what'll happen." He proceeded to draw his finger in razor-like style across his throat.
Carbone was not always a passive state regulator. He says that on being hired in the spring of 1972, “I was out to get these schools in line or else. If they dragged their feet, I was ready to zing them."
His hard-nosed approach to the schools was changed by a committee of business school owners that was created to advise the Education Department on the 1972 licensing law. "They cooled me down," Carbone said. "They gave me professional charisma. I thought I had more power than I did, and they showed me my job was to deal with the problems of the schools."
The regulation in Massachusetts of the two other types of profit-making schools-correspondence and resident trade institutes-has been equally lax. Joe DeRosa, the Education Department official responsible for these schools. said a lack of manpower has forced him to "take the school owner at his word." DeRosa said he does not have time to monitor television and newspaper trade school ads to determine if they have been submitted to him before being used, as required by law. DeRosa said he was therefore not able to check the ads for possible deception. The Globe found many dubious ads have been run by the schools and not submitted to DeRosa.
DeRosa cites his "good working relationship" with ITT Tech of Boston, the state's largest private trade school. Yet, The Globe discovered that ITT conducted two highly questionable promotional campaigns last fall with phony telegrams that had not been submitted to DeRosa. When shown the telegrams
by The Globe, DeRosa became visibly upset and called them "a cheap way to get students."
Although he says he receives hundreds of calls a week, many of them complaining about practices by the schools and salesmen he supervises, DeRosa requires all complaints to be sent to him in writing before he responds.
A group of ITT students who complained last year about being lied to by a school salesman and about inferior instruction at the institute were summarily dealt with by DeRosa. He never called an official investigation into their complaint; never questioned the salesman named; took as gospel the explanation of the ITT administrators and never even bothered to inform the students of his decision in favor of the school.
In his three years as state Trade School Supervisor, DeRosa has been content to operate in a vacuum. He has never referred a single complaint he has received for possible prosecution to the state attorney general or the Federal Trade Commission.
Moreover, he has never informed a complaining student that the first section of the state's trade school law allows a person who has been subjected to misrepresentation by a school or its salesmen to recover in court three times the amount of money he lost.
But bureaucratic bungling in the state Department of Education is not limited to DeRosa and Carbone. Much to the disadvantage of the public, it was found to go higher.
In October 1972, Anthony V. Cipriano, assistant director of the state Division of Occupational Education, asked the Education Department's Legal Office if the attorney general should be asked to rule on whether the new business school law would require the licensing of numerous dental and medical assistance schools in Massachusetts.
Several months later, in March 1973, Cipriano was informed that head counsel Joseph Robinson had determined the attorney general should not be asked to rule on the question. Cipriano took this to mean that the health assistance schools were not covered by the law, and to this day they operate without regulation in Massachusetts.
Atty. Robinson, however, now says he meant no such thing. "All I meant was that we were asking the attorney general too many damned things and I didn't want to bother him with another question. Cipriano should have come back and asked me personally if the new law covered the schools. Since he didn't, I never brought it up again." Atty. Robinson said.
While the health assistant schools remain unlicensed, the attorney general's proprietary school investigator Arnold Epstein, firmly feels the courses are covered by the licensing law.
Q. Why don't you tell the Education Department of your opinion?
Mr. HERRELL. The Globe accused several proprietary vocational schools operating in the Boston area of a variety of abuses ranging from misleading advertising in violation of State laws.
Inasmuch as several of the schools named by the Globe are accredited by nationally recognized accrediting agencies, these abuses, if actually committed, would indicate serious violations of the agencies' accreditation standards.
Accordingly, staff corresponded with the accrediting agencies and requested that they submit to OE a report of their investigation of the matter.
Further, because several of the schools cited are eligible for Federal financial assistance programs administered by OE, the staff wrote to each eligible institution and requested that it provide OE with its response to the Globe allegations.
Presently, the Office of Education still is in the midst of an intensive review of the cases and issues revealed by the Globe articles. A report on this will be presented to the Commissioner's Advisory Committee sometime this fall.
Another timely series of articles regarding the trade-school industry was published recently in the Washington Post. Entitled, The
Knowledge Hustlers, these articles provide another perspective of what, hopefully, is a national effort to rid the Nation of fraud, exploitation, and deceit wherever practiced on Americans seeking to further their education.
The Post series gives greater visibility to important issues regarding which the Federal Government is working closely with State and private groups in an effort to fashion solutions.
Because of the vast sums of Federal money which ultimately flow through reliance upon the accrediting mechanism, however, the Office of Education has deemed it only prudent to establish, and gradually intensify, Federal oversight of the operations of those accrediting agencies recognized by the Commissioner.
One of the pressing questions right now is just how far this oversight can and should go in order to achieve realistic assurance that both the student's educational rights and the taxpayer's dollars are protected while, at the same time, avoiding unwarranted Federal intrusion into the educational process.
We are all aware of the fast-paced change taking place all around us, and education is logically in as much ferment as is the rest of society.
The basic philosophical framework for Federal reliance on the private mechanism of accreditation for eligibility purposes was developed initially for the 1952 Korean GI bill-22 years ago—and reinforced by adoption of the 1958 National Defense Education Act-16 years ago.
It was essentially retained during the midsixties when landmark legislation in support of higher education was enacted-approximately 10 years ago.
We should not be surprised to find, then, strains and bruises as we attempt to resolve today's eligibility problems into statutes that were designed to suit another era.
Almost 20 classes of students have enrolled, under Federal funding assistance programs, in higher education since the Korean GI bill became law.
Two other basic points should be made with regard to difficulties in eligibility determinations.
First, the Office of Education must deal sympathetically with the accrediting agencies' attempt to address what they see as their own goals, needs, and purposes. The objectives of some of the accrediting organizations occasionally are not targeted fully on broader public or social goals.
Under present regulations, there often is nothing that can be done when such unfavorable impact occurs.
Second, informed and discerning administration of the existing eligibility machinery is not limited to declaring institutions and programs eligible, but also to declaring them ineligible when necessary in an appropriate and timely manner.
Indeed, the ability to act swiftly and fairly on the termination of eligibility is extremely critical when an institution's quality situation is deteriorating rapidly.
The authority to develop regulations to limit, suspend or terminate eligibility for the federally insured student loan program was ob