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What Happens if the Charter School Companies Win?

Companies have defrauded the government, left families deep in unrepayable debt, and cheated students out of an education.
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Among the arguments made by advocates for charter schools is that they expand consumer choice and that given the state of education in many inner-city minority communities experimentation with alternatives can only help the situation. As buzz words, choice and experimentation always sound good. After all, we know about the disappointing performance of many students in inner-city schools under the current educational system so why not try something else?

Unfortunately, we already know what will happen if private-for-profit charter school companies take over K-12 education in the United States because for-profit proprietary companies have already successfully invaded what used to be called "higher education." These companies have defrauded the government, left families deep in un-repayable debt, and cheated students out of an education.

The federal Department of Education recently published a list of suspect businesses masquerading as colleges and issued new rules to protect students from aggressive or misleading recruitment by private, for-profit, institutions. For-profit colleges received $26.5 billion in government-funded student aid in 2009. Tax dollars insure student loans and the government must pay them if students default.

One of the worst offenders is the so-called University of Phoenix, a "university" in name only, operated by the Apollo Group. Phoenix currently enrolls over 280,000 students nationwide. It makes its money by recruiting students who are eligible for federal Title IV financial aid programs. Over 90 percent of Apollo's net revenue in 2009 came from federal money.

Phoenix advertises that if offers flexible-degree programs for "working learners" who have jobs or other obligations that keep them from attending school full-time but who want to garner credentials that will improve their income and employment possibilities. However, according to its 2008-2009 records, only 9 percent of its customers "graduated," the average debt per customer is over $13,000, less than half of its customers repay loans, and 13 percent of them are currently in official default on loan payments.

Phoenix's parent company, the Apollo Group is also under investigation by the Securities and Exchange Commission for illegal insider trading in company stocks.

Another large proprietary school accused of misrepresentations and under investigation is Kaplan University with 138,000 customers, a loan repayment rate of only 28 percent, and a default rate of 17 percent. Kaplan, which is the largest and fastest-growing division of the Washington Post Company, boasts, "We build futures." It is unclear, however, what kind of futures the company actually builds.

Kaplan started as the American Institute of Commerce in 1937, changed its name to Quest College, and became Kaplan College when purchased by Kaplan, Inc. in 2000. It changed its name again, to Kaplan University, when it was granted permission to offer graduate-level degree programs. It is currently based in Davenport, Iowa, has offices in Fort Lauderdale, Florida, and online student support centers in Florida, Illinois and Arizona.

Almost all of Kaplan's customers take online courses of dubious quality. For a while California's public community colleges allowed students to take some courses at Kaplan and transfer credits that would count toward their degrees. However, in 2009 the University of California and Cal State University systems, concerned about the quality of Kaplan courses, canceled their agreement with the company

Kaplan University has an open admissions policy, which means there are no admissions standards other than eligibility for federal Pell Grants and student loans. Kaplan was one of 15 for-profit colleges cited by the Government Accountability Office for malfeasance and three former academic officers have filed a federal lawsuit accusing the "university" of defrauding the United States government out of more than $4 billion. They allege that Kaplan enrolled unqualified students, inflated student grades so they could stay enrolled, and falsified documents to obtain accreditation. The company's response is that the lawsuit should be dismissed because it lacks the specificity required in a federal fraud case.

In the movie Waiting for 'Superman', cute kids and desperate families plead for access to charter schools. But the movie is little more than propaganda for a well-financed campaign to undermine public education in the United States so edu-businesses can pick up the more profitable pieces. They need to divert us with the cute kids and their families because few people would buy their product if they realized it was being pushed by companies like Phoenix and Kaplan.