A dedicated group of educators helped to turn her life around. But even more amazing, they stuck with her. No one in my immediate family has graduated high school and gone into college. However, i believe ill be the first one, and theyll be excited and thrilled and theyll be proud of what ive become. Narrator these two stories on this special edition of frontline. Frontlinis made possible by contributions to your pbs station from viewers like you. Thank you. And by the corporation for public broadcasting. Major support for frontliis provided by the john d. And catherine t. Macarthur foundation. Committed to building a more just, verdant, and peaceful world. More information is available at macfound. Org. Additional support is provided by the park foundation. Dedicated to heightening Public Awareness of critical issues. The john and Helen Glessner family trust. Supporting trustworthy journalism that informs and inspires. The wyncote foundation. And by the frontline journalism fund, with major support from jon and jo ann hagler, and Additional Support from Laura Debonis and chris and lisa kaneb. Martin smith in the spring of 2012, hollie harsh and brian french were both homeless and looking for ways to improve their lives. We were addicted to methamphetamine for a while, and we ended up in a bad place, going homeless in a tent. And it was like that for four years. We just one day said, were done. We had enough. I had started getting online, doing some research about government grants, and i put in my email address, phone number, all the information that they asked for. Smith brian had stumbled on a leadgenerating website that collects information from visitors. Within 24 hours, they got a sales call from Corinthian Colleges, one of the largest forprofit schools in the country. phone ringing he has a deep accent, and he tells me that they will grant me a decent amount of money. And i thought, we owe this to the kids to move forward in our lives. Smith the recruiter offered hollie and brian money if they toured a few branches of corinthian, including Heald College in concord, california, which was near their encampment. I felt that, like, we almost didnt have a chance to say, no, lets think about it. And i do. If i remember correctly, it was only three or four days that we started school after that. And you said to them, im homeless . Yes. And she was like, oh, thats fine, a lot of our students are homeless in the same situation. Smith in order to enroll, hollie and brian signed up for federal Student Loans totaling 30,000, all to be paid after they graduated. But they had no money for housing, so they simply moved their tent and belongings to a vacant lot next to campus and began going to class. Welcome to my school smith around 1. 8 Million Students are enrolled in forprofit colleges across the country, in megaschools like argosy, devry, and grand canyon university. Youve got 60 million invested . I started reporting on this sector back in 2009 during the great recession. How big can you go . With unemployment up, americans were choosing to go back to school in record numbers. Well, the irony is, dylan, that when the economy is tough is when people actually look to go back to school and either upgrade their skills or maybe complete their b. A. , so. Smith back then, i had looked at the university of phoenix, one of the largest universities in the world. At its peak, phoenix had enrolled over 600,000 students. I spoke to a former highranking executive. For the first 15 quarters, we broke records and earnings every quarter. And instead of starting classes in september and january, we started classes in january, february, march, sometimes two in april. If we had more students than we could handle, well build another site and handle some more. We built campuses by a freeway because we figured thats where the people were. So if you went by any major freeway in the southwest, youre going to find a university of phoenix campus. We put schools 20 minutes apart because thats about as far as people could drive at rush hour. Smith how much could a College Administrator for university of phoenix make . The sky was the limit. I shouldnt say this. I shouldnt say this. Smith its a free country. I understand, i understand. But its boasting, and i wont say it. Smith well, in terms of how much you made, you did very well . We did very well. I did better than i ever imagined. Education stocks rallied today, including Corinthian Colleges. Smith in an otherwise flat market, forprofits had taken off. Education stocks are moving to the head of the class today. 24 billion, thats how muh the biggest forprofit colleges took in last year in federally funded student aid money. Not just a job search; a journey. Not just an interview. Smith forprofits were spending big money enticing students to sign up for loans. Whatever your Business Card says, youre in the business of you. Smith at the time, ad costs rivaled those of multinational brands. Which university revolutionized education in america to reach the working learner . You thinking about going back to school . Yes. Excellent, what are you thinking about going for . Smith the industry also employed an army of salesmen and recruiters. The forprofits need to continually add students. When you think about it, for the university of phoenix, for example, in order to grow on top of the folks that are leaving, youve got to add the equivalent of, you know, one to oneandahalf ohio states per year. To satisfy their shareholders on a quarterly basis, theyve got to increase their enrollment. They have to aggressively recruit marginal students. Because only one thing counts in this life. Get them to sign on the line which is dotted. Glengarry glen ross. Its that sort of a heavy commercial environment in which you say whatever you need to say to close the deal. phone ringing smith the pressure to grow encouraged dubious enrollment practices. Tami barker was an enrollment advisor at ashford university. phone ringing they used to tell us, you know, dig deep. Get to their pain. Get to whats bothering them so that that way, you can convince them that a College Degree is going to solve all their problems. The problem is that for many of these students, they think theyre talking to an admissions advisor, they think theyre talking to someone with some sort of ethical standards, and they dont realize that theyre talking to a person who is selling them something, and that they might be better off to just walk away. Smith many students assumed they were getting a quality education and a useful degree. I love grand canyon and the community that it represents, and also the christian background. This school is just perfect. Its night classes. Im studying merchandise product development, and it is the coolest thing ive ever done in my life. I love it. Smith in 2010, the top washington lobbyist for the sector told me it was all about providing new opportunities. We educate the students that traditional Higher Education has given up on. Traditional Higher Education has become a very sociodemographically elite group of people, so the only options lowerincome students and working adults have is either to go to a Community College, some of them can go to minorityserving institutions, and our option is the third option. Smith but for years, forprofits had been charging students nearly five times as much as Community Colleges and gotten the bulk of their revenue, up to 90 , from Student Loans and grants. This is the most heavily subsidized private business sector in america. No one compares. Defense industry, agriculture . Dont hold a candle to these boys. Hey ladies, you have to hold the household down, right . Why cant you get an education for yourself . You still can work, you can still take care of your kids. I did it, you can do it too. Smith but not all the promises were paying off. The whole world opens up for you, but you got to do something right now. You cant wait. Smith back in 2010, i met three students who had enrolled at everest, part of the forprofit giant corinthian. They were hoping to become nurses, but it wasnt going according to plan. They said that we were going to be making 25 an hour, and. 25 to 35, they told me. So i was, like, okay. And theyre going to find us a job. Theyre gonna find us a. Theyre going to place us. I got my license in december of 09, and ive been on countless interviews. And they all ask if ive ever been in a hospital, and i would have to tell them we never set foot in a hospital, ever. We went to a museum of scientology for our psychiatric rotation. Our pediatrics rotation, we went to a day care. Oh, yeah, that was our peds. We went to a day care. laughs smith after our report aired, john oliver picked up the story. Job hunting might be a little difficult, as students from a Corinthian CollegeNursing Program found. We went to a museum of scientology for our psychiatric rotation. What . Scientologists do not believe in psychiatry. This is the next big scandal in America Smith washington also started paying attention. This sort of reminds me of where we were two years ago with liar loans and no doc loans in the housing market, where people started accepting people who couldnt prove their income, couldnt prove employment, but we sold them a 450,000 house. Smith and in a handful of hearings, some forprofits were accused of employing false or misleading advertising and using illegal recruitment efforts. 15 of the 15 schools the gao investigated found instances of fraud, deceptive practices, or made misleading statements to prospective students. Smith in this hearing, they unveiled hard evidence. And if you can just sign and date right there for me. Okay, now, im not signing up for the school right now . Yeah, youre actually reserving your seat. Oh. I was hoping i could talk to the financial people first. No, they wont even let you back there. Am i on the hook for the 38,000 . The thing about those tapes is that it was really hard in the face of this evidence to deny that there was a problem there. You should be ready to make the investment of time and money necessary to get you to where you should be at this point. But youre not. What are you really afraid of . Smith congressional investigators also found that forprofit schools were failing to prepare students for the workforce. Too many of the students who go to these schools are coming out with nothing other than big debt and no education, no gainful employment at all. Smith in 2010, the department of education attempto regulate the industry by implemg some new rules. Were going to start with gainful employment. Smith but the department ran into intense resistance. The lobbyists for the forprofit industry and unfortunately many members of congress challenged those regulations, critiqued those regulations. This socalled gainful employment regulation is another example of this big federal government run amok. They were overwhelmed. They ran into this withering artillery fire of lawyers coming after the administration and beat them back. Well, theyre doing everything they can to screw up education. The fact that the sector has declared an existential emergency around this, the sector has every lobbyist in town, former members of congress on its payroll to defeat this, really kind of speaks volumes about the level of corruption and the kind of feeding frenzy were talking about. When the house of representatives voted to prevent the department of education from implementing tough new rules that could deprive certain schools from federal funding. Former ventures trump university. Its been the subject of increased scrutiny. Smith today, allegations of predatory behavior and negative press continue to dog the industry. The clintons got filthy rih off a forprofit university that took advantage of many poor people. Smith but since i last reported on these schools, a lot has changed. Are the forprofit schools value stocks or value traps . One of the big losers thou, that was apollo group, that operates the university of phoenix. Smith forprofits are no longer the darlings of wall street, and enrollment is way down. In san francisco, i talked with trace urdan, a banker who kept buy ratings on several forprofits for much of the last decade. They are into decline, why . Mostly market conditions. The economy recovers and everybody finds a job, and then all of a sudden, you know, that tradeoff that said, well, hey, wait a minute, why should i borrow all this money so that i can earn the same amount of money that i can earn at jamba juice . That doesnt make any sense. Smith you have termed these students that are signing up for these courses as subprime borrowers. I knew that was gonna come out. Yeah. They were subprime borrowers. I mean, thats a fair characterization of the types of students that are being served, right . These are unsophisticated students that have a great deal of risk. Now, thats not true across the board with forprofit education, but certainly when were talking in the context of corinthian. Smith corinthian. Thats the forprofit chain that included everest college. Its the school those three nursing students had attended. We looked one of them up, martha salmon, and found her living in Southern California. Martha had paid back the 28,000 she owed in Student Loans, but at a cost. That was money that could have gone towards my house or for my kids. It could have gone a lot of different ways. But i just wanted to get rid of it. Smith her degree from everest never resulted in nursing work, so she was forced to start over. I got my r. N. From citrus college. Its a Community College in glendora. And from day one, the start of that school was totally different from everest. Theres really no comparison. For our psych rotation at citrus, the r. N. Program, we went to a psych hospital. And we were there for four weeks, and we were able to interact with the patients. We followed the nurses while they gave medication. It was at an actual psych hospital; it wasnt a museum. And how much did it cost you to get a degree from a Community College . My r. N. Cost 3,000. But the education that you receive, the money that you save is. Theres no comparison. Smith stories like marthas got the attention of, californias attorney general. In 2011, Kamala Harris started investigating. As we started diving into it, it became clear that corinthian was engaged in extremely predatory behavior and conduct. And so we sued. This morning, my office filed suit against Corinthian Colleges, and in what can only be described as a forprofit College Predatory scheme. Smith a lot of what you charged was that there was a misrepresentation of job placement rates. Absolutely. Convincing students that if you sign up to receive an education, we will ensure you will also get a job. That was all, uh. Im gonna say a polite term that was wrong and inaccurate. Smith it was b. S. It was b. S. It absolutely was. Smith harris based her complaint on interviews with over 100 employees and students, including hollie harsh and brian french, the homeless students at corinthians Heald College. Thats a pretty girl hi smith hollie and brian had dropped out of heald in their third semester, but the bills kept on coming. And i was just like, how am i going to pay this . Yeah, we still got bills coming out. They still want their, what is it, 288 a month that they want to get from us. For you. Oh, for me alone. Can you afford that . No, not really. Were living paycheck to paycheck as it is. Kind of what i say i got from heald was a 16,000 tshirt. Thats what we got. Smith hollie harsh, brian french, homeless, recruited to sign up for government loans to go to school. Is that an extreme case . Are they outliers . Anyone is a target. They were targeting the most vulnerable and desperate people, people who felt that they were without resources. This was by their own marketing materials. Smith how do you explain that there are people that would want to take advantage of people like that . Its greed. Everest college is accredited by the west Coast Commission of nonaccredited schools. You can learn anything. Smith corinthian would fast become the poster child of predatory forprofits. Videos lampooning corinthian flooded onto youtube. Youre probably just sitting at home watching maury. I like maury; i want to know who the daddy is too. Make a decision, make a choice. You gotta call everest. You still here . Smith by 2013, californias attorney general would share her findings with the department of education. Soon after, officials in washington decided to cut off the flow of federal funds until corinthian could back up their claims of job placement. The way Financial Aid typically works, its almost like they give the institution a credit card, and they can. In anticipation of getting that bill paid by the department of education, they can spend the money in advance. What the department of education said is basically, it took away the credit card and said, no, no, we need to verify your expenses before we get reimbursed. I think were in the peak of the highest amount of worry right now. Smith trace urdan was closely monitoring the company. He told me that for most of the previous year, the ceo of corinthian, jack massimino, was downplaying his problems. He would say, its gonna be fine, you know, weve put these things in place and its all gonna be good, and you know, the students are coming, trust me. Theyre always extremely optimistic, right . So its the job of people like me to try to filter that a little bit. Smith did you ask that question . Are you defrauding students . Well, no, i probably wouldnt have phrased it that way. Smith maybe you should have. Maybe i should have. Maybe i should have. Smith i then asked him about the department of education withholding funds from corinthian. I knew something the department didnt know, which was that withholding that much cash from them would precipitate a crisis, right . So i knew that part. What i didnt see coming was that the department would actually do that to them. Smith without the influx of federal funds, top executives at corinthian saw the writing on the