For-Profit College: Costly Lesson

<B>Steve Kroft</B> Reports Whether Or Not Career Colleges Pay Off

Are you interested in a new career? Are you looking for specialized training and a high-paying job in computers, fashion or health care?

Well, a lot of people must be, because companies selling that dream, the for-profit career colleges, are one of the fastest growing area in the field of education.

As Correspondent Steve Kroft first reported last January, it's a multi-billion dollar business with most of the revenues guaranteed by the federal government -- and until recently, the industry was the darling of Wall Street.

Now, it's under scrutiny, with one of the biggest players facing allegations that it deceived investors, the federal government, and students, who say they've been taught a very expensive lesson.
If you've ever watched daytime TV, you've probably seen one of Career Education Corporation's ads offering students a brand-new life.

"Ever think you could be part of this? With the right training, you can!"
That one was for the Katharine Gibbs schools, which were bought by Career Education Corporation (CEC) in 1997, and make up just a small part of its scholastic empire.

A year ago, CEC was one the hottest stocks on the NASDAQ exchange, with five years of record growth and $1 billion in annual revenue. It comes from nearly 100,000 students at 82 different campuses, taking classes in everything from computer animation to the culinary arts.

Brooks College in Long Beach, Calif., offers training in fashion and design, but its graduates have a special nickname for their alma mater: "Crooks College."

Why?

"'Cause they robbed us," says one graduate.

"Everything was a lie," says another.

What was the biggest lie?

"Job placement -- 98 percent job placement," several graduates said. "They said, like, starting $30,000 a year, $30,000 or more."

Brooke Shoelberg, Chanee Thurston, and Amanda Harris enrolled to study fashion merchandising after the school signed them up for tens of thousands of dollars in student loans, and showed them videos promising to help them get jobs with companies like Giorgio Armani.

Did Brooks College find any of them a job? No, they said.

Did it make an attempt to find them a job? Again, they said no.

The school declined to comment, but 60 Minutes knows that all three women graduated near the top of their classes. A year later, none had been able to find the kind of job she was supposedly trained for.

Shoelberg was managing a telephone store; Harris was unemployed; and Thurston was selling T-shirts. All of them went heavily into debt to get a two-year degree they now believe has little value.

"The school has no credibility with the fashion industry whatsoever," says Thurston, whose complaint is just part of a chorus of complaints under investigation by the Justice Department, the Securities and Exchange Commission, and laid out in a number of lawsuits against CEC by former students, investors and employees.
  • Rebecca Leung

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