Like many college freshmen across the country, Bernard Akenabor says he spent a lot of time partying when he arrived at East Carolina University and not so much time studying. After just a semester, his father summoned the teen home to Raleigh to go to a closer university.
But when Akenabor wanted to return to college last spring, he says he could find only one school that would allow him to enroll in the middle of the semester: the Art Institute of Raleigh-Durham, a for-profit school offering associate and bachelor's degrees in specialized areas of study such as culinary arts and graphic design. Akenabor says he intended to eventually transfer to another university and wanted to earn credits in classes such as English and math that would count toward a degree when he applied to a state school.
"I never really planned on staying in the art field," says Akenabor, now 22, who visited the Durham campus with his father. "We were assured multiple times by multiple people that the credits would transfer."
Once he enrolled, however, Akenabor says he started talking to other students and teachers, and realized that although he and his father paid more than $20,000 for less than a year of school, his credits wouldn't count toward a degree at any university at which he inquired.
The Art Institute of Raleigh-Durham, and most of its 45 campuses in the U.S. and Canada, is accredited by the Accrediting Council for Independent Colleges and Schools, an organization with more than 800 technical and occupational schools on its roster. Both the U.S. Department of Education and the Council for Higher Education Accreditation recognize the ACICS as an accrediting council, but as Akenabor learned, all accreditations are not created equal.
Most nonprofit colleges in North Carolina, including universities in the UNC system, are accredited by the Southern Association of Colleges and Schools Commission on Colleges and readily accept credits from other schools with the SACS COC accreditation. "They've already met the same standards," says Kelly Rowett-James, registrar at the University of North Carolina-Greensboro. UNCG accepts credits from institutions validated by other agencies, but in those cases, students often have to present materials from a given course so UNCG professors may evaluate its rigor, Rowett-James says.
Akenabor is one of five former students of the institute's Durham campus who have filed complaints with the North Carolina Attorney General since December. Several of the students said in interviews that A.I. representatives said their credits would transfer to other colleges, so long as the new school offered similar courses. The attorney general's office confirmed it is investigating the complaints, but officials there wouldn't comment further.
A.I. representatives didn't return messages from the Indy seeking comment. But in a response to Akenabor's complaint to the state, A.I. President Christopher Mesecar attached an addendum from the school's catalog from spring 2010 stating Art Institute courses are designed to prepare students for entry-level employment, and are "not intended as a stepping stone for transfer to another institution."
A date and signature at the bottom of the form show Akenabor received the notice in March, before he enrolled at the school. Akenabor says he doesn't remember signing the form.
"[The recruiter] was explaining to me what the forms said," Akenabor says. "There wasn't a lot of time to read everything."
Akenabor's father, Godfrey Akenabor, said he was leery of the school, based on the eagerness of the A.I. representative, who wanted to enroll his son on the spot. "It was pretty much a sales pitch from the get-go," said the elder Akenabor, who is a car salesman. He was disappointed to learn his son might have signed forms without studying the fine print. "I see people all the time who sign the bottom line without looking at the fine details. I tell them, you've got to read the contract before you sign it."
It's unclear whether students who enrolled at the Durham campus in previous years received similar notices about transfer credits.
The complaints against the Art Institute, which according to its website has more than 500 students at its tony American Tobacco Campus, comes as the school's parent company, Education Management Corporation (EDMC), is the target of a federal whistle-blower lawsuit.
Most for-profit colleges make almost all of their money through federal financial aid provided to students. EDMC, which is 40-percent owned by Goldman Sachs, is one of several companies that in recent years have been accused of exploiting government programs. Two former employees are suing the company, saying it defrauded the government by illegally paying recruiters based on the number of students they enrolled, according to a New York Times report. The U.S. Department of Justice is a party to the lawsuit.
According to the most recent data available, almost 2 million students were enrolled in private for-profit programs in 2009. That same year, students at for-profit schools received more than $25 billion in Pell Grants and federal loans from the U.S. Department of Education.
Critics of for-profit colleges, including several congressional lawmakers, say many programs prey on students, leaving them with expensive degrees, low-wage jobs and high-interest loans they'll never be able to repay.
A Government Accountability Office report published last summer notes that students who enroll in for-profit programs often pay exorbitant amounts for degrees they could earn for much less at nonprofit schools.
In the Triangle, for instance, an associate degree in culinary arts at A.I., not including housing or other supplies, costs $52,976. An in-state resident can earn the same degree starting next year at Wake Technical Community College for $5,120—more than a 90 percent difference in cost (see chart).
For-profit schools enroll about 12 percent of all U.S. students. But those students account for nearly half of all student loan defaults, U.S. Sen. Tom Harkin, D-Iowa, said at a hearing last week. Many analysts are comparing high-interest student loans to the subprime mortgages that crashed the U.S. economy three years ago.
"Behind each student loan default is a person who has an unpayable debt hanging around his or her neck, too often with no degree to show for it," Harkin said. "You cannot discharge student loans in bankruptcy. It is a debt that follows students for the rest of their lives."
Danielle Ward, a Fayetteville student who enrolled at A.I. in 2009, says she also attended with the intention of eventually transferring.
"I remember them saying specifically that if I wanted to go to another university, they said 'Yes, your credits will transfer,'" Ward says.
When she learned her credits weren't valid at most other schools, she left. School records show she still owes A.I. money, she says, but she disputes their records in her complaint to the state. With a balance under her name, Ward says she can't qualify for federal aid to attend another school.
For the past 18 months, the U.S. Department of Education has pursued tougher regulations on for-profit colleges. Anticipating these reforms, companies such as EDMC have ramped up their lobbying efforts, spending millions to persuade Washington officials to ease potential restrictions on the revenue companies reap in federal financial aid.
The education department published those new regulations earlier this month. According to the new rules, for-profit colleges must meet new "gainful employment" standards by 2015 or be cut off from receiving federal education money. The standards measure the percentage of former students repaying their loans and the proportion of a former student's annual loan payments to their discretionary income, according to a news release.
The reforms are expected to affect roughly 2 percent of for-profit colleges, said Sara Gast, a spokeswoman for the U.S. Department of Education. Some critics say the rules were softened by lobbying dollars. But putting the squeeze on the worst programs could spare thousands of students.
Intern Jason Y. Lee contributed to this report.