Texas Trade School Chain Receives a Stay of Execution

The Texas Workforce Commission (TWC) on Tuesday granted the for-profit trade school chain ATI Enterprises a stay of execution. While the commission withdrew its approval for 22 programs ATI offers in Texas that substantially misrepresented their job placement numbers, it is allowing the company’s schools to continue operating in the state on a conditional basis.

The commission’s decision comes only a little more than a week after it announced its intention to revoke ATI’s license to operate in the state because it found that the company has engaged in  a systematic effort to mislead students and regulators about its record in placing graduates into jobs.

As we reported last week, the TWC threatened this action after an independent accounting firm found that 90 percent of the company’s programs in the state had “significantly overreported” their rates for the 2010 fiscal year, and that the majority of these programs had actual rates below the 60 percent threshold that TWC requires schools to meet. The firm also discovered that some of the schools’ programs had contacted fewer than 11 percent of their former students to confirm whether or not these individuals were working in a job related to their training.

Neither the commission nor the firm showed exactly how ATI schools had falsified their job placement rates. But during a year-long investigation of the company, the news team at WFAA-TV in Dallas interviewed former ATI employees who said that career service advisors at the schools often created fake employment records and forged former students’ signatures onto them. While ATI has acknowledged that some of its employees acted improperly, the company denies that there have been widespread abuses.

Under the agreement the commission reached with the company, students enrolled in the programs that are being shut down will have a choice of either finishing their programs or getting their money back.

The agreement also requires ATI to:

• Pay $61,000 in fines ($1,000 for each program that significant overreported its job placement rates

• Post a letter of credit “sufficient to cover the cost of refund or completion of training for all students currently enrolled.”

• Make management and operational changes “to ensure the accuracy of all future reporting data.”

In addition, TWC has ordered ATI to hire an outside auditor to verify the job placement rates that the school’s programs are to report to the commission for the 2011 fiscal year. The commission warned that if any programs misreport their rates by more than 5 percent, it will shut down the school at which that program is taught.

At Higher Ed Watch, we do not believe that the commission’s decision to grant ATI a temporary reprieve should deter the U.S. Department of Education from taking action against the company for lying to prospective students about their job placement rates. At the very least, the Department should require ATI to return any Title IV federal student aid money that the company received for misleading students into enrolling in the 22 programs that are being shut down. It should also provide “false certification” discharges to federal student loan borrowers who have been admitted to these programs under false pretenses, including students who are no longer enrolled.

In our opinion, this is a critical moment for the Education Department to show that it will no longer tolerate schools flagrantly breaking the rules and putting students in harm’s way. Otherwise unscrupulous for-profit schools will continue to flout the law, knowing full well that they can continue to do so with impunity from the federal government.