Greenberg: For-Profit Schools Whistle Blower Tells Tales
CNBC Senior Stocks Commentator
When the Senate HELP Committeeholds its hearing on for-profit schools Thursday, it's likely to get an earful from Kathleen Bittel, a current employee of Education Management.
Education Management , whose Art Institutes represent more than half its enrollment, went public last October. The company’s largest investor is Goldman Sachs. In SEC filings the company claims that around 85 percent of its students land jobs in their field or a “related field” within six months of graduation.
The next obvious question, especially when talking arts schools, is what constitutes a job?
In a letter Bittel sent to the HELP committee, Bittel said:
- For purposes of counting former students employed, a graduate only needed to be working one day.
- To justify employment in a "related field," a Game Art & Design Bachelor's grad with $100,000 in student loans was considered employed working in the video game department of Toys R Us earning $8.90 an hour.
- A graphics design student working in places like Starbucks was counted as using skills learned by making signs for daily specials and menus.
Bittel also said that she was “shown how to eliminate a document received from a graduate stating she was working in her field, but only earning 8k, and to subsequently create a document using Salary.com to validate that an employee in that position would be typically earning 25k, which would meet the salary threshold of $10,500 to ‘justify’ placement in their field.”
She said she alerted her supervisor, “who claimed to speak to the head of the department about them, but nothing was ever subsequently addressed on the matter.”
The company issued a statement saying that it found no support for her allegations.
The company said after it first learned of her concerns, it investigated but she provided nothing to support her claims and it found nothing. It said it investigated again after seeing her letter but she again couldn't provide support so it found nothing. CEO Todd Nelson said, "We have controls in place that are designed to avoid conduct such s that alleged by this employee and we are committed to thoroughly scrutinize and take action regarding nay indications to the contrary."
This post has been updated on September 29, 2010.