Former President Bill Clinton and presumed 2016 Democratic presidential frontrunner Hillary Clinton have deep ties to Laureate Education, an international conglomerate of aggressive, telemarketing-happy, for-profit colleges that is ensnared in controversy all over the globe.
The huge Baltimore-base company is America’s largest for-profit education corporation by enrollment — boasting 800,000 students worldwide. Many of its schools are located in Latin America.
Laureate scored a marketing coup when it hired Bill Clinton in 2010 as its global pitchman, reports Bloomberg. In his position as honorary chancellor, he has gone around the world over a dozen times — to places such as Peru, Malaysia and Spain — to hawk the company.
For his globetrotting efforts, the for-profit education juggernaut pays Clinton a secret sum of money. Neither Clinton nor Laureate will disclose exactly how much it is.
The company has also enthroned a small armada of old Clinton administration hands in significant board and executive positions. Among them are Henry Cisneros, former secretary of housing and urban development, and former education secretary Richard Riley.
The former president gets other perks as well. In 2012, for example, Laureate Education was one of a handful of sponsors of the Clinton Global Initiative’s CGI University.
Democratic presidential hopeful Hillary Clinton has also been squarely in cahoots with Laureate. As Secretary of State, she helped legitimize Laureate in the eyes of the world by making the for-profit education behemoth part of her State Department Global Partnership.
The State Department Global Partnership exists to “strengthen and deepen U.S. diplomacy and development around the world.”
Additionally, in January 2013, during Clinton’s last month at the State Department, the World Bank’s investment unit invested $150 million in Laureate.
Douglas L. Becker, Laureate’s CEO, has donated generously to Hillary Clinton’s various political campaigns. He gave $4,600 in 2007 and $2,000 in 2005, according to Bloomberg.
Laureate came into existence in 2004 as the successor to Sylvan Learning Systems Inc. The basic business model is to buy struggling private colleges. The company then aggressively sacks professors and increases the number of paying students by massively lowering admission standards. Another core company practice is obscene expenditures — in the hundreds of millions — on advertising and (where it’s legal) hardcore telemarketing.
There are 75 schools across 30 countries. Since 2007, the for-profit education giant’s annual revenue has more than tripled. It’s now $4 billion.
Laureate’s investors include Soros Fund Management LLC, chaired by billionaire progressive leftist George Soros; SAC Capital Advisors LP, a hedge fund that recently settled insider trading allegations to the tune of $1.2 billion; and KKR, a private-equity firm based in New York.
Becker, the CEO, never bothered to go to college himself. Still, the 47-year-old investment wunderkind assured Bloomberg that he has a passion for education.
Laureate is one of 30 large American companies criticized in a scathing 2012 report by Iowa Democratic Sen. Tom Harkin on for-profit colleges. These companies absorb well over $30 billion each year from U.S. taxpayers. Most students never get a degree, though. Many drop out within a couple months.
While Laureate operates chiefly overseas, the company runs five schools in the U.S. (and manages a sixth). Among the schools is Minneapolis-based Walden University, which grants most of its degrees through online graduate programs in fields such as nursing and education.
Compared to its treatment of a number of other for-profit colleges, Sen. Harkin’s lengthy, hard-hitting report strangely sugarcoats its treatment of Walden.
Nevertheless, the report does cite many problems with the Clinton-associated for-profit college.
Walden is geared toward making cash hand over fist by taking taxpayer funds. Almost 80 percent of Walden’s cash flow comes from federal coffers. In 2009, the school devoted $101 million to a vast array of marketing efforts and another $101 million to profit. Together, these spending categories constituted close to 60 percent of the for-profit school’s total annual outlays.
Walden took much more profit per student than it spent on instruction per student. Its 2009 expenditure per student of just $1,574 per student is laughably low. By contrast, the University of Minnesota spent $13,247 per student in 2009. The University of St. Thomas, a Catholic school in Minnesota, spent $11,361 per student.
Internal Walden documents “reveal an enrollment-driven culture.” Used car-salesman-esque tactics used by the sales staff included “‘overcoming objections’ scripts that anticipate and rebut” doubts about cost, credibility and lack of face-to-face instruction.
Also, over 90 percent of Walden’s faculty is employed on a part-time basis.
Finally, Walden’s retention rates are poor. As of 2010, over 28 percent of all Master’s degree students and over 51 percent of all bachelor’s degree students withdrew within a year. The vast majority of those students borrowed money they must pay back with no degree to show for it. (For the record, though, Walden’s loan default rate is a pleasantly low 3 percent.)
Walden’s problems, while numerous, pale in comparison to the substantially more awful practices of the Clintons’ favorite for-profit college corporation abroad.
Overseas, Laureate is notorious for implementing its model of increased enrollment coupled with a lack of spending increases — and, generally, in fact, staff cuts.
The company generates two-thirds of its revenue in Latin America, where the public schools and Catholic schools that dominate the higher education landscape don’t offer enough enrollment spots to meet rising middle-class demand.
Unchained from American customs concerning education ads and American laws banning shady telemarketing techniques, Laureate spends over $200 million each year on highly aggressive advertising. It pushes TV commercials and billboards.
The company also pays recruiters in other countries a commission based on the number of students they enroll. Congress banned this practice outright in the United States in 1992.
Bloomberg collects a set of facts and figures on Laureate’s many other contemptible practices abroad that is absolutely damning.
Part-time teaching is pathological, for example. At Laureate’s Universidad del Valle de Mexico, which enrolls over 100,000 students across a large number of campuses, only five percent of the faculty is employed full time. In the for-profit company’s 51,000-student Universidad Tecnologica de Mexico system, a miniscule 0.3 percent of the faculty is full time.
For his part, Becker defended part-time faculty. “I don’t see why we have to accept as gospel this particular tenet, that full-time professors equal quality,” he told Bloomberg.
In Brazil, Laureate’s Centro Universitario IBMR has tumbled in the country’s higher education rankings since the company took over. It hires students as fast-talking telemarketers and offers gimmicks such as 30 percent tuition discounts. It has expanded from — pre-Laureate — a strong set of science-related offerings into majors such as tourism. Also, admissions standards have become abysmal. Students scoring as low as 20 percent on an entrance exam can now enroll.
In Chile, the national accreditation commission stripped one of Laureate’s schools, Santiago-based Universidad de Las Americas, of its accreditation after the company had increased enrollment by 10,000 students and allowed graduation rates in certain majors to drop as low as 15 percent.
Additionally, Laureate used legal loopholes to circumvent a law banning for-profit education in Chile.
Laureate has also managed to get around a for-profit education ban in Turkey. At its Istanbul Bilgi University, the megacorp did its usual thing: It raised enrollment by over 40 percent, raised tuition by over 50 percent and canned a bunch of professors and staffers. Last year, Laureate also closed most of a Bilgi campus museum and auctioned off a $7 million collection of modern Turkish art.
Bloomberg describes a corridor at the Istanbul school marked with photos of Clinton — along with Turkish prime minister Recep Tayyip Erdogan and Laureate CEO Douglas Becker.