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What Daymar College Tells Us About the Gainful Employment Rule

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A ribbon-cutting ceremony at a new campus of Daymar College in Madisonville, KY.

CREDIT: Flickr / iSurfNews.com

Welcome to Daymar College, located in Owensboro, Ky. Students at Daymar pay $36,979 per year to attend the institution, and 97 percent of its students receive some type of financial aid. Pell grants, which go to low-income U.S. students, are distributed to 73 percent of those attending Daymar.

The most popular program at Daymar is its 12-18 month program to train pharmacy technicians/assistants, a job that, according to data from the Bureau of Labor Statistics, pays a median salary of $13.32 an hour. At that rate, assuming a graduate of the program can get full-time employment as a pharmacy technician and work 40 hours a week, he or she will make $27,705 a year.

But that’s just for students who actually graduate. Daymar College’s overall graduation rate is just 38 percent, according to its own self-reported data provided to the Department of Education. That means that just four in ten students have completed a one-year program in 18 months.

Just 10 percent of Daymar’s students transfer to another school. One student posted on his Facebook page, “Disappointing day! Sullivan PharmD program is accredited by the Southern Association of Colleges and Schools (SACS) Commission on Colleges. Daymar is not. … None of my Daymar credits will transfer!” Daymar didn’t return requests to confirm their credits didn’t transfer to Sullivan University College of Pharmacy.

Daymar Colleges Group, LLC (the college has several locations in Kentucky, Ohio, and one in Indiana) and its president, Mark A. Gabis, are currently the defendants in a lawsuit brought forth by some of its former students. The complaint says, “According to Daymar’s website, it is ‘the goal of Daymar Colleges Career Services Staff to see that all graduates secure meaningful employment in their fields of study …’ Upon information and belief, very few students find employment in their field of study, and those who do, do so without the assistance of Daymar’s Career Services.”

According to the complaint [PDF], Jennifer Duncan, a plaintiff in the lawsuit, says that she tried transferring the credits she earned in the school’s pharmacy technology program to numerous colleges and was denied; in part because the faculty “taught obsolete techniques and theories on outdated equipment.” As of the complaint’s filing, Duncan said she works as a cook and has incurred massive amounts of debt.

Additionally, 16.56 percent of Daymar’s students who graduated in 2008 had defaulted on their loans by 2010, according to data released by the Department of Education. To put that in context, just 2.4 percent of 2008 graduates of the University of Kentucky defaulted by 2010. And the Department of Education will soon begin monitoring schools at a three-year default rate; when you look at these figures, the percentage of 2008 Daymar graduates who defaulted by 2011 was 40.92 percent. And while that percentage might seem startling, it’s even starker when you look at the actual number of Daymar students who default: 257 students defaulted in the third year after graduation, compared with 104 in the second year, more than double.

One plaintiff in the lawsuit, Brittany Dixon, alleges in the complaint that she was charged for room and board by the college even though she lived in her own home and arranged her own transportation to and from the campus.

Kenneth Sales, one of the lawyers representing the plaintiffs in the lawsuit, says, “They are accredited for nothing. No major university will accept their credits or transfer [them].”

Sales says, “we found just a really huge, incredible scam going on” and noted that the school preyed on those who didn’t perform well in high school or have family obligations that prevented them from attending regular classes. “The whole idea of the state and federal governments in funding and getting people educated and getting them good jobs is theoretically great, but these people have found a way to use that and pervert the system,” Sales said.

Daymar College is regulated by the State Board of Proprietary Education (SBPE), a board that, until recently, was chaired by Daymar’s president, Gabis.

“There’s a sense that the fox is guarding the henhouse,” State Rep. Reginald Meeks (D- Jefferson) told Campus Progress in an interview for an earlier piece on the legislation. After scrutiny of the SBPE started coming from the Kentucky legislature and the attorney general’s office, Gabis stepped down from his position as chair of the SBPE. Gabis did not return multiple requests for an interview.

Although Daymar College may by fighting off criticism, it isn’t the only for-profit school under scrutiny.

Kentucky’s Attorney General Jack Conway (D) has opened an investigation into the practices of several of the state’s for-profit schools, and there is legislation that is currently being considered by Kentucky’s state legislature that would strengthen scrutiny of for-profit schools. Earlier this week, the Kentucky house committee unanimously approved the bill, 17-0.

The U.S. General Accounting Office (GAO) released a devastating report last year that found many for-profit schools have mislead students during recruiting sessions, encouraged students to lie on financial aid applications to maximize aid, and offered promises of career advancement that the schools could never meet.

As a response, the Department of Education has implemented numerous regulations in an attempt to reign in the for-profit education industry, including restrictions on recruitment. The Association of Private Colleges and Universities (APSCU), formerly called the Career Colleges association, has filed a lawsuit [PDF] against the Department of Education in hopes of overturning the regulations.

But the Department of Education has also proposed another regulation that they have not yet implemented. This regulation, called the “gainful employment” rule, is the most heavily contested of the regulations the Department has proposed. Such a rule would pull funding from programs that graduate students with too high default rates—suggesting the students aren’t, in fact, gainfully employed and therefore can’t make payments on their loans—or have a disproportionate amount of debt compared with how much they’re earning.[Full disclosure: Campus Progress’ advocacy arm actively supports issuance of a strong gainful employment rule.]

But attempts to curb some schools for bad practices have been met with resistance. For-profit education companies spent $5.5 million in the first three-quarters of 2010 alone (lobbying disclosures for the final quarter of 2010 have not yet been released). According to public records aggregated by OpenSecrets.org, Gabis has made donations totaling $9,000 from 2009-2010 to the Career Colleges Association, now APSCU, which has been lobbying heavily to fight the release of the final gainful employment rule.

Now, an amendment to a spending bill proposed by Rep. John Kline (R-Minn.) and supported by Rep. Virginia Foxx (R-N.C.) would defund the Department of Education’s enforcement of the gainful employment rule once implemented. The House is scheduled to vote on the amendment today.

Meanwhile, Daymar College and others like it continue to enroll students in expensive programs that may not adequately prepare them for employment.

“These are people who are hard-working, decent folks who are at the lower end of the economic strata in this country,” Sales says. “They need to get their money back. And then they need to have something to compensate them for the one or two years they wasted. … They’re creating a miserable situation on the backs of decent people.”

Kay Steiger is the editor of CampusProgress.org.

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