Everest College grads sue, alleging fraud
Chelsi Miller says she amassed $45,000 in debt to earn a surgical technologist degree from the for-profit Everest College in 2008 in the hopes of transferring to the University of Utah, only to find few schools accept Everest credits.
"That was my entire goal, to transfer. I felt hopeless and lost. I knew I had to start over," said Miller, 26, a single mother from Midvale who works in a surgical setting in a Salt Lake City hospital. "It was a complete waste of time and I lost all that time with my baby."
Miller and two other Everest graduates, saddled with tens of thousands of debt and questionable credits, filed a proposed class-action lawsuit alleging Everest admissions representatives deployed "a policy of deceiving and misleading students" about the value of a degree from the West Valley City campus and the true costs of attending. The school's corporate parent Corinthian Colleges disputes the charges.
The suit, filed Friday in Salt Lake City's 3rd District Court, alleges Everest's recruiters subjected prospective students to high-pressure sales tactics that omitted or distorted crucial information about the transferability of credits, as well as the debt loads associated with enrolling.
"Sadly, based on these misrepresentations, they completed their associate's degrees and then learned that the degree was useless for transferring to a school where they could get a bachelor's," said the students' lawyer, Randall Spencer of Provo. "The money they borrowed was wasted. That creates a problem not just for the students who took out the loans, but also causes a problem for the federal government that is issuing the loans."
After graduating, Miller called Everest recruiters posing as a prospect and recorded them suggesting Everest credits were good at the U., the suit states. Corinthian spokesman Kent Jenkins claimed Miller baited the recruiters to violate company policy.
"Our folks who reviewed [Miller's] tapes, found that despite her trying to take them where they shouldn't go, our enrollment representatives had adhered to policy, that is, the issue of college-credit transfer varies from institutions to institution and you have to check with them to see what the answer is," Jenkins said.
Everest's West Valley City campus is one of 100 schools operated by Corinthian, a publicly-traded company based in Santa Ana, Calif., and operates in 25 states and Canada serving 112,000 students, according to financial disclosure filings.
The Utah allegations emerge amid growing calls nationally for tighter regulations in the face of documented recruiting abuses by for-profit schools, which are highly dependent on federal financial aid. A recent undercover probe by the Government Accountability Office triggered Congressional hearings and a wave of bad press.
Some 1,300 Utah Everest students pulled in $7.2 million in student loans in 2008, and another $2.5 million in Pell grants, according to its annual audit on file with U.S. Department of Education.
The school's most recent default rate, for students who began repaying loans in 2008, is Utah's worst at nearly 25 percent, 13 times the state average, according to data compiled by the Utah Higher Education Assistance Authority.
Everest's high default rate, which had grown from 11 percent only two years before, is a function of the demographic the school serves people from low-income backgrounds without much exposure to higher education and the weak economy, Jenkins said.
Miller and her co-plaintiffs, Daniel Marty, of West Valley City, and Christie Cotton, of Salt Lake City, incurred debts of at least $30,000 while attending Everest. All three had initially tried to get into Salt Lake Community College (SLCC) allied-health programs, but were met with multiyear waiting lists, according to the suit.
SLCC does have waiting lists, but they "in no way reflect what actually happens," said SLCC spokesman Joy Tlou.
Students often get into these health programs much sooner because others on the list change majors or leave school, and they can complete general education and prerequisites while they are waiting for a spot.
"And you're doing it at tuition that is the lowest in the state," Tlou added. SLCC tuition is about one-fifth what for-profits charge.
The lawsuit's central charge concerns accreditation.
The plaintiffs say they enrolled at Everest as a stepping stone to the U. and were falsely assured that Everest credits would be accepted there.
Everest boasts "national" accreditation in its sales pitches, but without mentioning that regional accreditation is what matters for transfer to a traditional university, the suit alleges. Like some other for-profits, Everest is recognized by the Accrediting Council for Independent Colleges and Schools, but has no regional accreditation.
The suit also blasts Everest programs as "little more than information sessions wherein students learn generic information about the careers they could achieve if they received a bachelor's degree, or teach them broad skills applicable to positions that don't even require any sort of certification or degree."
Miller learned about Everest from a print ad about its surgical technologist program, which she thought might be a good springboard to the U.'s bachelor's program in pre-medicine.
At the time she was waiting tables and working as a certified nursing assistant. She called the college in August 2006 and toured the campus with a recruiter.
"They said they never heard of students not being able to transfer. I believed them. It was this older gentlemen who was interested in my having a better future," Miller said.
She agreed to enroll and was given a cost estimate of $12,280, far lower than what she was actually billed. She took out several student loans, including a private one to meet her tuition and living expenses.
Miller graduated with an associate degree within two years and was accepted to the U.'s pre-med program in 2009. After learning her credits wouldn't be honored, she postponed entering the U. and plans to repeat her associate level work at SLCC this spring. In the meantime, she owes one of her lenders, Sallie Mae, $500 a month while she's out of school.
"I will struggle through it. I will start with nursing and then physician's assisting," Miller said. "It's a challenge. I have bill collectors calling me all the time."
In July, she confronted Corinthian corporate counsel Stan Morton, who refused to refund Miller's tuition but agreed to provide her a "transfer portfolio" of materials she could use to persuade schools to accept the transfer credits.
Miller said the portfolio amounted to "a cruel joke," simply a packet of printouts from Everest's website. U. and SLCC officials declined to even look at it, she said.
About Everest College
The West Valley City school, 3280 W. 3500 South, belongs to a network of for-profits operated by California-based Corinthian Colleges, Inc. It offers several associate degrees and certificate programs for health and criminal-justice career paths.