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‘Abysmal’ grad rates under fire in Globe lawsuit

When Alexenderia Romig-Palodichuk enrolled in Globe University’s medical assistant program, she was promised a job upon graduation, an over-the-top starting salary and the ability to transfer credits to further her education.  She was sold dreams, and delivered debt.

That’s according to a class-action lawsuit the Woodbury student filed with four former students who attended various Globe University programs in Minnesota and South Dakota.

Court documents filed in Hennepin County District Court allege the school inflates salary wages, falsely advertises job prospects in prestigious fields and overpromises credit transfer opportunities.

Globe has been criticized for its admission practices locally during the trial of a former dean who won a whistleblower lawsuit against the school in August, and was awarded nearly $400,000 in damages by a Washington County jury.

The for-profit college industry as a whole has been the subject of heightened scrutiny and part of a two-year investigation by the U.S. Senate committee on health, labor and pensions, which found more than half of the students who enrolled in those colleges in 2008-09 left within just four months without a degree or diploma.

The investigation led by Sen. Tom Harkin, D-Iowa, revealed that although for-profit colleges play an important role in higher education and they satisfy a growing demand, they’re not well-equipped to meet the needs of non-traditional students.

“For-profit colleges also ask students with modest financial resources to take a big risk by enrolling in high-tuition schools,” according to the report published in 2012. “When students withdraw, as hundreds of thousands do each year, they are left with high monthly payments but without a commensurate increase in earning power from new training and skills.”

Romig-Palodichuk borrowed a total of $65,000 in student loans, according to court documents filed earlier this month, while other students involved in the lawsuit borrowed anywhere between $15,000 to $41,000 each. The class action represents students enrolled at Globe since 2007.

“Most of the people that we represent have paid Globe tens of thousands of dollars and they are unable to find jobs using their education, unable to transfer their credits,” said Scott Carlson, attorney for Halunen and Associates, the firm representing students. “Every dollar they paid to Globe was a waste and they ought to get it back.”

Targeting ‘vulnerable students’?

Noelle Jacquet-Morrison, a former Globe University recruiter who was hired in 2006 to start up Globe’s cosmetology program in Maplewood, was terminated one year later after raising concerns about alleged unethical practices at the school.

“I had some good feeling when I started, but I was quick to be squashed of that,” she said. “It became apparent really quickly that at first they didn’t care about who you recruited and how you recruited.”

Jacquet-Morrison said the school preys on vulnerable students who couldn’t get into other four or two-year public or not-for-profit institutions.

“Especially in the cosmetology field,” she said. “They were women, older, or had children very young.”

But Globe officials say the company is being criticized for practicing career-focused education, which gives opportunities to all kinds of people with all income brackets. They say the school has processes in place to ensure all students are successful.

“People criticize us because we give opportunity to those that nobody would give opportunity to,” said Chris Schmitz, director of admissions for Globe who oversee online admissions. “That’s what I think we’re great for, but yet that’s what other people sometimes criticize us for.”

But Jacquet-Morrison said the admission process required her to recruit as many students as possible with a minimum quota of about 40 students per semester, even if she had doubts about their ability to graduate.

“The name of the game was you enroll, you enroll, you enroll,” she said. “If you didn’t, your job is on the line.”

Like Heidi Weber, who sued the school for wrongful termination and violating the Minnesota Whistleblower Act, Jacquet-Morrison said she went to Globe executives to express concerns over the school’s admission practices.

“It’s unethical, what we’re doing is unethical,” she said was her message. “There must be a better way to get people to come to school and to be successful.”

She was told that shouldn’t be her concern, she said.

“They didn’t care, they really didn’t care,” she said.

Schmitz said those allegations, aside from violating educational standards, don’t make sense as a business model. He said it’s saddening to hear that former recruiters believe that was the case.

“Take it outside of the educational realm and think of any customer service or product exchange,” he said. “Why would I sell a bad product when I’m going to want a repeat customer? … There is no way you can last 130 years by doing that.”

The school believes students enroll there because of its mission, career-focused model and specific training programs, not because they’re being manipulated.

“That’s why students want to come here – not because of a marketing ploy, not because of a target that we’re going after,” Schmitz said.

For Jacquet-Morrison, though, the class action suit is “not an unusual story.” Many students she worked with saw Globe as an opportunity to better themselves, get a job and make a decent living.

But like other for-profit schools around the country, Globe is being criticized for relying on high levels of student borrowing.

Most students are eligible for grants in addition to subsidized federal loans, putting millions of dollars in the pockets of Globe executives, according to the lawsuit.

Citing U.S. Department of Education figures, the class action suit says Globe “took nearly $140 million in federal, state and private loans, grants and scholarships from its students” between 2011 and 2012.

The network also earned an additional $30 million in financial aid from Duluth Business University, Minnesota School of Cosmetology, the Institute of Production and Recording and Broadview University, which are all part of Globe Education Network, according to the complaint.

The lawsuit identifies former enroller Hannah Von Bank, who testified she was instructed to target low-income students eligible for Pell grants because it’s “free money.” She said executives told her it was general “corporate practice.”

According to Globe University's "Student Right to Know" report published in July 2013, 22 percent of low-income students who receive federal Pell grants graduated from the Woodbury campus in 2012-2013. Sixty-two percent of Globe’s approximately 8,000 student population receive Pell grants, according to the university.

Admissions process

Globe trains its enrollers to manipulate students – they read from a script or present the same generic slideshow to every student who comes through the door, according to the lawsuit.

Additionally, attorneys allege the school doesn’t have a legitimate admissions board, though Globe officials say they have 81 admissions representatives who have goals, not quotas.

The complaint lists a number of other unethical practices including “hounding” family members of prospective students.

“You know Sally would have a great future in business and would make lots of money if she just got an education first and enrolled at Globe,” Von Bank stated as an example. She said she was told that was also general corporate practice.

But Schmitz explains that although the admission process does include a scripted presentation, it’s intended to be a comprehensive overview of the school’s mission so that every student who comes through the door gets the same information.

Then as relationships between admissions representatives and prospective students form, the information becomes tailored to students’ interests and skills, he said.

Schmitz said Globe practices “full disclosure” with salary numbers, job placement rates, graduation and retention rates for each program, following federal government guidelines.

“We think it’s best to be transparent and so we have throughout the presentation a couple of different areas that we talk about,” he said. “One of them is our placement rates, most times those are fun slides for us to present because we do fairly well.

“But we have to show it, and we do show it, even when they’re not so hot because we want to be honest with the students.”

Students in the class action suit, however, say they learned real job and salary potential later after starting their programs. Those students who joined Romig-Palodichuk in filing the suit are Melissa Beck, Sarah Beck, Cherida Brom and Reginald Holmes. They also learned that credits from all campuses of the Woodbury-based university aren’t transferable and that many students are unable to move on to higher degrees. But school officials say they’re complying with U.S. Department of Education standards and have formal, written agreements with numerous schools that offer guaranteed credit transfer programs.

During her time as a recruiter at Globe, Jacquet-Morrison said students who didn’t have a high school diploma or a GED were required to take a placement test. The test was so simple that she said many were able to get past it.

“It’s about fourth grade level,” she said.

Many students enrolled at Globe are unprepared, unqualified for higher level classes and struggle to earn degrees while juggling full-time jobs and family obligations, according to the lawsuit, which describes Globe’s graduation rates as “abysmal.”

“(Of) the people that I recruited, only two completed the program,” Jacquet-Morrison said.

But Schmitz said a computerized placement test must yield an equivalent of a 21 on the ACT in order to move on to college level courses.

He said many Globe students, however, are not first-time, full-time students. The majority haven’t taken algebra, reading or writing since high school, so they usually need refresher courses.

If students are still not ready after the placement test, they take those foundational courses before moving on.

“A decent number of our students have to take at least one of the foundations,” Schmitz said. “Typically those types of students, it’s because they might be in their 30s and haven’t done a math problem or algebra or fraction since high school, they need to freshen up on that before they jump right into a collegiate algebra class.”

According to the student right to know report, the overall graduation rate for first-time, full-time students at the Woodbury campus is currently at 30 percent, while the overall retention rate for the same cohort is 48 percent. The report puts career placement rates for the campus at 78 percent.

The school is required by the U.S. Department of Education to report such data, but officials at the school and the Minnesota Department of Higher Education say first-time, full-time student numbers don’t necessarily reflect reality or the average student enrolled at Globe, which is why numbers may vary on the school's website based on each program. “In general students who are over age 24 tend to be working substantial number of hours while enrolled so they often don’t graduate in a short amount of time,” said Tricia Grimes, research and policy analyst and an author of a report that examined all for-profit colleges in the state.

That report, published in May 2013 by the Minnesota Department of Higher Education, focused on undergraduate data for 2010-11, in which the entire Globe network had a 49 percent six-year graduation rate. The rate was calculated for a group of 68 first-time, full-time students who began their studies in 2005 for a four-year program and in 2008 for a two-year program.


Attorneys representing students who filed the class-action this month say Globe University’s nationally-accredited status hurts their chances of furthering their education.

The lawsuit alleges students are promised one thing, but given something different.

“In addition to accreditation they were all telling us when they tried to transfer their credits to other post-secondary institutions that no one takes them,” Scott Carlson, attorney for Halunen and Associates, said. “And Globe said the opposite.”

Globe officials say they choose to be nationally, versus regionally, accredited, giving the school more opportunities to be involved in the community, offer career-focused education and track job placement rates.

“If we wanted to go through the process and apply for regional accreditation, we could,” Schmitz said. “We choose to be nationally accredited because our mission statement aligns with what our accreditor’s mission statement is.”

George Roedler, manager of institutional registration and licensing for the Minnesota Department of Higher Education, said at the end of the day it’s the school’s prerogative.

“There are many regionally accredited schools that will accept credits from nationally accredited schools, but not all,” he said. “There are schools that won’t take credits from anybody, but they’re very restrictive in who they take credits from and what credits they would take.”

Schmitz said Globe has agreements with more than a dozen schools that guarantee students transfer opportunities, including Brown College, Capella University, ITT Tech Institute and University of Phoenix. But he added that doesn’t mean other colleges don’t accept Globe credits.

However, students who filed the lawsuit told attorneys that Globe recruiters claim the two accreditations are equal and that Globe credits would transfer to colleges nationwide.

Sarah Beck said she was unsuccessful when she tried transferring credits from the health care management program at Globe. So was Melissa Beck who met with enrollers around the same time as Sarah Beck and said she was also under the impression that her credits would easily transfer to the institution of her choice.

Rachelle Hernandez, associate vice provost for enrollment management at the University of Minnesota, said the first thing her department looks at when considering credit transfers is whether or not the institution is regionally accredited.

“As an example, a credit would not be transferred from an institution that has industry-based education programs that are very narrow in scope,” she said.

The second is whether or not the school’s mission aligns with the university’s, she said, and the third is comparability of the coursework.

“Whether or not the coursework is appropriate for meeting our baccalaureate degree requirements,” Hernandez said.

Though the University of Minnesota is clear on its policy and that it does not accept credits from Globe, Hernandez said some students do inquire about the possibility of transferring credits from there.

“We tend to get more questions from students who are wondering where to attend school in their planning stages,” she said. “It does happen, but so many students are thinking about their next steps as they’re looking at community colleges.”

Schmitz admits that because of the school’s accreditation, students are scrutinized. However, he said if four-year institutions looked at Globe’s programs, they would find that it’s “equivalent” to regional accreditation.

“I think if they were to really evaluate the curriculum, the instructor’s credentials, the learning that happens in those classes, they would find that they’re equivalent,” he said. “And because I’m a fan of it, maybe even above the learning that happens at these other schools, but biases do not allow them to look at it.”

Globe University officials released a statement in response to the lawsuit, filed Oct. 2, stating the school has been committed to student success and that the allegations don’t reflect all students’ experiences.

“This is unfortunate and we are saddened that these students chose to handle their concerns in this way. Lawsuit aside, as a college you never want to hear that a student is unhappy with their education,” the statement said. “Although it is disappointing that even one student has something unfavorable to say about our schools, we know the sentiment of these five individuals does not reflect all, and we will not allow it to cast a black eye on the thousands of students proud to be a member of our schools.”

The school has been in compliance with state and federal laws, having below average loan default rates and valid accreditation status.

Globe has a 12.7 percent three-year default rate, which means 12.7 percent of students entering federal loan repayment after 2009 defaulted before 2011, according to the U.S. Department of Education.

Minnesota School of Business, which is also part of the Globe network, had a 17 percent rate, but it still falls below the 30 percent limit imposed by the federal government that may cause loss of funding.

Riham Feshir
Riham Feshir is a reporter and photographer for the Woodbury Bulletin. Her coverage includes Woodbury City Hall, Washington County Board of Commissioners and business news.  Follow Riham on Twitter @RihamFeshir for the latest updates.