Defunct Computer Training Schools Leave Students Frustrated And Indebted

Hundreds of schools that started during the dot-com boom have shut down, leaving students in the lurch--and having to pay back loans for classes they may not have taken.

InformationWeek Staff, Contributor

February 20, 2004

5 Min Read

BOSTON (AP) -- Hundreds of computer training schools that sprouted during the dot-com boom have now shut down, leaving frustrated students with big debts and little education.

State regulatory oversight of the business is far too lax, while loans to attend such schools have been too easy to obtain--a recipe for disaster, consumer advocates say.

"Did I get my money's worth? Absolutely not," said Christian Rinaldi, 33, of Lowell, Mass.

Three years after obtaining a $6,000 loan to attend the Greater Lowell Computer Center for certification as a Web designer, Rinaldi is working as a courier and paying $150 a month for his student loan.

The school closed without notice in November after losing a lawsuit brought by a disgruntled student. Rinaldi said he never got close to completing his courses.

"They went through teachers like water," he said. "We always got apologies. They'd say 'We're working on it.'"

Like Massachusetts, whose attorney general received 73 complaints last year about computer training schools, up from just eight complaints the prior year, other states are also reporting trouble.

About a fifth of Michigan's 100 computer schools closed in 2002, as did 10 of the 59 schools in Texas, according to the National Association of State Administrators and Supervisors of Private Schools, which surveyed members last year. Four of seven schools in Wisconsin closed.

Only a quarter of the schools in 22 states surveyed gave notice before closing. Among the reasons cited were a poor economy, low enrollments, bankruptcy, and state violations.

"These places are businesses not sanctioned by education groups," said David L. Johns, president of the National Private Schools Association Group Resource Center, a Florida-based group that accredits schools. "These (businesses) go in without properly being prepared, even though their intentions might be good."

AmeriTrain, which had schools in North Carolina, Georgia, Maryland, Pennsylvania, and Virginia, left several hundred students in the lurch when it filed for bankruptcy in 2002. One former student was so angry he created a Web site to vent his frustration.

"Most students go into these schools with the perception that the schools are going to watch out for their best interests," said Mary Jayne Fay, who heads trade school licensing at the Massachusetts Department of Education.

Fay said she has had difficulty contacting directors of failed Massachusetts schools--seven closed last year and one in January--and repeated attempts by The Associated Press to reach the officials were unsuccessful.

Accurate figures on the total number of computer training schools--and how many close--are difficult to obtain because so many are unlicensed. The U.S. Department of Education keeps statistics only on licensed schools.

Kenneth W. Chandler, a former education official in North Carolina, estimated last year that as many as 300 career training schools were unlicensed in that state.

Consumer advocates say states need to get more aggressive in protecting the investments of employment-starved tech trainees, who tend to be unable to afford lawyers.

"There hasn't been an attorney general lawsuit in any state. They need to start bringing the cases," said Deanna Loonin, a staff attorney at the National Consumer Law Center, a Boston-based nonprofit that works on behalf of low-income people.

Loonin and others say it should not be so easy for such trade schools to obtain loans for students. The loans, mainly obtained through Sallie Mae Financial and Key Bank, are not federally backed. And that makes it far more difficult for students to get them forgiven when a school suddenly closes.

Lawyers who sued subsidiaries of Sallie Mae, the nation's biggest educational loan provider, on behalf of a handful of former AmeriTrain students in Virginia say the loan giant has changed some of its policies.

It no longer provides loans to unlicensed schools and won't provide full tuition to a school up front for a series of courses, according to consumer attorney Tom Domonoske.

Sallie Mae Financial did not return calls for comment on its policies. Key Bank spokeswoman Ann Gurin declined comment, citing litigation.

The problem for students like Milla Muller, 25, is that they sign legal contracts to pay back loans, no matter how bad a school turns out to be. Muller's efforts to get her $7,500 loan from Sallie Mae Financial forgiven have been unsuccessful.

Muller was one of about 150 students enrolled at Xintra Institute of Technology in Quincy, Mass. The school was stripped of its license in April for failure to comply with state regulations. It filed for bankruptcy in August, without giving students any notice.

"Sallie Mae has absolutely no recourse for this at all," said Muller, who now pays $189 a month for classes she didn't take.

Schools are required to give refunds if they cancel classes or close midcourse. Massachusetts law requires schools to refund loan companies for any unearned portion of the loan, but only one of the seven schools that closed last year did that, Fay said. And all but one provided a list of its students after shutting down, as required by law, Fay said.

Fay and regulators in other states say their small staffs aren't equipped to police so many schools. Fay has just two people, herself included, to oversee more than 100 career school licenses.

"It works to a point," Fay said of state regulation. "Where it breaks down is when someone is flagrantly violating the law. We don't have the legal resources."

Massachusetts law requires the schools to post up to $100,000 bond so students can recover tuition if the school goes under, but that state cap has proven too low in some cases.

Glynn Gallagher, 43, still wonders how she didn't see warning signs. Like Rinaldi, Gallagher also attended Greater Lowell.

"A month after I started, they dropped the whole E-commerce course," she said. "That was just the beginning. Many times instructors just didn't show up. It seems like anybody can open a computer school, because these guys don't know what they're doing."

Never Miss a Beat: Get a snapshot of the issues affecting the IT industry straight to your inbox.

You May Also Like

More Insights