Wednesday, September 11, 2013

DeVry Lures Medical School Rejects as Taxpayers Fund Debt $DV $APOL

DeVry Lures Medical School Rejects as Taxpayers Fund Debt $DV

Rejected Students

DeVry, which has two for-profit medical schools in the Caribbean, is accepting hundreds of students who were rejected by U.S. medical colleges. These students amass more debt than their U.S. counterparts -- a median of $253,072in June 2012 at AUC versus $170,000 for 2012 graduates of U.S. medical schools.
And that gap is even greater because the U.S. figure, compiled by the Association of American Medical Colleges, includes student debt incurred for undergraduate or other degrees, while the DeVry number is only federal medical school loans.
Many DeVry students quit, particularly in the first two semesters, taking their debt with them. While the average attrition rate at U.S. med schools was 3 percent for the class that began in the fall of 2008, according to the AAMC, DeVry says its rate ranges from 20 to 27 percent.
Of those who remained, 66 percent of AUC students and 52 percent of students at DeVry’s other Caribbean medical school,Ross University School of Medicine, finished their program -- typically two years of sciences followed by two years of clinical rotations -- on time in the academic year ended on June 30, 2012.

Taxpayer Owes

And though neither AUC nor Ross, in the island nation of Dominica, is accredited by the body that approves medical programs in the U.S., students at both schools are eligible for loans issued by the U.S. Education Department. The loans, which totaled about $310 million in the year ended June 2012, leave the U.S. taxpayer -- not DeVry -- on the hook if students should fail to get jobs and be unable to repay them.
DeVry is also paying hospitals in the U.S. to take its students for the two years of clinical training that they need to complete their degree. U.S. medical schools typically provide the training hospitals benefits such as a faculty appointment and access to a medical school library, not cash per student per week, saysGlenn Tung, associate dean for clinical affairs at Brown University’s Warren Alpert Medical School, who has studied for-profit medical schools.


DeVry’s pay-for-play model has drawn the ire of the American Medical Association. In June, the state of Texas passed a lawprohibiting foreign medical schools from sending students to the state.
Congress needs to examine the law that makes foreign for-profit medical schools eligible for federal loans, says SenatorDick Durbin, a Democrat from DeVry’s home state of Illinois.
“These schools are taking advantage of an offshore loophole that allows federal funding to be released to students attending a medical school that is not accredited in the U.S.,” Durbin says. “Until Congress acts, these schools will stop at nothing to keep the American taxpayer dollars flowing.”
Durbin, in a Sept. 10 letter to Education Secretary Arne Duncan, called for an examination of the medical schools in the Caribbean that have federal loan access, yet may be subject to standards below those set for medical students in the U.S.
Students at the four schools -- the two DeVry schools, along with St. George’s University School of Medicine and, since July,Saba University School of Medicine -- are also eligible for tuition benefits from the U.S. Department of Veterans Affairs.

Students Shortchanged

DeVry’s policies shortchange students, says David Bergeron, who recently retired as head of postsecondary education at the U.S. Department of Education.
“If they have to make a choice between students and profit, they choose profit,” Bergeron says of the for-profit Caribbean schools. “Because their students heavily depend on student loans, it creates risk for the student and the taxpayers throughout the system.”
Adds Ernie Yoder, dean of Central Michigan University’s newly opened medical school, “I have grave concerns about the financial welfare of some of these kids and how they’re led to believe that they will be successful as physicians and be able to pay back their debt.”
A DeVry spokesman, Chris Railey, says, “Students who don’t succeed academically typically leave school before accumulating a large debt load.”
Michael Uva, a 2010 graduate of St. George’s in Grenada, twice failed to land a residency spot that would be the next step to practicing medicine in the U.S.

‘Unfulfilled Dream’

“I spent my entire life preparing for this career, and I am now 33 years old with massive debt and an unfulfilled dream,” Uva says. The Oswego, New York, native has almost $400,000 in medical school loans and currently earns $30 an hour overseeing a blood donation clinic in New Jersey, where he also draws blood.
Medical education is crucial to the future of DeVry, which is trying to diversify from its base in undergraduate studies. When DeVry, the No. 3 publicly traded for-profit education company in the U.S. based on revenue, announced in April that undergraduate enrollment had declined 21 percent in March from a year earlier, the company’s shares plummeted 20 percent in a single day.
Once among the fastest-growing U.S. industries, for-profit education faces increased competition and scrutiny from Congress and state and federal prosecutors.
“The vast majority of the students are left with student-loan debt that may follow them throughout their lives,” said a July 2012 report by the Senate Committee on Health, Education, Labor and Pensions, led by Iowa Democrat Tom Harkin, that criticized for-profit colleges.

High Payments

“They are left with high monthly payments, but without a commensurate increase in earning power.”
DeVry said in April that the attorneys general of Massachusetts and Illinois are investigating its use of student loans and its compensation practices. The company said in a filing that it’s cooperating with the investigations, with the aim of demonstrating that its practices comply with the law. Other for-profits have also been struggling.
Phoenix-based Apollo Group Inc., (APOL) which owns the University of Phoenix, was demoted from the Standard & Poor’s 500 Index to the S&P MidCap 400 in June as its market value shrank. Shares of Apollo, the largest public for-profit education company, traded at $20.05 on Sept. 6, down from a high of $89.22 in January 2009.
And the Kaplan education division of Washington Post Co. reported a $105.4 million operating loss for 2012, partly because of restructuring costs related to declining enrollment.

Student Borrowing

As enrollment grows at the DeVry medical schools, so does revenue -- 81 percent of which came from federal student loans in the year ended June 2011. First-year tuition on Dominica costs $56,475, based on the three terms Ross divides the year into. That compares with a median of $50,309 for tuition and fees at private U.S. medical schools in the 2012-to-2013 school year.
Students can also borrow for living expenses and other costs, which can run thousands more.
“Applicants who were denied admission or wait listed at U.S. schools constitute a large segment of prospective students,” DeVry says in its 2012 annual report. Some 91 percent of Ross’s students are from the U.S., while at AUC, the figure is 86 percent.

$271,000 in Loans

Clint Walls was rejected by more than a dozen U.S. medical schools over three application cycles and went to work as a real estate appraiser in Arizona. He applied to Ross, he says, because “I just couldn’t really shake the itch.”
Now a third-year student doing rotations in Atlanta, Walls, 29, has about $271,000 in student loans and expects to graduate with $400,000.
“Even on a physician’s salary plus whatever my wife earns, there is still doubt in our minds whether we will be able to pay the loans off in their entirety,” he says.
Still, Walls says he feels grateful for the opportunity to be in medical school. Giving those shut out of U.S. medical schools that chance is AUC’s aim, says Ron Testa, a Ph.D. in clinical and community psychology who is dean of medical sciences.
“When the world says no, and you have a burning desire to study medicine, there’s a place that provides you an opportunity to fulfill your dreams,” Testa says.

Doctor Shortage

The U.S. is facing a shortage of doctors as the population ages and President Barack Obama’s health-care law makes medical insurance available to 32 million more people. That means U.S. medical schools need to increase enrollment 30 percent by 2015, the AAMC says.
Caribbean schools aren’t the only ones ramping up capacity to meet the demand. The AAMC estimates in its 2012 Medical School Enrollment Survey that by the 2017-to-2018 school year, there will be 21,434 first-year students in the U.S., matching the 30 percent increase it recommended.
About two-thirds of the gain will come from the 125 U.S. medical schools that were accredited as of 2002, while most of the rest will come from new, accredited U.S.-based schools, such as the one at Central Michigan. As of mid-August, 141 U.S. schools were accredited by the Liaison Committee on Medical Education.
Caribbean-educated students such as DeVry’s will now have to vie with grads of accredited U.S. schools for a limited number of residency positions.

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