Allentown Business School in trouble

It looks like Allentown Business School (now known as Lehigh Valley College) is in a bit of trouble. That’s too bad… I went there after high school and earned my Associate’s Degree there.

It’s a shame that a school which has been around for so long has been ruined by the greed of a few.

College’s enrollment plummets

Lehigh Valley College’s records show decline since reports of its hard-sell tactics and state investigation.

By Sam Kennedy Of The Morning Call

One of the Lehigh Valley’s oldest educational institutions has seen its enrollment drop by half since last year, prompting questions among faculty and staff about the school’s future.

The number of students at Lehigh Valley College has plummeted from roughly 1,350 students in early 2005 to 668 as of the first week of this month, according to the Center Valley school’s internal records.

It is a dramatic turn for a school that last year was poised for growth. It had a new name, a new building on a new campus and a long-term strategy to compete with the region’s best-known colleges.

The enrollment decline followed a pair of investigative articles in The Morning Call describing student experiences that began with hard-sell sales tactics and often ended in overwhelming debt. The stories also sparked an ongoing investigation by the state attorney general’s office, a state legislative hearing and a class-action lawsuit.

The drop in numbers is documented in the college’s 2005 and 2006 Weekly Census reports obtained by The Morning Call.

It has forced the for-profit college, owned by Career Education Corp. of Hoffman Estates, Ill., to adjust to a tighter budget, current and former employees of the school said.

According to the employees, the school has eliminated classes and reduced the size of its faculty, and some instructors have been cut from full to part time. The winter graduation ceremony has been canceled. Two weeks ago, the in-house cafeteria stopped serving food.

Further fueling speculation about the 137-year-old school’s future, Career Education’s top executive recently said he was considering shutting some of the company’s roughly 80 schools.

Two executives who visited LVC last month said they did not believe the school was among those in jeopardy, according to a school employee who asked not to be named. The executives’ statements came during a meeting with faculty and staff. They were responding to an employee’s question about the possibility of closure.

Career Education has declined to answer publicly questions about LVC’s enrollment.

Spokeswoman Lynn Baker was asked about the school’s status, including what is reflected in the Weekly Census reports. She responded with a written statement about the company’s pride in its college.

LVC, formerly known as Allentown Business School, was founded in the decade of the Civil War with courses in penmanship and ornamental writing.

Today, from its new building on a 30-acre campus in Center Valley, the school grants associate degrees in a variety of subjects, such as paralegal studies and criminal justice.

In the decade since it was bought by Career Education, the country’s second-biggest for-profit education company, LVC has been transformed.

But, according to last year’s newspaper articles, LVC’s recruiters engaged in aggressive tactics; job placement services fell short of expectations; academic standards were lax; and expensive tuition and high-interest loans left some students with overwhelming debt.

Tuition and fees cost $30,400 to $37,500 for an associate degree, compared with $5,400 to $5,640 at the area’s community colleges.

Some students interviewed by The Morning Call had to pay as much as $100,000 because they had loans carrying 15 percent interest — a rate normally associated with credit cards, not student loans. Faced with monthly bills of more than $500, some said they were forced to postpone marriage and consider bankruptcy.

More than a year after the attorney general’s office launched its investigation into LVC’s practices, anxiety about the school’s future, along with frustration over pay and treatment by administrators, is hurting the morale of instructors. Those were some of the findings of the Faculty Council’s recent anonymous survey, the results of which also were obtained by The Morning Call.

One respondent described ”the stress of not knowing if we have a job, or a school for that matter, from day to day.”

Another wrote: ”Honestly, if admissions can’t bring in the students, then none of us has jobs.”

It was during a conference call with financial analysts last month that Career Education’s interim chief executive officer indicated he might shut down underperforming schools.

”I do have it on my agenda to deal with those quite quickly — figure out which ones could be saved, which ones might be closed down, which ones might be appropriately sold — and to just deal with that,” interim Chief Executive Officer Bob Dowdell said. (He took over last month after founder John Larson stepped down under pressure.)

That represents an abrupt change in strategy for a company whose steady growth over the course of a decade won the favor of Wall Street. Career Education stock peaked at $70.66 a share in April 2004, before a string of regulatory and other legal issues dragged the price down — to $21.98 as of Friday.

After being told about LVC, Parker Quillen, a hedge fund manager who follows Career Education for investment purposes, said, ”Having your enrollment cut in half is typically a disaster.”

By comparison, the company reported in August that its student population had shrunk 8 percent, to 85,000.

Kelly Flynn, a financial analyst for UBS, said shutting down underperforming schools is ”standard practice” in the for-profit education industry. In such cases, schools typically fulfill their obligations to currently enrolled students, allowing them to complete their course work and graduate, she said.

”I would not be surprised if they announce plans to shut down some,” she said, although she could not predict which schools. ”They’re going to do what makes the most sense for the business.”

Quillen said heightened regulatory scrutiny could be hurting recruiting.

College struggles to retain students

At LVC, retention also is an issue, the school’s Weekly Census reports show: Although 90 new students started at the school in the first week of the month and 21 others re-entered, 32 dropped out.

Susan Siegel, 44, of Allentown, withdrew from LVC in March, after completing nearly half of her course work in the massage therapy program.

A school recruiter had rushed her through the application process without a full explanation of the expenses she would incur, she said.

”If I had known what it would cost me, I would have said no,” she said.

Only later, when another school official instructed her to apply for a new loan, did the cost become clear, she said.

”The teachers were great. I hated to quit — I was doing good,” recalled Siegel, who at the time was a single mom with a job at a beauty salon. ”But I said to myself, if I don’t quit now, I’m really going to be in a hole.”

LVC has on at least two occasions — once last year and once last month — offered to help students who have called the school to complain about high-interest loans, according to sources familiar with the cases. In response to questions about the school’s policy, LVC President Alan Shikowitz said in a written statement that in rare circumstances the school may decide it is appropriate to refund some portion of a student’s tuition.

”We continue to address any student concerns about financial aid, or any other school matter, on an individual, case-by-case, basis,” he wrote.

Letter of support cites LVC’s role in community

LVC also is circulating a letter of support for itself. It cites the school’s contribution to the community both as an employer and training ground for local workers.

During the special staff meeting last month, Shikowitz said the letter would be the basis for a planned advertising campaign, according to the school employee who was there.

The letter closes: ”The next time you read an article about LVC in this publication, or any other, we hope you will remember us and all of the talented, dedicated and skilled LVC graduates who work in our local doctor’s offices, hospitals, shops, businesses and other institutions and companies in our community and throughout the nation.”

Shikowitz said during the meeting that ads citing the letter would be placed in local media outlets, according to the employee. The president encouraged employees to sign the letter and recruit outsiders to sign it as well. Each employee received a copy, which includes places for three signatures.

In her statement, Career Education spokeswoman Baker said: ”A significant number of members of the college and the community have expressed a strong interest in publicly sharing their pride in and support for the college. We applaud their efforts to do so with the letter of support they have circulated.”