TRANSCRIPT: Chris Cuomo's Interview with Harris Miller on For-Profit Schools

August 20, 2010— -- Harris Miller, President and CEO of the Career College Association based in Washington, D.C. sat down with ABC News' Chief Law and Justice correspondant Chris Cuomo to talk about the for-profit education industry and allegations of misconduct by their recruiters. The following transcript of their interview has been edited for clarity.

CHRIS CUOMO:

Let's begin at the beginning. Let's get Eiseman (PH) outta the way. He comes out. He looks at you guys as the next subprime. He sees your industry as potentially bankrupting our country. Your response?

HARRIS MILLER:

Totally nonsense. First of all the amounta dollars involved is not even close but that's not the point. The point is that we have a product which is higher education that has to be offered on an ongoing basis. It's not a one time transaction like a mortgage is.

CHRIS CUOMO:

Fair to say that your business is a business. It's about making money. At the enda the day that's what you have to do?

HARRIS MILLER:

Every institution of higher ed-- education has to bring in more money than goes out otherwise the school'll close down. Your tax status has nothing to do with it whether you're Harvard University, whether you're the University of Michigan or whether you're a tax status for profit institution.

CHRIS CUOMO:

We're talking about the-- requirements and the pressures on what makes you a successful institution. Unlike most universities though you're tied to a stock price and you've got Wall Street pressure on you to bring in money. You actively recruit almost like no other university system. Isn't that the bottom line for you? It's gotta be profit first?

HARRIS MILLER:

No. It can't be profit first because if you're not turning out a quality student you're not gonna be able to continue in business because students have choices. They don't have to go to one of our institutions. They can choose to go to a state college if they have relatively open enrollment. They can choose to go to a community college. So unless we can show quality outcomes systematically there's no way these schools will be able to continue to operate.

CHRIS CUOMO:

Why do you think you're under fire?

HARRIS MILLER:

We're under fire for a couple of reasons. One reason is we're making mistakes. There's no doubt that the GAO report which came out in the hearing was very troubling because whether the problems exist because of poor training or whether they exist because of rogue employees or whether they're being taught improperly-- we should not have a situation where that many bad occurrences are being visible.

We have to do something to clearly improve our quality relationship with our customers and do more to protect the potential students and also protect the taxpayer dollars. Now some of the attacks are unfair. They're generated by people who have a financial interest in running us down. But whether those attacks are coming from legitimate sources or not the GAO report is very troubling and our schools and my board of directors is committed to making changes.

CUOMO:

Why isn't the GAO situation 15 for 15 in terms of finding deceptive practices? Simply a reflection of what you are as an industry? You're in the business of convincing people to borrow money to come to your school.

MILLER:

We're in the business of getting students who might be reluctant to go on to higher education to come into school, to study, to earn their degree and turn that into a job.

CUOMO:

So if they go there and realize it's not for them they may be saddled with debt. You come out ahead. You get to keep my money, taxpayer money, over 80 percent of the money that you take into your schools. That's a good situation for you-- not so good for the person who decides it's not for them.

MILLER:

First of all what's important is making sure that before the prospective student makes a decision he or she fully understands the responsibility that-- particularly if you have a U.S. government federally subsidized or unsubsidized loan the U.S. government will follow you into your grave to make sure that you pay it.

CUOMO:

But is it all-- is it a coincidence that you are going after the same population that often el-- eligible for the most in federal funding and who are open to suggestion by your very aggressive recruiters about what this education can give them and how they're looking for these people because of the money that could be brought in through Title Four?

MILLER:

Our message is the same as President Obama's message and we applaud the President. Our country has fallen to 14th in the world in higher education. The 25 to 34 year old generation is the first generation in the history of this country that has less post-secondary education than their parents. And the failure is not so much at our traditional universities-- 'cause we still have the best traditional universities in the world-- our failure has been in those post-secondary programs that last one or two years, the certificate diploma and associate degree programs.

Our system has failed and we're filling a gap by giving students a choice.

CUOMO:

But then how do you reconcile that with these anecdotes and hidden camera exposes of your recruiters giving deceptive information about what the education can give-- pushing people to borrow the max, trolling in homeless shelters to get people to sign up to keep the head count up. I mean, that doesn't exactly coincide with being some social benefactor.

MILLER:

Well, let's be clear about the homeless shelters. That is clearly against the law and the reporter who wrote that story first refused to include my quote where I gave him a very definitive quote that says, "That's against the law and if anybody did that hang 'em high." The reporter wanted to tell a story and he didn't wanna hear the other side.

CUOMO:

But they do it? You do it? Your people do it?

MILLER:

If they do it it's against the law and the enforcers need to go out and enforce the law more. But in terms of being too aggressive, yes, some of our schools are too aggressive.

CUOMO:

This is systemic.

MILLER:

No. It's not systemic because--

CUOMO:

It's-- it's gotta be systemic because you find it again and again over a course of years, different schools. The GAO does its report-- 15 for 15 were deceptive, some outright fraudulent. That's systemic.

MILLER:

I'll admit the schools are making mistakes. I'm not gonna tell you that I know for certain whether it's because it's rogue employees or employees who have been poorly trained or because they've been told from above. I don't care where the cause is.

CUOMO:

You're paying them for bringing people in. Of course, they're gonna go to the extremes.

MILLER:

No. It's against the law to pay them solely for that. It's been against the law since 1992.

CUOMO:

But incentivized compensation was part of the structure at many of your schools. That's why you got outed by the government.

MILLER:

And schools that have engaged in that according to the GAO's investigation which was released in February is there have been 30 some cases of incentive compensation violations since 1992, about 1/2 of them in our sector, about 1/2 of them in traditional higher education by the way and those schools have been punished.

CUOMO:

That's the standard? Whether you get caught?

MILLER:

It is about enforcement because unfor-- poor people unfortunately sometimes as much as you try to drill into them don't get it. And that's we need the simple formula I talked about, Chris, so there'll be no ambiguity.

CUOMO:

The-- one of the burdens is is that you keep getting nailed time and time again for having recruiters who are ce-- who are deceptive and for trolling for people who-- may be vulnerable to your solicitation and saddling them with a lot of money that you get to keep and they have to pay off for the rest of their lives even if they don't wind up getting better by experience.

MILLER:

Well, we know that the vast majority of students do pay back their loans. The vast majority of graduates pay back their loans. The default rate among graduates is relatively low.

CUOMO:

Should have always been that way.

MILLER:

Well, I think it's developing 'cause the market place-- of-- of ideas does respond.

CUOMO:

No. You got caught.

MILLER:

No. We got caught-- we always-- as you said there're always problems. There're-- there're problems in traditional schools to--

CUOMO:

We've been hearing the same kinds of things for almost a decade now, right? This is a deceptive recruiting practice. "What are you gonna do about it?" "We're gonna change. Those are bad apples. We'll get rid of them." Then it happens again and then you settle for millions of dollars.

Then it happens again and the GAO goes 15 for 15. Now we hear, "Well, now we're really gonna change." So we send out one of our producers. They go to random recruiters-- same thing. They get given deceptive information about whether or not the education will pay off on the job.

They get pushed to borrow the money. You've got homeless people who are being recruited to go to the schools.

MILLER:

The system is not about that. The system is about providing quality education. And what we're establishing for our membership-- and we will enforce it through throwing schools out of the program if they don't follow it.

MILLER:

They have-- our schools have not focused enough on consumer protection. And they haven't realized-- they haven't always put themselves in the position of the student and said, "Is this the perfect or at least the best fit for me in higher education?"

CUOMO:

You think you didn't know that before the GAO study?

MILLER:

I was personally very disappointed. I was personally very disappointed. Did I expect to see some problems? Sure. Fifteen for 15? I was personally very disappointed as was my board of directors. That's very shocking. You don't get that lucky-- even Ted Williams didn't get 1000-- so that's what-- was a dramatic wake up call.

CUOMO:

When you hear the suggestion that people were trained and taught to find pressure points, points of pain with people they were recruiting-- that this is what they were taught to do to bring people in-- doesn't that speak to an industry wide culture?

MILLER:

I'm not sure it's industry wide but that's unacceptable. That's not the way any admissions representative should be looking at his or her position in terms of interacting with a prospective student. Your position as an admissions representative should be explaining the potential rewards and up sides and exactly what your institution does and the positive things that you've been able to do for your students and your graduates, how your program is structured and what your expectations are of the student.

CUOMO:

Are you beefing up your enforcement division within the trade route to catch these bad actors?

MILLER:

We're doing two things. We're-- we're hiring a-- senior person to head up our consumer affairs. We've had it as part of our general compliance but this person's gonna report directly to me 'cause that's critically important. We are being very clear about the fact that we are gonna throw people out.

But most importantly we're gonna get by it. A lotta this is just what's in people's heads. We're also looking at creating a national certification process for admissions officers. Now wh-- again what we tell 'em and what the school tell 'em if that ever diverges we wanna get the message out there-- that should never diverge.

CUOMO:

You acknowledge that the wrongdoing is ongoing even as we speak?

MILLER:

Unfortunately, yes. We have not gotten rid of all of the bad situations. And again I'm not sure what the sources are but we have a zero tolerance policy that we're (UNINTEL) and we're recommending every school adopt a zero tolerance policy.

So there are imper-- my point is there're imperfect people in every part of life and in every part of higher education but we have this as an opportunity. They say what doesn't kill you makes you stronger. This is gonna make us a lot stronger.