The Times-Tribune, October 24, 2010, Sunday

Copyright 2010 The Times-Tribune
The Times-Tribune (Scranton, Pennsylvania)

Distributed by McClatchy-Tribune Business News

October 24, 2010, Sunday

Beauty school boon

BYLINE: James Haggerty, The Times-Tribune, Scranton, Pa.

Oct. 24--Despite debate about the success of the $787 billion federal stimulus, it clearly benefits students at Empire Beauty School.

Students at Empire, a for-profit system based in Pottsville that has a school at the Birney Mall in Moosic, qualified for $42.3 million in Pell grants from the American Recovery and Reinvestment Act from April 2009 through June. The grants are provided to low-income, higher-education students. Empire, which offers degrees in cosmetology, barbering and cosmetology instruction, has 12,000 students at 103 schools in 21 states.

"We certainly have more students on Pell grants than other schools, but we have a different demographic, a differ-ent dynamic than other schools," said Angela Watson, a spokeswoman for Empire.

The stimulus-related aid to Empire's students emerges as the for-profit school sector comes under closer examina-tion.

The federal government is stepping up regulation of the industry, which critics say exploits low-income students and leaves them saddled with debt and bleak employment prospects. Rising defaults on student loans leave taxpayers with the bill and the government is considering rules limiting the schools' access to financial aid.

"Now, you are seeing more scrutiny and I think that is warranted," Sen. Bob Casey said.

"The for-profit people have a different set of incentives and went into the business for a different reason," said John Bishop, Ph.D., a labor economist and professor of human resources at Cornell University in Ithaca, N.Y. "There's a real potential for exploitation."

Proprietary schools are a convenient target in a climate of rising austerity, said Dick Dumaresq, Ed.D., executive director of the Pennsylvania Association of Private School Administrators, a trade group based in Harrisburg.

"This is the season of Halloween and there's a little bit of a witch hunt going on here," Dr. Dumaresq said. "When money rears its head, everybody gets nervous."

The Pell grant money delivered to Empire students through the stimulus accounts for 8.4 percent of more than $503.8 million distributed in Pennsylvania.

More than two-thirds of the students at Empire's school in Moosic received Pell grants in 2008-09, Ms. Waston said, and the average grant amount was $5,318. Costs for tuition, fees, books and supplies at the Moosic school total about $19,000 annually, she said, and it job-placement rate is 80 percent. Full-time students can complete the program in one year and they receive a diploma and license if they pass a state test.

Students in the Empire system actually received more than $58.2 million in Pell grants in 2009-10, including non-stimulus aid, said Sarah Gast, a spokeswoman for the U.S. Department of Education. The per-recipient grant for Empire averaged $3,700. In 2008-09, Empire students received $35 million in Pell grants, she said.

"When you have that large of a student population receiving aid and do the math, that's how the number gets that big," Ms. Gast said.

One of the objectives of the stimulus was to train people for many types of jobs, said U.S. Rep. Paul E. Kanjorski, D-11, Nanticoke.

"All the judgment in the stimulus bill probably wasn't the finest," he said.

The Pell grant totals reflect Empire's high ratio of nontraditional students, including people who enroll after years in the work force.

"It's high because of the type of student we get," Ms. Watson said.

"It might make sense at $3,700 per student to get a new career," Dr. Dumaresq said. "No one looks at the context."

For-profit schools have thrived in the troubled economic climate. Enrollment at proprietary schools in 2009 was 1.8 million, up from 240,000 in 1995, according to industry data.
"More people in greater need have gone back to school and the Pell grants have gone up, not only in our sector but across the board," Dr. Dumaresq said.

Empire has expanded to 103 schools from 85 early in 2009 and enrollment is up about 10 percent in the last year.

The growth came from expansion and acquisitions, Ms. Watson said.

"We're certainly are not growing due to the Pell grants," she said. "It doesn't do any great things for us financially. It doesn't change our bottom line."

The idea behind Pell grants was sound social policy, Dr. Bishop said, but it enables for-profit schools to prosper despite student outcomes.

"The problem with this program is, using our concern for disadvantaged people and creating opportunities for them to advance in life is being used to increase the profits of these schools," he said. "What the feds are thinking about with the Pell grants is, the student will have to commit the time and pay the rest of the costs.

"If the kid doesn't show up or comes for two days and goes away, they still get their money."

Contact the writer: jhaggerty@timesshamrock.com

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