Report: Government-Sponsored Job Retraining Program Pays Sketchy Colleges, Leaves Workers in Debt and Jobless

It seems Uncle Sam isn't great at picking job training programs.

A New York Times report Monday detailed the dysfunction of the Workforce Investment Act, a recently re-authorized bill that provides federal money to help the unemployed train for new careers.

Due to a lack of oversight — the feds pay but the states run things — the actual effects of the $3.1 billion federal program aren't very positive: program participants often wind up in debt and unable to find work after studying at institutions that have a track record of ripping off students and the government.

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The Times report contains such examples as:

The South Texas Vocational Technical Institute, which operates several campuses, is among a number of schools nationally that have been allowed to offer Workforce Investment Act courses despite having defrauded the federal government.

[…]

During the past seven years, the institute’s former president has been sentenced to federal prison for defrauding the Department of Education; the Texas Workforce Commission has prevented it from offering some Workforce Investment Act training courses for failing to meet required graduation and job placement levels; and two of the institute’s employees, including the former admissions director, have been indicted on a charge of attempting to defraud the government of nearly $500,000 in student aid funds.

In January, the school’s parent company, ATI Enterprises Inc., filed for bankruptcy after having agreed to pay $3.7 million to settle a Justice Department lawsuit for submitting false student financial aid claims.

The Workforce Investment Act also funneled students to the trade schools of Corinthian Colleges, the company that has faced lawsuits — and is now largely shutting down — over allegations that it lied to students about job placement rates.

The Workforce Investment Act may be well-intended, giving those in need of job training up to $3,000 per year in federal grants to pursue careers in healthcare, mechanical and other fields. It was reauthorized just last month by Congress with strong bipartisan support.

But research has shown government job training investments don't have much of an impact of joblessness in many cases.

As the Times put it, "In some states, data and academic studies have suggested that a vast majority of the unemployed may have found work without the help of the Workforce Investment Act."

Even when they do find work, graduates have often paid tens of thousands of dollars for retraining, only to wind up working for $10 an hour.

“The jobs they are being trained for really aren’t better paying,” Carolyn Heinrich, of the University of Texas at Austin, told the Times. “We have not used our work force investment system to help people make the choices they need to succeed. For some of the workers, we know what we’re doing for them isn’t working.”

The original Workforce Investment Act was enacted in 1998; President Barack Obama spearheaded an expansion in 2009.

As the Times noted, 21 million unemployed people started job retraining in 2012.

Read the full Times report.

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