The Art Institute of Las Vegas Reviews: Angry Investor!

(Look at how well the Art Institutes manage to place their ads…on an article that is bad news for them)

 

I don’t like to paraphrase, so I’ve taken statements exactly as they were from the article.  Some notable comments from the article:

 

1.  “EDMC shares were trading at $1.09 on the NASDAQ exchange Monday, down 5 cents — and a small-fraction of the company’s 52-week high of $16.94.”  Ouch.

 

2.  EDMC has “…sold off its Art Institute of Pittsburgh building in recent months.”  That is bad news, eh?

 

3.  “The lawsuit contends EDMC exaggerated its career placement abilities…”  When I was enrolling, it was stressed on to me that my likelihood of receiving a job after graduation increases greatly if I am willing to move outside of Las Vegas (really?).  What I was also told was that each Art Institute is tailored to its local area.  Does that sound like it helps finding a job outside of my local area?

 

4.  “The Justice Department and attorneys general from 13 states want the school to forfeit more than $11 billion the company received in federal and state student aid it’s received since 2003.”  What does forfeit mean?  I am hoping it means that it means to forgive the student loans, because the education is not worth the tens of thousands students wallets are missing.  It also might mean that, straight up, the government wants its money back.

 

5.  “The SEC has since also questioned how the company paid its recruiters and last year subpoenaed documents about how EDMC has calculated and reported its bad debt expenses on earnings reports.”

 

6.  The school has “…provided statistics it contends prove its recruiters weren’t solely paid on enrollment statistics.”  “solely paid”  This doesn’t shut out the fact that they could be getting paid on enrollments.  When I was in the Army as a recruiter, they initialized the RIP, or Recruiter Incentive Program.  This meant recruiters got paid more if they enrolled quality applicants.  Needless to say, Recruiters were a bit more tenacious when it came to recruiting.

 

7.  The lawsuit and previous federal concerns worry that “…the company knowingly recruited students it knew were likely to drop out of school after a few months, without regard to the students’ welfare, in order to receive federal education funds.”  There have been investigative reports done on this.

8.  “The school has blamed its debt problems on federal rules that tightened the availability of student loans. EDMC has begun offering more scholarships and giving students more time to pay back such loans, but has said it still expects bad debts to increase compared to net revenue.”  Is this them trying to save face?  As of October 1st, 2014, they just started giving out The Art Grant, which can save a student up to $18,600 in tuition.  Great timing!

 

Previous to this article, dated 22 September 2014, this article and many like it came to surface from a lawsuit the government put on to EDMC.

 

Again, here is the original article:  http://finance.yahoo.com/news/investor-sues-over-education-management-184528280.html