The U.S. Department of Education has fined a Michigan college $2.5 million for years of “materially misrepresenting” career outcomes.
The department said in a news release Tuesday that an investigation into Baker College found that the institution’s misrepresentations “may harm students who may reasonably rely on this information when considering higher education options and possible outcomes.”
A federal review was launched after a a joint investigation by ProPublica and Detroit Free Press in 2022 which details the low college graduation rate and the heavy debt many students carry. For decades, the college touted a nearly 100 percent employment rate, which the investigation found was based on its own shaky data. The for-profit college regularly spent more on marketing than on financial aid, and experts found conflicts of interest in its governance structure.
In 2023, news organizations — together with the Chronicle of Higher Education. – informed about the increasing financial problems in the institution.
As part of the settlement, the college agreed not to make future misrepresentations, to provide the department with its marketing materials for review for three years, and to notify current students and employees of how they can submit complaints or information to the department about an alleged violation.
President Jackie Spicer said in a statement that the college maintains it made no misrepresentations and that the settlement contains no admissions of wrongdoing. The findings “do not allege that the College provided false information as part of our marketing and hiring data,” she said, but rather cases “in which our materials had what the DOE considered to be insufficient information or explanation.”
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“Baker College is committed to continuous improvement, meeting and exceeding the expectations of the Department of Energy and has already taken steps in accordance with this commitment,” Spicer said in a statement.
Dan Novaczyk, a 2016 graduate of the now-shuttered Flint Baker campus, cheered news of the sentencing and settlement.
“I hope this helps their administration take a step back and analyze what went wrong and fix it,” Navaczyk said in a text message. “Although they are being fined for this, I wish more had been done to protect the people who were exploited by this false advertising. But I think it’s a good step to show that the DoE is serious about these things.”
Navaczyk was among a number of former students who previously spoke to reporters about their troubling experiences at Baker, including some who said they had no idea they would have to pay back the loans.
Another former student said he wished the faculty had moved on.
“My first thought is that I am genuinely shocked that they are allowed to remain open and accredited. If they could lie like that before, they will definitely do it again,” Bart Bechtel said in a text message.
A Baker graduate, Bechtel said he took out more than $40,000 in student loans for his online associate degree. “My second thought is that it sucks. I still owe $5,000 on a $16,000 loan because of these liars.”
Kevin, an alumnus of Baker’s Flint campus who asked not to be identified, agreed. “It’s like a slap on the wrist,” he said.
“From what I can see, there is no restitution to the students,” he added. “They should lose their accreditation. But this is not the business of the education department. It depends on the Higher Education Commission, which may well happen in the future.”
HLC is a private accrediting agency overseen by Baker. Could not immediately be reached for comment.
An initial media investigation found that 10 years after enrolling, fewer than half of Baker’s former students earned more than $28,000 a year, the lowest rate among colleges of its kind in Michigan, according to federal data.
The agreement comes in the final days of the Biden administration, which has vowed to crack down on misleading college advertising, particularly about outcomes. Many experts have expressed concern that such investigations will disappear under the new Trump administration.
An investigation by the department’s Office of Federal Student Aid found that:
- Baker posted misleading career performance metrics on his websites that gave the false impression that all graduates were represented in the performance statistics, when only a fraction of them were.
- Baker touted in emails an overall career success rate of 91% and his automotive program nearly 96%, but the college did not say how it arrived at those calculations or what the career success means.
- Baker included on his website a list of employers who were said to be hiring college graduates. But 14 of the more than 100 employers listed hired those people before they started at Baker.
- Baker reported the earnings of its graduates using national data from the U.S. Department of Labor, not its own graduate data.
- The Baker Company has released inaccurate data on the employment outcomes of students in its culinary programs.
“This agreement demonstrates the department’s continued commitment to enforcing higher education laws and regulations and protecting students and taxpayers,” the department said in a statement.
In a 2023 message to the campus community, responding to news reports, Baker noted that “many colleges and universities in and out of state are engaged in marketing activities in Michigan; Baker College is not unique.”
Baker was founded as a for-profit business college in Flint before converting to non-profit status in 1977. It has grown rapidly, becoming one of the early adopters of online learning and opening several campuses. It was once the largest private non-profit college in Michigan.
Growth contributed to a healthy balance. At the end of the 2013-14 school year, Baker brought in $219 million in revenue and had $226 million in expenses. But by the end of 2022-23, revenue was $58 million and expenses were $93 million. From a peak of around 45,000 students in 2011-12, the number of students is now around 4,000.
However, Baker still owns about $362 million in the fund, according to his 2023 tax return. With that in mind, Kliman Moorer Jr., a former administrator and teacher, questioned the impact of the fine. “$2.5 million out of $300 million — I’m not sure how punitive that is for an organization of this size,” he said.
Baker is in the midst of a radical shift in its target market, closing campuses in historically industrial locations like Flint and Allen Park and building a new one in the more affluent suburb of Royal Oak.
But many students said Baker’s rise was due to fraudulent practices, and they filed complaints with multiple agencies, including the Department of Education. About 60 complaints were filed with the Federal Trade Commission between 2016 and mid-2023, ProPublica and The Chronicle previously reported. In the period from January 2021. until June 2023. Department of Education records show 500 borrower protection claims have been filed against Baker alleging fraudulent practices, an unusually high number for a for-profit school.
Among the complaints collected by the FTC in 2022 was one from a student who wrote: “Baker College is supposedly a non-profit institution, but they made false statements about graduate employability, finances, and programs.”
Another wrote, “I was tempted to feel like I would be attending a college that valued their students, only to find out that they valued my financial assets in college, not my education. I feel that I have been deceived and used for their financial gain.’
