December 15, 2013
Educational Opportunity? Globe University's Murky Student Loan Partnership With Debt Collection Agency
Recently, Jeff Myhre, CEO of the Globe Education Network, issued a statement in response to my article, Globe University: Profiteering off the Backs of Students and Taxpayers. In Jeff Myhre's response, he specifically takes issue with my pointing out that Globe Education Network schools and the Myhre family have profited off lending money to students at 18% interest, loans which they must use to pay for the schools' extremely high tuition. Myhre attempts to deflect attention away from this predatory lending and instead, deceptively sell Globe University as an opportunity for those less fortunate. His response is factually deficient in many areas and fails to address perhaps the biggest question of all: why does the Educational Opportunities Loan website have the same mailing address as a debt collection agency? At best, it is a public display of a CEO out of touch with the services his company provides. At worst, an executive blatantly misleading students and the public about services his institutions offer.
The Globe Education Network makes up more than 20 for-profit colleges owned by Jeff Myhre's father, Terry Myhre, operating under the names Globe University, Minnesota School of Business, and Broadview University, among others. In Myhre's recent response, he mentions that the Educational Opportunities (EdOp) Loan Program was discontinued this past March and is no longer offered at Globe Education Network schools. However, this loan is still marketed on the Globe University website under the loans and grants page, and students can still fill out an application on the EdOp Loan website. Regardless of whether or not this specific loan is still being offered, the fact still remains that a loan with predatory terms was issued to students, and the Myhre family profited from it.
For years, the EdOp Loan has been marketed as one of the "primary sources of financial aid" (at Globe?) and carried an 18% interest rate. As I mentioned in my previous article, the mailing address listed on EdOpLoan.com happens to be the same mailing address for American Accounts and Advisers, a debt collection agency. As of March 31 of this year, Terry Myhre had more than $1.2 million in loans outstanding to Broadview University students. Terry Myhre owns 87% of the share of Broadview University and because it is a publicly traded company, we are able to see this information. Each of the 20+ other Globe Education Network schools is privately owned by Myhre, so this information is not publicly available. However, there certainly is reason to believe that Terry Myhre has been profiting off students with these loans at his other schools as well.
Myhre lists a series of bullet points which he claims are the terms of the EdOp Loan. Let's take a look at one:
The interest on the loan varies, but is reduced with consecutive on-time payments and at program completion. Students have the opportunity to reduce interest to zero percent.
Myhre indicates that the interest on the EdOp loan is variable but is reduced with consecutive payments and upon graduation. This is comical. He is the CEO of colleges with horrendous graduation rates and many with very high student loan default rates. According to the school's own website, Globe University's flagship location in Woodburry, Minnesota, for instance, has a graduation rate of 30%, and in 2011 Broadview University had a graduation rate of only 19%.
Students at Globe also graduate with far more debt than average. A report available at PellInstitute.org, which lists the cumulative student debt in Minnesota in 2009-2010, is quite telling. According to the report, students graduating from Minnesota State universities in 2010 finished with an average of $23,879 in student loan debt. Students graduating from one of the University of Minnesota campuses finished with an average of $26,727 in federal student loan debt. However, the 45 students that graduated from Globe University finished with an astonishing average of $44,824 in student loan debt. The 312 graduates of Minnesota School of business finished with an average of more than $45,244 in student debt.
With average student debt so much higher than the state and national averages, how could he (better to say, anyone, or, Myhre) possibly expect students who borrow at a high interest rate offered through the the EdOp Loan to continuously make payments? The most recent data shows that the three year cohort default rate at Globe University for federal student loans is 17.5%. It would be interesting to see what the default rate is for the EdOp Loan since it is not factored into this number and has an interest rate multiple times higher.
Another point Myhre lists is certainly puzzling:
No late fees
Yet, the EdOp Loan promissory note, as seen below, certainly lists a variety of late fees.
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