‘Wasted money’: How career-training companies scoop up federal funds with little oversight

Having previously worked as a certified nursing assistant, Magilke leapt at the chance to move up in the medical field with the full $4,000 tuition for a medical-assistant training program covered. But she said she was never told that she needed in-person clinical training — which MedCerts did not provide — to make her a viable candidate for a job as a medical assistant. After finishing the roughly seven-month-long program and passing her certification exam in late 2021, she found that no one would hire her. Would-be employers told her she lacked the experience they required.

She asked MedCerts for help finding a clinical training placement, but said she was told the company could not help. She tried going back to the local career center, too. “They couldn’t do anything,” Magilke, now 53, said. “That’s a lot of wasted money in my eyes.”

MedCerts, which offers short-term training in industries like health care and information technology, is a large workforce training provider enrolling thousands of students annually. Like hundreds of similar programs, it receives millions in tuition dollars, not from traditional student aid, but from the Departments of Labor and Defense.

Since 2018, just 54 percent of people who attended WIOA-approved programs became employed at all after completing their program.

The appeal of training for a good job in a short program paid for by the government is obvious. But for hundreds of thousands of Americans like Magilke who have tried to take advantage of this, there is virtually no way to find out whether the programs actually lead to good jobs.

That’s because these schools aren’t eligible for federal student financial aid from the Department of Education, placing them in a sort of no man’s land of accountability.Students enrolling in traditional two- and four-year colleges can easily find graduation rates and can even get some employment data. But the Department of Defense does not release information on how many students complete specific programs for some of its grants – or even how much money the providers get. The Department of Labor does track and publish results, but the state and federal data on how many students finish a program and get jobs is often contradictory or is simply unavailable.

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Between 2018 and 2021, these schools took in more than $239 million in federal workforce grants from the Department of Labor — most of which went to for-profit institutions like MedCerts. On top of that, such schools received unspecified millions of dollars in tuition money from Department of Defense grants for military service members and their spouses.

“There isn’t enough oversight,” said Shalin Jyotishi, a senior analyst at the progressive think tank New America, adding that information about how students fare “is excruciatingly difficult to obtain for for-profit institutions.”

MedCerts, owned by the publicly traded corporation Stride, Inc., is approved to provide workforce training in more than 30 states. It promises quick, affordable paths to jobs; most courses take less than nine months to complete and cost less than $5,000. Yet it’s impossible to know how many MedCerts students finish their programs or how many of those who use taxpayer money to do so ultimately get jobs in the fields they trained for.

In an interview, Rafael Castañeda, vice president of workforce development at MedCerts, said that more than 85 percent of students who sit for certification exams pass them.

Asked repeatedly for specific graduation rates and employment rates, Castañeda replied only that the “vast majority” of students work in the field they studied and that in “our best-performing programs, completion rates are 86 percent.”

MedCerts, and other such providers, must submit data to state agencies, which use that information to decide whether to approve them for funding. The data in MedCerts’ applications to the Michigan Department of Labor and Economic Opportunity, obtained through a public records request, shows that, at most, a third of students who went through MedCerts programs had a job of any kind a year after leaving. Castañeda said the data was imprecise because it was based on self-reported information. But MedCerts has told state regulators in Michigan, where the company is based, that “often times” students receiving federal grants fail to finish or to become employed because of “life obstacles.”

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Michigan state officials said companies use such disclaimers to justify any exception to the required performance metrics. Department officials said that MedCerts had been meeting or exceeding its goals for the number of students who pass a certification exam.

Complicating matters further, agencies don’t track what kinds of jobs the students get, meaning they have no way of knowing whether the students ended up in the field they were studying. Magilke, for instance, began working as a medication aide while taking classes and still has that job. On paper, she would count as a win for MedCerts. But her job pays less than what she could earn as a medical assistant, the job she was training for. 

In 2021, the most recent year for which information is available, the government spent roughly $547 million on training for more than 220,000 people. 

“You’re still working in that same job that you were trying to get out of,” she said. “It’s just frustrating.”

The data about student performance is also rife with inconsistencies. For example, Michigan’s public website says that fewer than three students were enrolled in MedCerts’ phlebotomy technician program for the most recent one-year time period available. But MedCerts’ applications to the state indicate that, in the same time period, 60 students exited the program, 40 of whom completed it. And an unwieldy federal database says that 1,041 Michigan residents have exited MedCerts’ phlebotomy technician program over the past three years.

Officials at the federal Department of Labor said that states bear the responsibility for making sure their data is accurate. 

Local workforce boards play a crucial role in connecting students with training programs, including those funded by the Workforce Innovation and Opportunity Act, known as WIOA. In 2021, the most recent year for which information is available, the government spent roughly $547 million on training for more than 220,000 people. The inspector general from the Department of Labor, which is primarily responsible for administering WIOA, audited a sample of participant data in 2020 and said it was not “accurate, valid and reliable.”

The data that does exist paints a bleak picture: Since 2018, just 54 percent of people who attended WIOA-approved programs became employed at all after completing their program, according to the Department of Labor.

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Officials said the agency “does not regulate training providers or their programs” because states do. States are required to set goals for the training programs WIOA funds, including graduation and job placement rates. But these criteria are often so weak or poorly enforced that schools that fail to help a majority of students get a job, according to federal data, can continue to enroll new ones year after year.

Many local workforce boards don’t have enough staffers or the technology to track what’s effective, experts say.

“Some workforce boards are persistently under-resourced, and they lack an understanding of how to best use WIOA money,” said Justin Birch, program director of workforce development at the Rural Local Initiatives Support Corporation.

Meanwhile, behind the scenes, companies like MedCerts, which received about $3 million through WIOA grants from 2018 to 2021, lobby local job centers to send students to their programs.

“I was under the impression that there would be an actual teacher uploading videos and that there would be a way for me to get in contact with that teacher to get better explanations.”

Jon Oue, former MedCerts student

In marketing materials, the company also promises students access to subject-matter experts, personal one-on-one mentoring and job search assistance. But Isa Partee, a former student success adviser for the company who had a caseload of about 500 students for the year she worked there, remembers feeling ill-equipped to help students understand the course material. She’d sometimes try to puzzle through the content with them, having nowhere else to send them for assistance. Partee said many students didn’t have access to a computer, despite having been admitted to an online-only program.

“It really started to feel like I wasn’t a student success adviser that genuinely cares about students’ overall success,” Partee said, which is why she quit.

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Castañeda said MedCerts had “more than tripled the size of our team and increased the training and level of proactive program support” since Partee left the company in November 2021. While subject matter experts are available to students, he said, the courses are designed for them to progress on their own.

“The need to talk to a faculty member, if you will, is somewhat redundant,” he said.

That’s not how Jon Oue understood it. As the Covid pandemic and widespread unemployment raged in the summer of 2020, Oue, an Army specialist, was looking for a job that would earn him a decent paycheck when he left the military.

“I was Googling classes I could take, and MedCerts popped up. It said it was quick and easy and interactive,” said Oue from his home in Georgia. “It said you could talk to an instructor and it doesn’t take long.” He enrolled in the PC Technician program using an Army grant administered through the Department of Defense.

Significant federal funding for workforce training programs like those MedCerts offers comes from military grants, including a military spousal benefit known as MyCAA and the grant Oue used. And these grants receive even less oversight than WIOA’s; no information is collected about how many students get jobs or continue their education elsewhere. 

Army officials said they do not track how much funding it directs to individual providers; Department of Defense officials said information on the spousal grant was not public. MedCerts has enrolled more MyCAA students than almost any other school or training program in the country, though, with nearly 16,000 having attended.

Oue’s problems with MedCerts began almost immediately. Delivery of his textbook was delayed, and he had questions about the material.

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“When I signed up, I was under the impression that there would be an actual teacher uploading videos and that there would be a way for me to get in contact with that teacher to get better explanations,” said Oue, 23. “That wasn’t the case.”

Instead, he was assigned a career counselor to answer questions. MedCerts officials said Oue’s counselor offered career support services such as resume assistance and interview coaching — not what Oue said he needed.

Between August 2020 and January 2021, Oue said he tried to reach his counselor several times with questions about the course material, but she responded only twice — and once was to tell him whether he needed to pass the state licensing exam to graduate from the course.

The answer to that was no. He worked hard to finish the course, in part to make sure he didn’t have to reimburse the military for the tuition, he said, but never learned enough to enable him to take the state licensing exam.

“I didn’t understand enough,” he said. “There was no way I could have passed the state test. It was just a big waste of my time.”

This story about workforce training programs was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for our higher education newsletter.