A call for oversight of Mass. for-profit colleges

BOSTON — Two top Massachusetts elected officials are trying to tighten regulations on for-profit colleges, arguing some of the schools are leaving students with high debt and without the skills needed to land a good job — all while reaping the benefit of federal student loans.

Democratic U.S. Sen. Elizabeth Warren has filed a bill she said will protect student borrowers by requiring colleges to assume some of the risk of student loan default.

Massachusetts Attorney General Martha Coakley, also a Democrat, is proposing new state regulations prohibiting for-profit and occupational schools from using misleading advertising and unfair lending practices.

Coakley has also sued a now-shuttered for-profit school, alleging it falsified student enrollment records, attendance and grades to benefit from government-funded student loans while failing to provide course materials and training.

Coakley said that while many for-profit schools provide an important service, some use a "predatory model" that advertises heavily to those with access to federal loans, including returning veterans or low-income students.

"The students end up either not completing the program or completing it and then not getting a job and so they're behind the eight ball. They've lost the time. They've lost their money. They default on the loan. And now they've got a credit problem," Coakley said in an interview with The Associated Press.

"Meanwhile all that money goes into the bank, into Wall Street. A lot of this is funded by investors who see this as another way to make money without worrying about what the impact is going to be on students."

Warren also argued that for-profit colleges are draining billions in student loans without giving students a meaningful education.

"That (debt) crushes the student and imposes losses on the taxpayers and yet the for-profit college just keeps making money," Warren said in a separate interview.

Steve Gunderson, president and CEO of the Association of Private Sector Colleges and Universities, said for-profit colleges are a critical resource for low-income adults trying to improve their education while balancing work, life and children.

He said some public officials are driven by "ideological opposition" to private investment in education.

"What they're really saying is that if you are poor, you can't go to school," he said.

In Massachusetts, he said, the majority of certificates in the construction trades, culinary arts and mechanic and repair technologies are awarded by private-sector schools. He said there are 70 for-profit colleges in the state. Nationwide, more than 3,000 for-profit schools enroll about 4 million students, he said.

Gunderson conceded, however, that during the recession, private-sector colleges accepted a flood of laid-off workers looking to beef up their skills without sufficient vetting.

"Our schools would be the first to tell you we enrolled students that probably should not have been enrolled because there really wasn't a commitment to complete their education," he said. "That practice has stopped. Schools now are being more careful about who they enroll and are much more focused on retention, graduation and placement."

Warren's bill would require colleges with a student loan default rate of 30 percent or more to pay 20 percent of the total loans made to students who default, including interest and collection fees, into a fund. Colleges with a default rate of 25 to 30 percent would pay 15 percent.

A portion of that fund would help make up for shortfalls in Pell Grants, which are aimed at lower-income college students. Institutions with a student loan management plan, including financial aid counseling, could seek a waiver from the payments or be assessed a lower payment.

The bill, co-sponsored by Democratic U.S. Sens. Dick Durbin of Illinois and Jack Reed of Rhode Island, would also prohibit colleges from denying admission or financial aid based on the perception that a student may be at risk of default.

"It's a skin-in-the-game bill that tries to help align the incentives of the colleges to keep costs down for the students and to make sure the students get a meaningful diploma," said Warren, a former Harvard Law School professor.

Gunderson said his group opposes Warren's bill but supports limiting student loans to cover just the cost of education and instituting an income-based repayment system so students are never asked to spend more than 8 percent of their annual income to repay loans.

Coakley, who last year reached a $425,000 settlement to reimburse former students of another for-profit training center, is proposing state regulations she said would require all for-profit and occupational schools provide accurate information to the public, prohibit misleading advertising and address unfair lending practices.

"You can't do anything that is unfair or deceptive in the course of trade or business," Coakley said. "That's just leveling the playing field."

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Gillette’s sales clipped by furry fashion

Boston Red Sox left fielder Jonny Gomes' remarks this week that his straggly beard will be gone before the start of spring training likely was welcome news across town at Gillette's World Shaving Headquarters.

The beard fashion trend — championed by the Red Sox on the road to their World Series win, the "Duck Dynasty" crew, and hipsters, among others — has clipped Gillette's razor sales, parent company Procter & Gamble said yesterday.

While its global grooming sales increased 3 percent in the quarter that ended Dec. 31, razor sales fell in the United States.

"Trends come and go, and we are seeing a slight decline in wet shaving incidence in the U.S. right now driven by fashion," P&G spokesman Bryan McCleary said.

Chief financial officer Jon Moeller also placed blame on Movember, the annual event in which men are encouraged to grow moustaches during November to raise awareness of men's health issues, including prostate and testicular cancer.

Gillette's sales of non-disposable razors and blades declined 7.8 percent in the 12 weeks through Dec. 21, according to a recent report by JPMorgan & Chase analyst John Faucher, who attributed the drop to an "increased interest in facial hair."

But Gillette is turning to another trend to buoy razor sales.

"We are also seeing increased shaving below the neck, particularly among younger men 18-24, and have brought new innovation to the market to meet guys' holistic shaving needs," McCleary said.

A new Gillette Body razor will be released next month to cater to the "manscaping" needs of men who shave body areas including their groin, stomach, back, chest and underarms.

Herald wire services contributed to this report.

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Care.com shares skyrocket to $24.30

Shares of Waltham-based Care.com shot up yesterday, marking a successful first day of trading for the Boston area's first tech IPO in a year and a half.

Care.com shares closed at $24.30, up nearly 43 percent from the IPO price of $17 per share. Coming out of the SEC-mandated quiet period, Care.com founder and CEO Sheila Lirio Marcelo said the company will continue to expand its membership and grow as a company.

"We're targeting 42 million households in the U.S. alone," Marcelo told Bloomberg TV after ringing the opening bell at the New York Stock Exchange. "We barely touched the surface."

Care.com, an online service that connects professionals with people who need family care, has 9.7 million members around the world.

Marcelo said her company would use the IPO to "raise the overall awareness (of Care.com) to help families and to take advantage of acquiring companies."

The company has made a number of significant acquisitions already, including German care site Besser Betreut. Marcelo said the family care industry is "fragmented," so acquisitions make sense going forward.

"There's ways for us to enhance our products and services so we can deliver more for our members," Marcelo said. "We're definitely interested in continuing to expand our overall offerings."

Right now, care.com users can find child, adult and senior, pet and home care.

Yesterday's closing price gave Care.com a market cap of $722.83 million.

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Global markets hit by fears of growth slowdown

Fear is back in the market.

Investors are worried about slower economic growth in China, a gloomier outlook for U.S. corporate profits and an end to easy-money policies in the United States and Europe. They're also fretting over country-specific troubles around the world — from economic mismanagement in Argentina to political instability in Turkey.

Those fears converged this week to start a two-day rout in global markets that was capped by a 318-point drop in the Dow Jones industrial average Friday. It was the blue-chip index's worst day since last June. The Dow plunged almost 500 points over the two days.

The Dow finished down 2 percent at 15,879 Friday. The Standard & Poor's 500 index fell 38 points, or 2.1 percent, to 1,790. The Nasdaq composite fell 90 points, or 2.2 percent, to 4,128.

As investors shunned risk, small-company stocks fell even more than the rest of the market, and bond prices rose.

Despite the sell-off, U.S. stocks remain near all-time highs after surging 30 percent last year. The S&P 500 is 3 percent below its record high of 1,848 on Jan. 15.

U.S. stocks have not endured a correction — a drop of 10 percent or more over time — since October 2011.

The turbulence coincides with a global economic shift: China and other emerging-market economies appear to be running into trouble just as the developed economies of the United States and Europe finally show signs of renewed strength nearly five years after the end of the Great Recession.

The trouble began Thursday after a January survey showed a drop in Chinese manufacturing activity. Days earlier, China reported that its economic growth last year matched 2012 for the slowest pace since 1999.

"It is interesting how even a mild tremor in China's growth causes such anxiety around the world," said Eswar Prasad, professor of trade policy at Cornell University.

In Asia, Japan's Nikkei 225 slipped 1.9 percent Friday to close at 15,391.56; Hong Kong's Hang Seng shed 1.2 percent to 22,450.06; and Seoul's Kospi dropped 0.4 percent to 1,940.56.

Slower growth in China is bad news for countries that supply oil, iron ore and other raw materials to the world's second-biggest economy. Some of those countries, such as Indonesia and South Africa, were already struggling with an outflow of capital as rising U.S. interest rates drew investors to the United States.

Here's a look at the forces buffeting global financial markets:

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THE END OF EASY MONEY

Since the global financial crisis hit in 2008, the Federal Reserve has flooded markets with cash to push interest rates lower and encourage U.S. businesses and consumers to borrow and spend. But last month, as signs of growing economic strength emerged in the U.S., the Fed cut back — reducing its monthly bond purchases to $75 billion from $85 billion. It also said that it expected to reduce the bond-buying further "in measured steps" at upcoming meetings.

The Fed meets again Tuesday and Wednesday. Many economists expect the central bank to cut the purchases again — perhaps to $65 billion a month.

The scaling back of the Fed's easy-money policies has hit some emerging markets hard. When the Fed was pushing U.S. rates lower, emerging markets had seen an inflow of capital from investors seeking higher returns than they could get in the United States. Now investment is flowing back to America, hammering currencies in emerging markets.

The South African rand, Russian ruble, Turkish lira, and especially the Argentinian peso — which fell 13 percent Thursday — have been "trounced," said Jane Foley, a currency strategist at Rabobank. "Talk that the U.S. Federal Reserve will announce another reduction in its monthly bond purchases next week ... (is also) contributing to a loss of confidence in some emerging markets," she said.

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POLITICAL TURMOIL

In some countries, concerns over the local political or financial situation have worsened the market volatility dramatically. That was most obvious in Argentina, where the peso this week suffered its sharpest fall since the country's 2002 economic collapse. The government, running short of reserves it could use to buy the currency and keep it from falling, has let the peso drop instead. The country's economic fundamentals are grim: Inflation is believed to be running at about 25 percent to 30 percent.

The peso fell 16 percent in two days, easily the worst performer among emerging markets.

Turkey's national currency, the lira, hit multiple record lows in recent weeks as investors worried about the fallout of a corruption scandal that threatens to destabilize the government. Having a stable government for the past 10 years has been one of the key ingredients in the country's economic revival.

The lira hit an all-time low of 2.33 against the dollar on Friday — from around 2 per dollar in December — despite a $3 billion-intervention by the central bank in foreign exchange markets.

Beyond political problems, the countries that have seen their currencies fall most are those that rely heavily on exports of raw materials used in manufacturing. The Russian ruble was trading at 34.58 per dollar, from below 34 on Thursday. The South African rand weakened to 11.13 per dollar, from 10.98 the day before.

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CHINA AND GLOBAL GROWTH

Since the recession, the global economy has relied heavily on China and other emerging markets as the developed economies of the United States, Europe and Japan struggled.

But China's economy is decelerating. It grew 7.7 percent in October-December 2013 from a year earlier, down from the previous quarter's 7.8 percent growth. Factory output, exports and investment all weakened. On Thursday, the preliminary version of HSBC's purchasing managers' index of Chinese manufacturing fell to 49.6, the lowest reading since July's 47.7. Anything below 50 signals a contraction.

China's growth is still far stronger than the United States, Japan or Europe, but is down from the double-digit rates of the previous decade.

Many economists are troubled less by the slower growth numbers than by China's over-reliance on trade and investment instead of spending by its consumers.

"China, and the world at large, would benefit from its shift to a lower but more sustainable pattern of growth that is not so heavily dependent on investment-led growth fueled by bank credit," Cornell's Prasad said.

China's growth is slowing just as the world's rich economies begin to gain momentum.

The 17 countries that use the euro currency appear to be recovering from a debt crisis that tipped them into a double-dip recession in late 2011.

In the United States, households have reduced crippling debt levels and are in better shape to start spending again. The International Monetary Fund expects the U.S. economy to grow 2.8 percent this year, up from 1.9 percent in 2013, and for the eurozone economy to grow 1 percent in 2014 after contracting 0.4 percent in 2013 and 0.7 percent in 2012.

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CORPORATE PROFITS

In the U.S., the outlook for corporate profits has already been weakening, and the turmoil in emerging-market currencies could make matters worse.

About two-thirds of the 123 S&P 500 companies that have reported fourth-quarter earnings so far have beaten analysts' estimates, according to S&P Capital IQ, in line with the historical average. But the forecasts for income growth have been falling and could decline further.

As recently as this summer, analysts predicted earnings growth of more than 11 percent for the fourth quarter, but now they expect just half that — 5.9 percent.

Some companies are becoming more pessimistic, too. For the January-March quarter, seven out of every 10 that have talked about their prospects have cut projections, more than average, according to FactSet. The stocks have tanked as a result. Since United Continental lowered revenue estimates on Thursday, for instance, its stock has fallen 6 percent.

U.S.-based multinational companies posted some of the biggest declines on Friday as investors worried about overseas sales. Oracle and 3M have warned that their results could take a hit because of the strengthening dollar. Shares of the companies fell 3 percent.

Companies that rely on overseas sales will bring home fewer dollars if the dollar continues to appreciate against foreign currencies, especially in emerging markets that have been hammered this week. In Argentina, for example, the same amount of pesos buys fewer dollars today than it did last week.

On Tuesday, Europe-based consumer goods giant Unilever said fourth-quarter sales slowed because of weakness in emerging markets. The decline was mostly because of unfavorable currency moves.

"So when emerging markets sniffle," said Lawrence Creatura, a portfolio manager with Federated Investors, "large-cap companies can catch a cold."

____

Associated Press writers Bernard Condon in New York, Toby Sterling in Amsterdam and Suzan Fraser in Ankara, Turkey, contributed to this story.

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US citizen and local filmmaker detained in Egypt

CAIRO — An American translator and an Egyptian filmmaker were detained in Cairo and have been held for three days in an undisclosed location, their lawyer said Saturday.

Ahmed Hassan, a lawyer with the Hisham Mubarak Law Center, told The Associated Press that U.S. citizen Jeremy Hodge, 26, of Los Angeles, and Egyptian filmmaker Hossam Eddin el-Meneai, 36, were arrested Wednesday night at their apartment in the Dokki neighborhood of Cairo. Hassan said that officers at the local police station first acknowledged they were holding the two but later denied that they were in custody. It is not immediately clear why the two were detained.

The Interior Ministry declined to comment.

Hassan said he believes the two are being held by Egypt's National Security Agency, the country's domestic spy service. He said he has filed a report with authorities saying the two have been "kidnapped."

Hassan called the detentions part of a "wave of intimidation of journalists" in Egypt. There has been a rise in cases where citizens detain journalists and foreigners amid a growing nationalist fervor and panic over foreign plots to destabilize the country.

The U.S. Embassy in Cairo confirmed that a U.S. citizen was detained and that officials are "providing all appropriate consular assistance," declining to comment further.

Hodge is a freelance translator working in Egypt. His roommate el-Meneai is a filmmaker, originally from the restive Northern Sinai province where militants attack security and military forces.

A statement issued by friends of the two included text messages that Hodge sent after they were detained.

"They're asking Hossam about Sinai and his camera," Hodge wrote. "They're asking me how I know him, and where I learned my Arabic." In another text message, he wrote: "Hossam is being investigated, I'm waiting around."

Hodge suffers from asthma, his friends said. It is not clear if he has access to his medication.

In a separate incident, Egyptian artist and filmmaker Aalam Wassef was briefly detained along with a Swiss citizen on Friday, and was later released without charge, lawyers said. It was not immediately clear why the two were taken from Wassef's apartment that overlooks Tahrir Square, where rallies took place Saturday on the third anniversary of Egypt's 2011 uprising.

Wassef has made videos critical of the government and former autocrat Hosni Mubarak. He worked under a pseudonym when Mubarak was in power and began putting out videos under his own name after the autocrat's fall.

Three journalists working for satellite news broadcaster Al-Jazeera English also have been held since Dec. 29, with one of them spending long hours in solitary confinement. Authorities initially accused them of being part of a terrorist group, referring to the Muslim Brotherhood, and spreading false news about Egypt. They have yet to be formally charged.

Since July 2013, at least five journalists have been killed, 45 journalists assaulted, and 11 news outlets raided in Egypt, according to the Committee to Protect Journalists. The group also reported that at least 44 journalists have also been detained "without charge in pretrial procedures, which, at times, have gone on for months."

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Coke: Stolen laptops had info of 74,000 people

Coca-Cola said Friday that laptop computers stolen from its Atlanta headquarters held the personal information of up to 74,000 people.

The company has recovered the laptops and spokeswoman Ann Moore said Coca-Cola has no indication that the information on the stolen computers was misused. Moore confirmed that the personal information on the laptops belonged mostly to employees or former employees of Coca-Cola Co.

Coke is sending letters to about 18,000 people whose names and Social Security numbers were found on the laptops. The laptops also contained information on compensation, ethnicity and addresses.

The Wall Street Journal first reported the theft Friday, citing a memo sent to Coca-Cola's U.S. and Canadian employees. Moore said that the company cannot provide further details on the thefts because there is an ongoing law enforcement investigation.

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Wal-Mart's Sam's Club to cut 2,300 workers

NEW YORK — Wal-Mart Stores Inc. said it's eliminating 2,300 workers at its Sam's Club division as it reduces the ranks of middle managers in a bid to be more nimble.

The layoffs, which cut 2 percent of the membership club's U.S. employee count of about 116,000, mark the largest since 2010 when the Sam's Club unit laid off 10,000 workers as it moved to outsource food demonstrations at its stores.

The cuts come as Sam's Club strives to compete better with Costco Wholesale Corp. and online players like Amazon.com's Prime membership service. They also follow layoffs announced by several other major retailers in recent weeks that include Macy's Inc., J.C. Penney and Target Corp.

Bill Durling, a spokesman at Sam's Club, says that a little less than half of the cuts were aimed at salaried assistant managers. The cuts are also eliminating some hourly workers. He says that each of the clubs had roughly the same number of workers regardless of how much revenue each store generated.

"We felt this was the right move to make sure we are positioning ourselves for growing in the future," said Durling in an interview with The Associated Press. "We are trying to rebalance our resources in the field to make sure we are investing in the clubs that have the higher growth potential and balancing resources across the chain."

He added that Sam's Club operates 630 units in the U.S. and Puerto Rico. He noted that the unit will be adding 15 or more clubs in the fiscal year starting on Feb. 1.

For the year ended Jan. 31, 2013, Sam's Club generated revenue of $56.4 billion, or 12 percent of Wal-Mart's net sales of $466.1 billion.

Durling said that those workers who received notices will continue to get paid for the next 60 days and will have time to re-apply for opportunities at Wal-Mart or other areas of Sam's Club's operations. After that time expires, they will receive severance.

"We're trying to treat our associates with utmost care and respect," he added.

Wal-Mart is based in Bentonville, Ark.

Shares slipped 3 cents to $74.39 in after-hours trading, after being down 54 cents to $74.42 Friday.

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Foes of Obama trade pacts mostly fellow Democrats

WASHINGTON — Debates on lowering trade barriers can turn Congress upside down for Democratic presidents promoting such legislation. Business-minded Republicans suddenly turn into allies and Democrats aligned with organized labor can become outspoken foes.

It's a reversal of the usual routine, where a Democratic president can generally count on support from fellow Democrats in Congress and varying levels of resistance from Republicans.

Now it's President Barack Obama's turn to experience such a role reversal.

Already, he's encountering pockets of deep Democratic resistance, especially from manufacturing states, to his efforts to win congressional approval for renewal of "fast track" negotiating authority.

Such tactics help speed the process for major trade agreements by restricting Congress to up-and-down votes — with no amendments allowed.

Two such trade deals are in the works.

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Sandy aid to Hoboken on par with other NJ towns

TRENTON, N.J. — A New Jersey city whose Democratic mayor alleged that GOP Gov. Chris Christie's administration threatened to hold up Superstorm Sandy aid if she wouldn't support a development project doesn't appear to have been slighted by the state's allocations so far.

But a spokesman for Hoboken Mayor Dawn Zimmer says the problem isn't how much the city received from programs so much as which storm-relief programs the state has funded.

Hoboken has received more than $300,000 from a pair of grant programs, one for storm-related planning and the other to find alternate energy sources in case of major outages. Those amounts are typical of the programs.

State officials have said most of the initial federal Sandy aid is going to rebuilding what was lost and more resiliency programs will come later.

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A look at Superstorm Sandy aid in New Jersey

Following is a breakdown of aid by the numbers from Superstorm Sandy in New Jersey, where Democratic Hoboken Mayor Dawn Zimmer has said state officials threatened to hold back funding if she did not support a development deal. The administration of Republican Gov. Chris Christie has denied the allegations.

FEDERAL MONEY

Last year, Congress allocated $50.5 billion to rebuild after Superstorm Sandy. That is in addition to the nearly $10 billion used after the storm to replenish the National Flood Insurance Program. The emergency money is divided into many different programs.

WHAT THE STATE CONTROLS

As part of the federal aid, New Jersey received $1.8 billion last year to allocate as it saw fit, though the state's plans were first cleared by federal officials. A second distribution of $1.4 billion is expected in coming months. This time, state officials plan to hold a public hearing about how it will be used. Most of that aid for the first round — and likely most in the second round — is going to rebuilding programs. About $745 million is in a program to cover home rebuilding and repair costs not covered by insurance or other government programs. And demand still far outstrips money available in that program.

STATE FUNDS FOR RESILIANCE

New Jersey has put $290 million of its federal money so far toward programs aimed at mitigating damage from future natural disasters. Most of that is going to programs to buy and knock down flood-prone properties and to raise homes about expected flood levels. Some smaller programs are focused on community-wide projects.

MONEY HOBOKEN HAS RECEIVED

Hoboken has received $200,000 for a program to plan for future flood events and $142,080 to implement ways to keep the lights on in the case of major power outages. The energy allocation was typical of what's been awarded in that program; the planning grant was among the largest in the state so far.

THE FUTURE FUNDS

The funding amount and number of projects have not been set yet, but the federal government is planning to pay for some major flood mitigation programs that are being designed now. One for Hoboken would use open space to absorb floodwater and levees and pumps to control it.

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