A Lesson From Trump University's Predecessor
An exposé published by The Atlantic in 1970 led to the downfall of the notorious Famous Writers School. The drama that embroiled the correspondence school is strikingly similar to the trials of Trump University.
Nearly 47 years ago, in July 1970, The Atlantic published “Let Us Now Appraise Famous Writers”—a devastating, and at times wickedly funny, takedown of a huge mail-order correspondence school called the Famous Writers School. The author, Jessica Mitford, a renowned investigative reporter, later wrote in her book Poison Penmanship that the article was “one of the few clear-cut successes, however temporary, of my muckraking career.”
Yet in retrospect, Mitford's exposé is more notable for its eerie prescience. The rise and fall of the Famous Writers School turns out to bear an uncanny similarity to the sordid saga of Trump University.
Like Trump University, the Famous Writers School misled people with promises of career training, relied on deceptive ads to recruit students, pretended to be a legitimate academic institution, and used aggressive sales tactics to prey on people's dreams. Far from being innovative, Trump University's sales "playbooks" were pedestrian—similar to those used by correspondence schools in the 1970s. Just as was the case with Trump University, Mitford's exposé prompted an investigation by New York’s state attorney general.
Trump University did differ from the Famous Writers School in at least one notable respect: Unlike the Famous Writers School, Trump University was unaccredited, making its students ineligible for federal student loans and grants. Yet the rise and fall of both schools is a cautionary tale that continues to bear on the debate in Washington in 2017 over how for-profit schools should be regulated by states and the federal government.
In an ideal world, for-profit colleges pioneer educational innovations like online learning and respond more nimbly than highly regulated public institutions to the career needs of working adults. But in the cases of the Famous Writers School and Trump University, the desire to maximize profits ultimately undermined educational quality, exposing the need for regulation to protect consumers and ensure accountability for better student outcomes.
Mitford started to report on the Famous Writers School after her husband, the civil-rights lawyer Robert Treuhaft, represented a 72-year-old semi-literate widow in a case against the school. Treuhaft's client had drained her savings of $200 after a salesman talked her into making the down payment on a $900 contract for a home-study course.
As soon as the salesman left, the widow had second thoughts and returned her lessons unopened. But Famous Writers refused to release her. “You are involved in a legal and binding contract,” the school wrote, advising her that no student was permitted to withdraw from a course unless a doctor’s certificate attested to ill health. After Treuhaft threatened to alert the U.S. Attorney’s office, Famous Writers relented and returned the elderly woman’s money. That episode whetted Mitford's appetite to investigate the for-profit school.
The Famous Writers School had 15 “Guiding Faculty”—well-known writers, including Rod Serling and Bennett Cerf, The Twilight Zone creator and a Random House co-founder, respectively. The “Famous 15” appeared in ubiquitous ads in magazines and newspapers, hawking the virtues of the school's mail-order courses. Mitford soon learned that none of them actually taught or reviewed any writing submissions, but that didn’t stop the school from running ads implying that the famous writers would be personally involved in cultivating students’ writing talents.
One ad featuring Cerf stated: “If you want to write, my colleagues and I would like to test your writing aptitude. We’ll help you find out whether you can be trained to become a successful writer.” Another ad featured the best-selling romance novelist Faith Baldwin declaring: “It’s a shame more women don’t take up writing. … Beyond the thrill of that first sale, writing brings intangible rewards."
Even before Mitford began investigating, a skeptical writer named Robert Byrne had fabricated an applicant to the Famous Writers School, “Louella Mae Burns,” and submitted a giddy essay in her name. In his droll book Writing Rackets, Byrne recounted what “Louella,” purportedly a 63-year-old widow with little education, had written about a fictitious meeting with Calvin Coolidge. “When out of the blue came a honking and cars and motorcycles and policemen,” “Louella” wrote in her aptitude essay. “It was really something! Everybody started shouting and waving and we finally essayed to see the reason of all this. In a sleek black limousine we saw real close Mr. Calvin Coolidge, the President himself!”
Louella’s dreadful essay drew a congratulatory letter from Donald Clark, the “registrar” of the Famous Writers School, who stated: “The enclosed Test unquestionably qualifies you for enrollment … only a fraction of our students receive higher grades … In our opinion, you have a basic writing aptitude which justifies professional training.”
The “registrar” who reached out to the so-called Louella, Mitford discovered, was actually a copywriter in the school’s advertising department. Mitford decided to have a neighbor send in her own “aptitude test.”
The school salesman who soon visited them lied, telling Mitford and her friend that several of the Famous 15 writers were stationed at the school’s headquarters in Connecticut at all times working with dozens of experts evaluating and correcting student manuscripts. “Your Guiding Faculty member … could be Bennett Cerf, could be Rod Serling," the salesman promised.
In an interview, Cerf confessed that the school’s advertising was designed to lure the gullible into paying a then-hefty fee of $785 to $900 for the home-study lessons. “The crux of it is a very hard sales pitch, an appeal to the gullible,” Cerf told Mitford. “Of course, once somebody has signed a contract with Famous Writers, he can’t get out of it, but that’s true with every business in the country.” Cerf said that “If anyone thinks we’ve got time to look at the aptitude tests that come in, they’re out of their mind!”
When Mitford asked how many books by FWS students Random House had published, Cerf retorted: “Oh, come on, you must be pulling my leg—no person of any sophistication, whose book we’d publish, would have to take a mail-order course to learn how to write.”
At the time, 65,000 people were enrolled in Famous Writers courses. None of the Famous 15 taught at the school, but Famous Writers did employ 55 teaching faculty—which translated into 1,182 students on average per un-Famous instructor. Each student was supposed to submit 24 assignments over three years. That would amount to 55 instructors grading 520,000 assignments a year—nearly 10,000 writing assignments each, an impossible task.
The school’s financial model thus actually depended on having the overwhelming majority of students drop out. Fortunately for the school, Mitford’s math indicated about 90 percent did. Phyllis McGinley, the Pulitzer Prize-winning poet and one of the 15 Famous Writers, confessed to Mitford: “We couldn’t make any money if all the students finished.”
Mitford’s exposé was an overnight sensation. She detailed its successes in Poison Penmanship: The Washington Post and The Des Moines Register reprinted her story. Dick Cavett invited Mitford onto his TV talk show. Congressman Laurence Burton, a Utah Republican, read her article into the Congressional Record as a warning to unsuspecting consumers. Cartoonists had a field day. A New York Times Book Review cartoon portrayed a middle-aged woman writing a letter: “Dear Bennett Cerf and Faith Baldwin—Yes! I have a strong desire, nay, a lust to write. …” A New Yorker cartoon showed a disgruntled husband telling his smirking wife: “Go ahead, scoff. Bennett Cerf and Faith Baldwin say I have writing aptitude, and they know more about it than you do.”
In Indiana and Washington, the state universities ordered reprints of Mitford’s article for secondary-school principals, counselors, and university directors of independent study who might advise students on postsecondary options. Iowa’s attorney general filed suit to bar Famous Writers from sending direct mail appeals into the state, charging that they constituted use of the mail to defraud the public.
The Federal Trade Commission soon launched a full-fledged inquiry into the Famous Writers School, dispatching investigators to depose school personnel and talk to disgruntled students. And that was just the beginning of a wave of scrutiny for correspondence schools.
In the early 1970s, more than 2 million Americans were enrolled in hundreds of correspondence or home-study schools such as Famous Writers. As I detail in a series of papers that are being rolled out by the progressive Century Foundation as part of a project on the history of for-profit-college regulation, correspondence schools were the early, if primitive, predecessors to the distance-learning programs of today. Those programs include the online learning program that Trump University initially launched.
The rapid growth of the correspondence-school industry in the 1970s was fueled in part by federal tax dollars. About one in four students enrolled at the fewer than 160 accredited correspondence schools used federal student loans, and more than a third used veterans’ benefits through the GI Bill.
So long as correspondence courses could be paid for with federal dollars, the types of courses that home-study schools could dream up seemed almost infinite—an idea that the Chicago Tribune put to the test in June 1975. James Jackson, a reporter at the Tribune, discovered one school that offered a course in how to start your own correspondence school. Jackson ordered the course from Pioneer Schools in California. He learned “how to make enrollments, place graduates, and get Veterans Administration approval on a shoestring investment.”
Jackson then proposed a course in the “most preposterous subject he could think of to teach through home-study lessons—skydiving.” Sure enough, the head of Pioneer Schools replied enthusiastically: “I would welcome the opportunity of writing a course for you on ‘Skydiving.’ I believe … that seven lessons would suffice.”
Ultimately, nearly 2,000 vets took courses at Famous Writers on the taxpayer’s dime. In other home-study schools, veterans were even more prevalent: By 1973, 430,000 veterans and servicemen were enrolled in correspondence schools. Advance Schools, Inc., a correspondence school that went bankrupt in 1975, had more than 51,000 Veterans Administration beneficiaries. A Government Accountability Office report published in 1972 found that 75 percent of veterans failed to complete their correspondence courses.
That same year, the Federal Trade Commission ordered a correspondence school offering a law degree, LaSalle Extension University, to put a disclaimer in its advertisements: “Completion of these courses does not qualify anyone to take the bar examination or practice law in any of the 50 states of the United States or the District of Columbia.”
Many correspondence schools were sharply criticized for their misleading advertising and high-pressure sales tactics, including the use of the counterintuitive "negative sell." The essence of the sales technique, as a 1976 FTC report summarized, was to "degrade the prospect's abilities and embarrass and humiliate the prospect . . . to turn the tables on the prospect, undermining the natural sales resistance and forcing the individual to prove his or her worth to the salesperson, instead of the salesperson proving the worth of the course to the prospect."
"Misrepresentations about enrollment selectivity," the FTC report stated, not only encouraged students to believe they "must act quickly but also form the basis for the negative sell itself--if the school claims to be highly selective, the consumer comes to believe that he must sell himself to the school." Decades later, Trump University salespersons would also make use of the negative sell, along with other sales tactics employed by correspondence schools in the 1970s.
Trump University—like the Famous Writers School, with its “registrar” for courses, “faculty” members, and phony “aptitude tests”—pretended to be a university. Although Trump U did not offer any degrees, did not award grades to students, and provided no courses that could count toward college credits, the school's website boasted of an “Ivy League-quality curriculum” and “world-class faculty.” One of the few differences between Trump U and Famous Writers was that the former couldn’t rely on federal funds. (Introductory real-estate seminars started at $1,495 but more advanced programs cost as much as $35,000.)
In a promotional video, Trump himself pledged, “We’re going to have professors and adjunct professors that are absolutely terrific. … the best of the best.” Trump, a graduate of the University of Pennsylvania’s Wharton School of Business, said his namesake seminars were “going to teach you better than the business schools are going to teach you.”
Payments for online courses or real-estate seminars were referred to at Trump U as “tuition.” The investigative reporter Steven Brill reported in Time that salespeople were coached to use special “catchphrases/buzzwords” (such as “Ivy League”) with marketing guidelines that advised: “Think of Trump University as a real university with a real admissions process—i.e., not everyone who applies is accepted.” While Trump U didn’t have any guidelines or restrictions for getting accepted into its pricey seminars or online courses, salespeople were told to follow scripts that would make it seem as if a potential customer had been screened and selected for “admission."
Just as the Famous Writers salesman tried to mislead Mitford about the personal involvement of the 15 Famous Writers, Trump U employees misled customers about Donald Trump’s personal involvement in real-estate seminars. At the three-day, $1,495 introductory workshops to real-estate investing—at which Donald Trump never appeared—Trump University speakers regularly insinuated that he might stop by as a “surprise.”
Although Trump could not identify a single real estate seminar instructor or mentor by name, or pick one out of a photo lineup, company sales scripts directed seminar speakers to falsely speak of their personal ties with Trump. According to David Barstow in The New York Times, one script read: “I remember one time Mr. Trump said to us over dinner, he said, ‘Real estate is the only market that, when there’s a sale going on, people run from the store.’ You don’t want to run from the store.”
In an introductory video and multiple ads, Donald Trump promised that instructors would be “handpicked by me.” In one ad, Trump pledged, “my hand-picked instructors will share my techniques, which took my entire career to develop. Then, just copy exactly what I’ve done and get rich.”
In fact, none of Trump U’s instructors were picked by Trump. To his credit, Trump did initially consult a number of business-school professors at Columbia and Dartmouth on subject matter and curriculum when Trump U first offered home-study products in 2005. And during its first year-and-a-half, Trump U offered a Real Estate Investor online training program developed by Roger Schank and Gary Eldred, who had previously served on the faculties at Yale and Stanford. But those elements of a bona fide academic institution largely vanished after Trump University switched to enrolling students in live real-estate seminars in early 2007.
Critics mocked Trump's aspirations to be the founding father of a university soon after Trump U opened. In June 2005, Doonesbury devoted a week of cartoons to Trump U, with Zonker abandoning his shiftless life to enroll. “The web site is really classy,” Zonker enthused. “Portraits of the founder, a coat of arms, even a university motto: ‘Greed Est Bonum’ (to which Boopsie replies: “Wow, part Latin—that is classy).”
Fortune magazine got into the act as well, suggesting in 2005 that Trump U might be well-positioned to offer courses such as “Understanding the Superlative”—which would focus “on the most powerful words in the English language, such as ‘best,’ ‘greatest,’ and ‘most unbelievable’” and which would be “Definitely the best and most useful English class offered at any university ever.”
The pitch for Trump U's real-estate seminars was premised on the idea not only that students would be learning from outstanding instructors, but also that students would be gaining unique access to Trump's secrets for making a fortune.
In December 2007, the Los Angeles Times business columnist David Lazarus responded to an ad promoting free introductory seminars in California. The ad, which ran near the peak of the subprime mortgage crisis, featured Donald Trump declaring, “Investors nationwide are making millions in foreclosures … and so can you! … I'm going to give you two hours of access to one of my amazing instructors AND priceless information … all for FREE.”
Lazarus jumped at the chance to take a Trump U seminar—and soon discovered that the “amazing instructor” had never bought or sold a house in California, had been through bankruptcy, and had his own home foreclosed upon. The two-hour seminar was essentially an infomercial aimed at selling Trump U’s three-day $1,495 introductory workshop to real estate.
Meanwhile, an October 2016 investigation by Michael Biesecker of the Associated Press of 68 former faculty and staff identified in Trump U customer-satisfaction surveys found that half had “personal bankruptcies, foreclosures, credit-card defaults, tax liens, or indicators of significant money troubles” before teaching the real-estate courses. “Many of those hired to teach,” Biesecker reported, “did not have college degrees and were not licensed to broker real estate.”
Media scrutiny aside, officials realized that Trump U wasn’t a real university right from the start. Under New York state law, an entity can only operate as a university if it is chartered by the state's Department of Education. In 2005, the state education department warned Trump U that it was in violation of state law because the company was neither chartered as a university nor licensed by New York state to offer instruction or training.
Only after the state pressured Trump U a second time, in 2010, to drop the title "university" from its designation did the company agree to change its name to the Trump Entrepreneur Initiative. In November 2016, 11 years after the state first contacted Trump U, Donald Trump agreed to pay up to $1 million in penalties for violating New York’s state education laws.
If there was an element of farce to Trump University, there was also an element of tragedy. Trump, who owned 92 percent of Trump U, reportedly personally earned $5 million in profit from the enterprise. His profits came largely from the 9,208 people who ultimately attended the three-day workshops and the roughly 800 who shelled out for “elite” programs costing $10,000, $19,500, or $35,000; those customers often got hooked through a free 90-minute real-estate session that upsold to those pricey seminars. Before the free session, salespeople gathered as much financial information about customers as possible to gauge how much attendees might be able to fork over. This was all part of “The Art of the Set” and “setting the hook.”
Court documents show that roughly 575 customers paid the full $35,000 fee for the Gold Elite “mentorship” program before Trump University closed in 2010. Even so, Trump's $25 million payout to settle the civil fraud and class-action lawsuits brought by former students and the New York state attorney general appears to dwarf the profits Trump earned from Trump U.
One sales manager rebelled when his superiors pushed him to conclude his hard-sell encouraging a couple to purchase the company’s $35,000 program. The couple, the manager testified couldn’t afford it and would have to pay, “using his disability income and taking out a loan based upon equity in the apartment.” The sales manager was reprimanded for not pressuring the couple to purchase the program, and another salesman talked them into buying it. Disgusted by the company’s predatory tactics, the sales manager resigned.
Other students took on more than $20,000 in credit-card debt to pay for Trump U programs. Some went into bankruptcy. At least one student lost her life savings. A woman who cared for a son with Down syndrome alleged she was pressured into signing up for a $25,000 program by an instructor who told her she needed to secure more resources to invest in her future and guaranteed she would make her $25,000 back within 60 days. The woman tried and failed to get her money refunded—and is still paying off her debt.
Tales of misled and defrauded customers at Trump University did not result from sheer coincidence—Trump U salespersons utilized some of the same misleading and deceptive sales tactics that correspondence salespeople of the 1970s had employed.
For example, one sales-pitch variation of the negative sell was the "shaming close." A 1972 sales manual for McGraw Hill, which then ran one of the nation's largest correspondence school programs, advised salespeople to tell reluctant customers: "We've known for over 45 years that we won't enroll people if our programs are too expensive. We have also learned something far more important ... if a young man like you does not have the ambition and motivation to find more security... well, there is very little WE can do to help them." The sales manual said that this closing technique often put a potential customer "in a position whereby he finds it very difficult to say he cannot afford" the course.
What did Trump U salespeople do when confronted with customers who were reluctant to take on thousands of dollars of new debt to pay for a real-estate seminar? They used the shaming close. Trump University's script directed people to tell the potential customer: "Do you like living paycheck to paycheck? Do you like just getting by in life? Do you enjoy seeing everyone else but yourself in their dream cars with huge checking accounts? Those people saw an opportunity, and didn't make excuses, like what you're doing now."
Trump U recruiters also mimicked their 1970s counterparts in their use of the “Take Away Sale, similar to the “impending event” close that had proven itself such a popular tactic for the correspondence schools. The Trump U playbook definition: "a closing technique which acts on a person's inherent need to possess something before it is gone."
Some customers who were pressured to pay tens of thousands of dollars for advanced Trump U programs were reluctant to make a quick decision. Here was the salesperson's scripted response:
Well, [insert student's name], real estate may not be for you. With the kinds of deals we are going to teach you and find and put together--they don't last long. Investors like me and my team will continue to take your opportunities away from You because we do make quick decisions if there is little or no risk. Now would you like to learn what we know, take control of your life, stop making excuses and make a ton of money? Mr. Trump .... does expect you to make a commitment. [sic]
Michael Sexton, the former president of Trump U declined to comment about the sales practices of his company. But Trump himself remains unbowed by criticism of his eponymous university. Despite the multiple fraud lawsuits against Trump U and the lack of any empirical data on the subsequent real-estate success of the university’s one-time customers, Trump told an election rally in California in May 2016: "If I don't win [the election], and even if I do win, we want to [re-]open [Trump University]—my kids will open it up again, because it was a terrific school."
The denouement of Trump University in 2010 and its aftermath bore many similarities to that of the Famous Writers School. After Mitford’s exposé appeared, the Famous Writers School’s earnings dropped by half, from $3.5 million in 1969 (about $22.8 million today) to $1.6 million in 1970.
The attorney general of the state of New York launched an investigation into the FWS, just as his successor did a generation later with Trump U. He announced a crackdown on the school’s “deceptive practices” and ordered the school to pay $10,000 in costs. By 1972, Famous Writers’ parent company, FAS International, had gone through a bankruptcy reorganization. Nothing remains of the Famous Writers School today.
Still, the downfall of Trump University eclipsed that of the Famous Writers School in two notable respects. The Famous Writers School never had to pay out $25 million in a settlement to thousands of students who claimed the school had defrauded them. And the founder of the Famous Writers School did not go on to become the president of the United States.