Predatory For-Profit Colleges & Student Debt Hurt Our Economy
Terrible, Predatory For-Profit Colleges
For-profit colleges, often owned by private equity firms or hedge funds, used lobbying to eliminate rules so they could maximize profits by providing a poor education.
- Many of the largest for-profit colleges often use misleading ads, pressure tactics, and scam bait-and-switch telemarketers and websites.
- They often promise Medicaid or health benefits, jobs, food stamps, heating benefits, or $1,000 Target or Best Buy gift cards.
- They often advertise on New York subways or late night TV and target poor people, single parents, older students, military veterans, and racial minorities.
- Some for-profit colleges even go to welfare offices to find students.
- Their inspiring ads claim to train students for well-paying jobs in growing fields.
- Next, they push people into ridiculously overpriced online courses for useless degrees.
- The College Board says for years, for-profit colleges charged students nearly five times the cost of community colleges.
- One study found for-profit college graduates and dropouts combined earn less after leaving school than they did before they enrolled.
- Government investigations found strong evidence 7 of the top 10 for-profit colleges deceived their students about the cost of tuition, job placement rates, and likely starting salaries and left them jobless and buried in student loan debt.
- Many of the big for-profit colleges get 85 or 90% of their money from federal student aid.
- They can collect tens of thousands of dollars in federal aid for each student.
- For-profit colleges collect over $30 billion of our taxes each year, more than any other private business sector in America.
- They spend a lot of that taxpayer money on marketing, including the scams and paying celebrities for advertising.
- Bill Clinton made $17.6 million representing a for-profit college.
- In 2009, for-profit colleges spent only 17% of their budgets on teaching and 42% on marketing and profits for their investors.
- The graduates of 72% of for-profit schools earn less, on average, than high school dropouts.
- For-profit colleges use contracts forcing students to sign away their rights by requiring arbitration so that 98% of their students can’t sue in court or appeal, compared to only 7% of students in other colleges.
For-profit colleges educate about 11% of our students while they suck up 25% of taxpayer-funded Pell grants and federal aid and produce:
- low achievement
- higher student debts
- sky-high dropout rates
- high unemployment rates after graduation
- 4 times the student loan default rate of community college students
- 50% of all loan defaults
- financial ruin
Obama tried to clamp down on terrible college programs by stopping them from receiving federal grant money if
- their typical graduates couldn’t find jobs earning enough to comfortably repay their student loans
- the college used deceptive or illegal practices to push students into debt
- the college used forced arbitration to stop lawsuits and appeals
The Trump administration has reversed these reforms, turning loose the for-profit colleges to again cheat poor and minority students and military veterans.
- Billionaire Education Secretary Betsy DeVos is leading the effort.
- She has killed investigations into abuses by for-profit colleges.
- She is working to weaken college accreditation standards.
Student Debt Is Sabotaging a Whole Generation
About 60% of college students graduate with debt and the average debt is now $27,000, which adds up to $1.6 trillion in loans to the federal government.
The effect is a life-long drag on graduates and our economy.
- Community bankers have long told lawmakers massive student debts are hurting their home mortgage and auto loan businesses.
- In the long run, our graduates will have $4 trillion less to spend on things like cars, homes, and refrigerators during their lifetimes.
We need debt relief for student loans.
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