Scam Schools: How Some Higher Ed Swindle Youth

There's a good piece this week that I saw shared on the Demos Fan Page - if you're not a fan of demos you totally should be. It shares the story of a women in her 40's that chose to go back to school to be a nurse after years of being a translator for film and television in CA.

She described the procedure of being accepted to an institution, being told one thing about her education, being rushed through the financial aid process with advisers telling her "oh don't worry we'll make sure you're taken care of," and ultimately ending up with no training, a low income job, and tons of debt primarily from private lenders with double didgit interest rates. Welcome to our world.

Its a similar story that young people all over the country are facing. Many many a time I sat in a cubical sobbing to a "financial aid counselor" who told me that my only options were to take the loans I had to pay back before I was out of college. Already working 3 jobs while taking the minimum course load, there was simply no way. I'll never forget the day I told my counselor that I was just going to drop some of my classes at the University and take them at the community college because they considered me an in-state resident and the price was literally $1,500 less per class. Suddenly, they seemed more apt to help telling me that I could go to the Endowment Center for loans with very low interest rates I didn't have to pay back until after college. The whole thing seemed like a giant scam to me then, and it seems like more of a scam to me now. The sad thing is that I was lucky, I was going to a public university.

"Each year, more than two million Americans enroll in for-profit colleges, also known as proprietary schools, and their popularity has only grown since the financial crisis. While traditional four-year colleges are struggling with dwindling student bodies and budget gaps, proprietary schools are reporting record enrollments as the newly unemployed try to retool their skills so they can wade back into the job market. Some of the largest for-profit chains say their numbers have doubled over the last year."

These scam schools are worse for lower income students who hope to learn a trade to enter into the workforce with a bit of a leg up. They're the ones who can't quite afford a 4 year degree and would be great candidates for an associates degree, but they're easily swindled into high interest loans from ads for these schools on TV guaranteeing the top of the line classes, the best and perfect jobs, and top notch skills from professional teachers.

"According to a College Board analysis of Department of Education data, 60 percent of bachelor’s degree recipients at for-profit colleges graduate with $30,000 or more in student loans—one and a half times the percentage of those at traditional private colleges and three times more than those at four-year public colleges and universities. Similarly, those who earn two-year degrees from proprietary schools rack up nearly three times as much debt as those at community colleges, which serve a similar student population.

Proprietary school students are also much more likely to take on private student loans, which, unlike their federal counterparts, are not guaranteed by the federal government, offer scant consumer protections, and tend to charge astronomical interest—in some cases as high as 20 percent."

The piece goes on to say that graduation rates are only at 38% and make for one of the lowest of higher ed schools. And in the end the kids haven't gained the skills necessary to find jobs, because the education was sub-par at best.

The saddest part is that there is ZERO regulation of these schools. And according to this piece, it's just the way they want it:

"That’s partly because the proprietary school lobby has enough clout among lawmakers on both sides of the aisle to keep the issue quiet. But Congress and the Obama administration have also had their hands full advancing other higher education reforms—in particular, legislation to kick private lenders out of the federally subsidized student loan program."

Ideally, with better loan availability there will be more help to students who qualify for Pell Grants. The question I have, however, is how much the schools make off of the private loans? If the school receives a kickback from every student they sign up for a private loan with a 20% interest then they have no incentive to "counsel" the student to fill out the paperwork for the Pell Grant and every incentive to encourage the student to sign up for the high interest loan.

It's the same song, different tune as what I had to deal with. The "counselor" might seem like a super friendly person and they might say that they want to help you, but in the end, they are employees of the school, whose job it is to figure out how to get money out of you to pay for your classes. While these institutions, public or privet, are there to "educate our nation's youth" they are also there making obscene amounts of money.

I think there should be a hearing about these forms of higher education that are swindling an entire generation out of money and out of their education, and there should be some form of standards that these places should be held accountable to. If public and private universities are held to certain standards I think proprietary schools must also be.