As student financial aid is increasingly used at for profit institutions, people are taking notice. For profit institutions offer degrees focus on specific careers, often geared towards non-traditional students. Enrollment at for profit institutions has increased 225% since 1998. As the government offers fewer scholarship and grants, they encourage and support students taking loans to invest in their education. However – as more and more students are going into debt, are they being taken advantage of by for profit colleges?
About 10% of college students go to for profit colleges, but over half of loan defaults come from for profit institutions. Colorado is one of 5 states with a default rate over 11% (the others are Iowa, Arizona, Arkansas, and Indiana) . For profit colleges attract students who may already be less likely to be able to pay back their loans, but are they also responsible for making sure half of their students don’t default on their loans? Is college more a benefit to the student or to the community (going back to the discussion of a welfare vs neo-liberal state)? If it’s a commodity for a student to pursue, why should the college be responsible or accountable for their debt? Should Best Buy be held responsible for their customers’ credit card debt?
This article has an interesting perspective, that sheds light on how an education is being viewed. In it, they quote the Minnesota Attorney General who says – do your homework. Make an informed decision about where you go to college. What a remarkable idea! This article also shed light on some of the limitations of for profit colleges including their higher cost and lower graduation rates.
You may have also heard that the government is looking into the admissions practices of for profit institutions. This report shows how last fall, the US Government Accountability Office posed as students interested in attending for profit institutions and learned about suspicious admissions practices. Several schools encouraged students to falsify information to better qualify for student loans.
Increased regulations on admissions procedures have, understandably, hurt for profits. Devry’s stock fell 22%. As the government looks to student loans as the solution to increased cost of higher education, they are now faced with the question of how students get to use that loan money. Should we restrict how students spend their money? I know of students who use the money to buy cars and computers, clearly there are many more who choose to spend it on a poor degree or a less-than-reputable institution. What is the government’s role in regulating this?
The idea of 'doing your homework' is a good one- and applies to just about every area of higher education (including in the classroom- ha!). MN Attorney General Swanson's straightforward approach to educating yourself before enrolling in any institution reminds me a bit of the Consumer Financial Protection Board’s “Know Before you Owe” initiative, mentioned in Obama’s Wednesday speech and discussed on the Access & Higher Education blog here. This theme of proactive education to students is not a new one, but in light of the country’s economic situation, and particular the mortgage crisis which led to the formation of the Consumer Financial Protection Board, I think that we’ll see more of it. The question that remains is who has the responsibility to educate in these areas? The government, the institutions (by way of government mandates), or the individual students and their families? If we leave the responsibility solely up to the individual student and/or their families, I fear that we will continue to see a disparity in those who fully do understand what they are getting themselves into (whether for-profit or not), based on the educational level of their parents. It is likely that first-gen students will continue to be less informed, and therefore more susceptible to the aggressive marking tactics and other possible ploys by certain institutions. Instead, I’d like to see engaging educational programs (not just handouts… as I mentioned in comments on another post) that really do teach the important elements that should be considered when choosing an institution and when choosing how to finance higher education. Furthermore, it is important to note that such programs should not be limited to delivery within the context of the high school setting (as I’ve seen suggested elsewhere). Given the older population which is more often drawn to the for-profits, it is essential that the education around these issues is somehow embedded into the admissions process or otherwise delivered across the board to all potential students.
ReplyDeleteI’m wondering how well do for-profit institutions educate the prospective student on the severity of the size of the loan and how/when is the student supposed to pay it back. No, I don’t think Best Buy should be responsible for one’s credit card debt, but I think that is a totally separate issue. A college education is supposed to help a person better themselves rather than just stick’em with a huge debt. It’s sad that some admissions advisors have now become sales agents. How do they sleep at night knowing they just screwed someone into debt?
ReplyDeleteEnrolling in any type of institution should require the student to have a thorough understanding of the pay back process. Obviously, there are vulnerable people who are brainwashed into enrolling in for-profit institutions and they should not be taken advantage of. A man or woman could have the best intentions of acquiring the skills to assist them in getting a better job, so hey enroll in the for-profit institution. But if the institution is only concerned with sucking every penny out of that individual, that’s not fair at all. It’s no surprise Wall Street investors have their money tied into for-profit institutions—Occupy Wall Street on behalf of for-profits too!!! The statistics the article provides is scary. People do your homework before you sign on the dotted line! I do not want my tax dollars to pay for someone who has defaulted on their loan. I can’t even afford to pay back my own loans.
The federal Gainful Employment legislation came as a result of so many students leaving insititutions (with or without a degree or certificate) loaded down with student load debt and entering the workforce in positions that will never allow them to pay back all of the money they have borrowed.
ReplyDeleteAs someone who previously worked at a private, for-profit institution, the admission tactics used were sketchy at best - hounding students with phone calls and emails until they could get them in for an appointment, glossing over some critical information about how much their education would cost, getting them to fill out the application for admission and get them enrolled in classes all at their very first visit to campus, etc. - I can totally see why the crackdown is happening.
The idea of providing education about student loans and debt at the high school level would be very interesting. Yes, it would limit adult-learners, but maybe that curriculum should be added to every junior level math class or economics class.
ReplyDeleteDion, I agree with you - how can they sleep at night knowing they have placed this burden of debt on students? In the same vein, are we not doing the exact same thing by bringing ourselves as a nation more and more in debt? As of this writing (according to: http://www.brillig.com/debt_clock/) our national debt is right around $50,000 per person. So, in essence, our bail outs and increasing the debt ceiling is handing my 5 month old daughter a $50,000 debt she has to pay off. In actuality, it's much more, as not everyone is going to pay back their debt.
A loan might be worth it if the benefit pays off. What benefit exists for the generation that's inheriting all this debt? How can we sleep at night?
For profit institutions’ goals are to generate as much revenue as possible without looking at the quality of the education they provide much less at the enormous debt students acquire in order to further their education.
ReplyDeleteIn my opinion, educational institutions either private or public should have as their fundamental philosophical principles that education is first and foremost fort the advancement of individuals as human beings and their interaction in society. Thus, people are of first importance.
It is outrageous to see how some for profit institutions have even resorted to suspicious admission practices so students can qualify for student loans
Further regulation on for profit institutions should be examined and implemented. For profit institutions benefit from financial aid monies thus they need to be accountable.
I have only known one person who obtained a degree from a for-profit. I was curious about his educational experience in relation to the traditional college experience that I am more familiar with. He attended Westwood and obtained his BS in 3 years. Of course, when he began, I warned him about the lack of accreditation. And of course, he really did not know what I was talking about or why he should care. He took his classes on-line, which allowed him to work his full time job, which had sporadic hours. His degree is in Criminal justice and now he has a decent paying job that did not care about the lack of accreditation of his institution. He works for the State of Colorado. I find it ironic that the state does not (at least for him) take into consideration the value of a degree. In the commentary about "students doing their research", I could not help but think of my friend. I recently asked him about his experience and he still does not see any difference between his degree and one from a public institution. I don’t believe the general population knows what "homework" to do in making this decision to attend one of these schools. My friend certainly looked into his options and he truly found Westwood to be a better fit for him. Granted my example is "an N of 1", but it does serve as a good reminder to me that those in higher education could have an elitist perception.
ReplyDeleteJust the thought of schools encouraging students to falsify information to better qualify for loans makes me sick. We are higher education practitioners. Shouldn't we be positive models for our students and teaching them the value of honesty and strong ethical decision making? I do not agree with school's luring students into taking more student loans without providing them accurate information and education about the loan process.
ReplyDeleteI like the idea of providing loan and dept education in high school math courses. That way, each student is informed before they get to college and can make accurate decisions based on their needs.
I think that if for profit institutions are helping student falsify documents then they should certainly be held accountable for the unpaid debt that their students accrue. Public institutions should be as well. It is our responsibility to assure that those who are taking advantage of the financial aid system are identified. It is also our responsibility to provide the resources that are necessary for students to understand their loan debt and the ramifications of leaving it unpaid.
ReplyDeleteCollege exist, in my view, to educate the whole student, this includes issues such as financial understanding and planning. We all play a part in this education and our accountability to the feds assures that we provide the bare minimum of resources to students.
My brother obtained his graduate degree with the University of Phoenix. I don't know how much he accumulated in debt but I can not begin to imagine! As he is still working his old job and hasn't even begun working in his "new" field, I am uncertain if he will be able to continue to pay the high loan payments. It is hard for me not to look at him and think that he really should have investigated more options. I think he could have found an amazing graduate program offered at any of the three major schools in Colorado. I think he got caught in the "ease" at which the University of Phoenix seemed to be.
ReplyDeleteI believe it was a complete rip off. Hopefully, some day he is able to at least find a job in his new field but I won't hold my breath!!