Putting profits over students
What do federal student loan money and for-profit colleges have to do with a rise in tuition at public universities such as UC Berkeley? It’s complicated.
But Alexander Shebanow does an excellent job of laying out the sordid history of forprofit universities and their role in the decline of American higher educational systems in “Fail State,” an anger-inducing documentary executive-produced by newsman Dan Rather.
First, a few relevant facts: 7 million lower-income people will go to college this year; most will not graduate. Public universities are increasingly under a budget crunch because states are cutting money for higher education, thus forcing a rise in tuition rates that are pricing out lower-income students (Louisiana, for example, used to provide 60 percent of the funding for public universities; now it’s about 25 percent). And this nugget: Collectively, student loan debt is higher than credit card debt. How did we get here? The situation basically stems from a law passed in 1972 that switched federal education money from going directly to public universities to instead flow into students’ pockets in the form of federal student loans and grants. That changed a law that had boosted education in the United States in the quarter of a century following World War II, when, as part of a transformation that created a strong middle class, the federal government provided the public education funds that kept tuition at a low cost, and sometimes free.
Thus, in 1940, 1 out of every 20 Americans went to college; by the 1970s it was 1 in 4.
Why was the law changed? Because many private universities were losing money, unable to compete with the low costs of public universities. The idea of having the money go directly to the students was that they could choose where they wanted to go: public or private universities.
But it also created the conditions for the rise of for-profit universities — vocational schools such as Ivy Tech and DeVry — whose profit model depended on getting students’ federal money. As “Fail State” shows, abuses became more common than not. They began charging tens of thousands of dollars for “degrees” that often weren’t recognized by prospective employers.
“So these students were getting a terrible education, taking on huge debt, and even if they graduated didn’t have the skills they need,” one expert says. “These companies were knowingly destroying people’s lives.”
Shebanow gets Rep. Maxine Waters, D-Los Angeles, and former U.S. Sen. Tom Harkin, D-Iowa, two who have led the fight against for-profit universities, to sit down for the film. The Obama-era regulations they fought for, which caused several for-profits, including Ivy Tech, to close, are being rolled back by the Trump administration.
Would you expect anything else? After all, President Trump himself once ran a for-profit university and paid $25 million to settle lawsuits accusing Trump University of fraudulent practices.