For-profit col­leges of­ten leave many with big debts

Some in­sti­tu­tions have faced in­creased fed­eral scru­tiny, law­suits, even shut­downs

The Enterprise - - News - By DEANNA DAV­I­SON and BRAN­DON CE­LEN­TANO

Higher ed­u­ca­tion and the profit mo­tive, many ar­gue, do not mix — and stu­dents at for-profit col­leges of­ten pay the price.

ITT Tech­ni­cal In­sti­tute, a for-profit col­lege in­sti­tu­tion with about 130 cam­puses in 38 states, shut down in Septem­ber 2016 af­ter then-Pres­i­dent Barack Obama’s ad­min­is­tra­tion blocked its stu­dents from re­ceiv­ing fed­eral stu­dent aid. The in­sti­tu­tion had 40,000 stu­dents en­rolled among all its cam­puses when it closed.

For-profit schools have a his­tory dat­ing to colo­nial Amer­ica, ac­cord­ing to the book “Higher Ed, Inc.: The Rise of the For-Profit Univer­sity.” In those days, a scarcity of places for peo­ple to re­ceive a for­mal ed­u­ca­tion re­sulted in en­trepreneurs teach­ing prac­ti­cal skills and trades, as well as read­ing and writ­ing.

Steve Gun­der­son, pres­i­dent and CEO of Ca­reer Ed­u­ca­tion Col­leges and Uni­ver­si­ties, a trade or­ga­ni­za­tion that rep­re­sents 1,500 for-profit col­leges, praised a judge’s rul­ing in March that said Obama’s De­part­ment of Ed­u­ca­tion failed “to con­sider var­i­ous cat­e­gories of rel­e­vant ev­i­dence” in re­view­ing the Ac­cred­it­ing Coun­cil for In­de­pen­dent Col­leges and Schools, the largest ac­cred­i­tor of for-profit col­leges in the U.S.

In Septem­ber 2016, the Ed­u­ca­tion De­part­ment re­moved the coun­cil’s ac­cred­it­ing au­thor­ity, fol­low­ing a lengthy con­tro­versy over its ca­pa­bil­ity to be an ef­fec­tive over­seer for stu­dents and bil­lions in tax­payer dol­lars.

“Yes, our sec­tor has had bad schools like ev­ery sec­tor of higher ed­u­ca­tion,” Gun­der­son said in a news re­lease. “But it is time that ev­ery­one across the po­lit­i­cal spec­trum stop, step back and look for ways to work to­gether to es­tab­lish pub­lic poli­cies that treat all sec­tors of higher ed­u­ca­tion on a fair and equal ba­sis.”

Govern­ment reg­u­la­tion of for-profit col­leges has be­come less re­stric­tive since Pres­i­dent Don­ald Trump ap­pointed Betsy DeVos as U.S. sec­re­tary of ed­u­ca­tion. DeVos froze reg­u­la­tions that pro­tected stu­dents from loan de­fraud­ing and paused the gain­ful em­ploy­ment rule, which states: “In or­der to be el­i­gi­ble for fund­ing un­der the Higher Ed­u­ca­tion Act Ti­tle IV stu­dent as­sis­tance pro­grams, an ed­u­ca­tional pro­gram must lead to a de­gree at a non-profit or pub­lic in­sti­tu­tion or it must pre­pare stu­dents for ‘gain­ful em­ploy­ment in a rec­og­nized oc­cu­pa­tion.’”

Ac­cord­ing to In­side Higher Ed, Obama’s ad­min­is­tra­tion cre­ated the gain­ful em­ploy­ment rule to es­tab­lish ac­count­abil­ity for ca­reer ed­u­ca­tion pro­grams when they pro­duce too many grad­u­ates with debt they can­not re­pay. Schools could have their fed­eral fund­ing elim­i­nated if they did not meet re­quire­ments.

Demo­cratic at­tor­neys gen­eral in 17 states, in­clud­ing Mary­land, as well as the District of Columbia, sued DeVos in Oc­to­ber, al­leg­ing that freez­ing those reg­u­la­tions vi­o­lated fed­eral law.

Mary­land At­tor­ney Gen­eral Brian Frosh (D) told Time magazine that “what they’re do­ing is fa­vor­ing these preda­tory for-profit in­sti­tu­tions over stu­dents — and stu­dents who are over­all ex­tremely vul­ner­a­ble.”

The De­part­ment of Ed­u­ca­tion said those al­le­ga­tions were “friv­o­lous.”

Sales and re­cruit­ing tech­niques, specif­i­cally at ITT Tech, were dis­cussed in a 2012 re­port by the U.S. Se­nate Com­mit­tee on Health, Ed­u­ca­tion, La­bor and Pen­sions. It said that in re­cruit­ing stu­dents, ITT Tech staff mem­bers fol­lowed a script called a “Pain Fun­nel,” ask­ing in­creas­ingly un­com­fort­able ques­tions.

When ad­dress­ing prospec­tive stu­dents who signed an en­roll­ment agree­ment but in­di­cated they may not want to start school, ITT Tech rep­re­sen­ta­tives were in­structed to “poke the pain a bit” and “re­mind them what things will be like if they don’t con­tinue for­ward and earn their de­grees,” the re­port said.

The script’s ques­tions, de­signed to elicit emo­tional pain from prospec­tive stu­dents, were in­tended to per­suade vul­ner­a­ble in­di­vid­u­als to ap­ply to the school. The pres­sure cul­mi­nated with the ques­tion: “Have you given up try­ing to deal with the prob­lem?”

ITT Tech is not the only for-profit in­sti­tu­tion to face le­gal ac­tion for al­legedly de­fraud­ing stu­dents. In De­cem­ber 2016, DeVry Univer­sity — an Illi­nois-based univer­sity with 38 cam­puses across the na­tion — set­tled a law­suit from the Fed­eral Trade Com­mis­sion that claimed the school used deceptive ad­ver­tis­ing to re­cruit and mis­lead stu­dents.

DeVry paid $100 mil­lion to the FTC: $49.4 mil­lion for stu­dents harmed by the ad­ver­tise­ments and $50.6 mil­lion for stu­dent loan for­give­ness. All un­paid pri­vate stu­dent loans the school is­sued to un­der­grad­u­ate stu­dents be­tween Septem­ber 2008 and Septem­ber 2015 were for­given, as well as more than $20 mil­lion that stu­dents owed the school in tu­ition and fees.

An ITT Tech ad­ver­tise­ment from 2007, which de­tails the feel-good story of grad­u­ate Char­lie Graves, prom­ises view­ers and prospec­tive stu­dents the chance to at­tain their goals. The web­site of the Ca­reer Ed­u­ca­tion Col­leges and Universi- ties touts sim­i­lar suc­cess sto­ries of stu­dents from di­verse back­grounds who earned de­grees and launched ca­reers in fields rang­ing from ad­ver­tis­ing and nurs­ing to com­puter sci­ence and au­dio pro­duc­tion.

But crit­ics say “suc­cess” is not the out­come for many stu­dents at for-profit col­leges, par­tic­u­larly when it comes to loan debt.

Time magazine re­ported in Jan­uary that more than half of bor­row­ers — 52 per­cent — who at­tended a for-profit col­lege in 2003 de­faulted on their stu­dent loans af­ter 12 years. Bor­row­ers from two-year com­mu­nity col­leges de­faulted at half that rate: 26 per­cent.

Ju­dith Scott-Clay­ton, who wrote a re­cent re­port on stu­dent bor­row­ing for the Brook­ings In­sti­tu­tion, said the high per­cent­age of for-profit stu­dents who de­fault on their loans does not il­lus­trate the full scope of the is­sue.

For-profit col­leges are gen­er­ally more ex­pen­sive to at­tend than com­mu­nity col­leges, so more stu­dents tend to take out loans, and at higher amounts. The Brook­ings In­sti­tu­tion re­port said its find­ings “pro­vide sup­port for ro­bust ef­forts to reg­u­late the for-profit sec­tor, to im­prove de­gree at­tain­ment and pro­mote in­come-con­tin­gent loan re­pay­ment op­tions for all stu­dents.”

The 2012 Se­nate re­port on ITT Tech stated: “Com­pared to pub­lic col­leges of­fer­ing the same pro­grams, the price of tu­ition is higher at ITT Tech. Tu­ition for an as­so­ci­ate’s de­gree in busi­ness ad­min­is­tra­tion at ITT Tech’s In­di­anapo­lis cam­pus was $44,895. The same pro­gram at Ivy Tech Com­mu­nity Col­lege in Bloom­ing­ton, In­di­ana cost $9,385.”

Tu­ition for a bach­e­lor’s de­gree in busi­ness ad­min­is­tra­tion at ITT Tech’s In­di­anapo­lis cam­pus was $93,624. The same pro­gram at In­di­ana Univer­sity in Bloom­ing­ton was $43,528.

Tressie McMil­lan Cot­tom, a for­mer ad­mis­sions and fi­nan­cial aid coun­selor for ITT Tech, said she sold as­so­ci­ate de­grees for about $30,000 and bach­e­lor’s de­grees for about $60,000.

“On av­er­age, stu­dents en­rolled in for-profit col­leges take on stu­dent loan debt that they can­not man­age,” said Cot­tom, now an as­sis­tant pro­fes­sor of so­ci­ol­ogy at Vir­ginia Com­mon­wealth Univer­sity and au­thor of “Lower Ed: The Trou­bling Rise of For-Profit Col­leges in the New Econ­omy.”

“Whether that is be­cause these stu­dents are more likely to be eco­nom­i­cally vul­ner­a­ble or if it is be­cause em­ploy­ers don’t seem to value these de­grees very much, we aren’t ex­actly sure.”

Cot­tom said her work at for-profit col­leges, which she dis­cusses in her book, in­formed her in­ter­est. Later, she de­cided to do re­search on for-profit col­leges as a so­ci­ol­o­gist be­cause she thought the ex­pan­sion of these in­sti­tu­tions and their de­grees were un­der­stud­ied.

She thinks it is im­por­tant to keep in mind the cir­cum­stances of stu­dents who at­tend for-profit schools. Many in­di­vid­u­als en­rolled in such pro­grams are peo­ple who have been dis­ad­van­taged in ac­cess­ing high-qual­ity, not-for-profit higher ed­u­ca­tion, she said.

“As a so­ci­ol­o­gist, one of our long-stand­ing dis­ci­plinary in­ter­ests is in how and why in­equal­ity hap­pens. I study for-profit col­leges as a way to un­der­stand con­tem­po­rary in­equal­ity,” Cot­tom said. “When this [stu­dent debt] hap­pens, peo­ple can be worse off for hav­ing pur­sued higher ed­u­ca­tion than they would have been had they never gone to school at all.”

The Na­tional Cen­ter for Ed­u­ca­tion Statis­tics re­ports that 23 per­cent of stu­dents at for-profit col­leges grad­u­ated within six years. The six-year grad­u­a­tion rate for stu­dents at pub­lic, not­for-profit col­leges was 59 per­cent.

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