The Nation takes a look at one of the more egregious scams in the scam-ridden US: for-profit colleges that flourish because of the egregious scam of our college loan “system.”
More than half of the students who enroll in for-profit colleges—many of them veterans, single mothers, and other low- and middle-income people aiming for jobs like medical technician, diesel mechanic or software coder—drop out within about four months. Many of these colleges have been caught using deceptive advertising and misleading prospective students about program costs and job placement rates. Although the for-profits promise that their programs are affordable, the real cost can be nearly double that of Harvard or Stanford. But the quality of the programs [is] often weak, so even students who manage to graduate often struggle to find jobs beyond the Office Depot shifts they previously held. The US Department of Education recently reported that 72 percent of the for-profit college programs it analyzed produced graduates who, on average, earned less than high school dropouts.
Well that’s the programs they analyzed: maybe they analyzed programs they had reason to suspect were bad. But it’s pathetic that any of them should be as bad as that.
For-profit schools are driving a national student debt crisis that has reached $1.2 trillion in borrowing. They absorb a quarter of all federal student aid—more than $30 billion annually—diverting sums from better, more affordable programs at nonprofit and public colleges. Many for-profit college companies, including most of the biggest ones, get almost 90 percent of their revenue from taxpayers.
Well that’s the free market, dammit.
On March 14, the administration released its much-anticipated draft “gainful employment” rule, aimed at ending taxpayer support for career college programs that consistently leave students with insurmountable debt.
This rule would have a real impact: it would eventually cut off federal student grants and loans to the very worst career education programs, whose students consistently earn far too little to pay down their college loans, or whose students have very high rates of loan defaults.
Some critics say the rule is too weak – but the industry on the other hand says oh no no it’s much too strong.
APSCU and other lobbyists for the for-profit college industry are now out in full force, hoping to extract from the gainful employment rule its remaining teeth. Supporters of stronger standardsto protect students from industry predation—among them the NAACP, the Consumers Union, Iraq and Afghanistan Veterans of America, the Service Employees International Union and others (including, full disclosure, myself)—will push back, but they have far fewer financial resources for the battle. This is a crucial round in a long fight, one in which the industry has already displayed a willingness to spend tens of millions to manipulate the machinery of modern influence-peddling—and with a remarkable degree of success.
Well that’s how the system works, dammit. It’s pay to play. If you have more bucks, you get to win all the battles. That’s democracy.
For-profit colleges have also sponsored policy events held by media outlets. Officials at The Chronicle of Higher Education admitted to me that they had allowed Career Education Corp. not only to sponsor the Chronicle’s Washington, DC, event on student loan defaults but also to select all the speakers, despite CEC’s own terrible record on these defaults. Education expert Barmak Nassirian likened it to “a conference about preventing lung cancer, with the tobacco companies…presented as credible interlocutors.”
Why yes, it is. And?
That’s what we do.
Then David Halperin details the money going to people in Congress. Then there’s the pointlessly respected Washington Post.
Perhaps the most effective lobbyist for the for-profit colleges in 2010-11 was Donald Graham, CEO of the Washington Post Company, which obtained 55 percent of its revenues from its Kaplan education subsidiary, which was, in turn, dominated by the Kaplan for-profit college. Meeting with Obama administration officials and members of Congress, Graham insisted the proposed rule would deny low-income students educational opportunities.
For Washington leaders, Graham was a pillar of the community, someone who attended the same social functions—someone they could trust. And intended or not, Graham’s entreaties may have seemed to come with an implied threat: Cross me and risk my paper’s wrath.
While Graham’s august presence led many fancy Washingtonians to believe that Kaplan was, amid a sea of shady for-profit college operators, “one of the good ones,” the record showed otherwise.
Don’t tell us that; it’s the Washington Post.
Aaaaaaaaaaaand then there are the banks, that make out like bandits from the college loan swindle.
When it came to lobbying against accountability, one more powerful force was in the mix: large financial institutions. The companies making the most money off student loans have included America’s biggest banks: Citi, Wells Fargo, Bank of America and JPMorgan Chase, along with the number one student loan company, Sallie Mae. These companies earn big profits in the lucrative private, nonfederal student loan market, with particularly strong revenues from for-profit colleges, who are eager to share in the benefits. Some banks have an even more direct interest: Goldman Sachs owns 43 percent of EDMC, while Wells Fargo has a 19 percent stake in Corinthian.
But they’re banks, what could possibly go wrong?
The whole thing is a scam and a rip-off and the people who are making a lot of money out of it are using some of that money – ultimately via taxes, don’t forget – to frustrate efforts at reform.
I feel so proud to be an American.