For-Profit College Grads Also Earn a Life of Debt

http://www.businessweek.com/magazine/content/11_03/b4211018017031.htm

Education January 6, 2011, 5:00PM EST

For-Profit College Grads Also Earn a Life of Debt

The schools leave students more indebted than conventional colleges

By John Hechinger

Ronnie Franklin borrowed to pay his tuition at a for-profit college that advertised its success in preparing graduates for better jobs. The decision still haunts him. Despite graduating from RETS Technical Center in Boston in 2000, he found himself so strapped for money that he and his two sons lived in a homeless shelter last year. Frustrated that his degree didn't lead to work in electronics, Franklin—now a $12-an-hour housepainter—decided to go to a community college this year. He can't qualify for a federal grant that would pay the cost because he has defaulted on $20,000 of his earlier U.S. student loans.

Students seeking to move up in life by getting a degree from a for-profit college are being trapped in a growing underclass of education debtors. Under U.S. law, their loan obligations can rarely be discharged in bankruptcy, making them more onerous than credit-card debt or subprime mortgages. Defaults can subject students to government confiscation of salaries, tax refunds, and Social Security payments—and disqualify them for aid to get more marketable degrees.

Students at for-profit colleges carry the biggest loans in U.S. higher education. Bachelor's degree recipients at for-profits have median debt of $31,190 compared with $17,040 at private, nonprofit institutions and $7,960 at public colleges, according to Washington-based nonprofit Education Trust.

The show talked much about how the financial assistance office pushed loans and did some other shenanigans to convince people they could afford shit they can't afford, to get a degree from a school that an awful lot of businesses are gonna look at their resume and go "Really? That's too bad."

The "schools", such as they are, exist as vehicles to (1) qualify students for loans, and (2) collect the money.

What would be pretty cool would be to start one on a cooperative basis or revenue sharing program.

For example:

You want a low interest loan.

So:

1. You apply to my "school" and apply for a student loan.

2. I enroll you in a "work study program" where I will pay you to "work" at my "school".

3. You earn back 90% of your student loan and I keep the 10% as an administrative fee.

Look how much you'll learn!

The Workforce Investment Act provides funds to qualified individuals for schooling (its the old JTPA, Job Training Partnership Act program). The funds do not need to be paid back. As a condition of receiving those funds, however, the school/college/university/whatever must provide information on outcomes. The outcomes are per student so the feds can track the income of those students over time. The idea is that we could then determine which kinds of education actually led to increased earnings.

Phoenix notified states last year that it would no longer accept WIA money because they will not report outcomes.

Now, why do you think they wouldn't want to report that information? Maybe its because they know their degrees were useless? That's my guess. I'm also sort of surprised this has not received any more attention.

He's a Registered Dietician and then some. He's also vegan, which is what I've become to lose a very large amount of weight and regain my health -- and for me it's worked beautifully. I'm over half way to where I need to be and I feel better than I have in a few years.

I would sell my soul to have this guy as an instructor and get my own RD degree so I can pay my experience forward by helping the super-morbidly obese get back to good health through nutrition rather than surgery or gimmicks.

But I wouldn't sign up for Kaplan's program with a gun to my head, without proof that the vast majority of that program's graduates move on to well-paying work.

From what I understand the cost of that program is but a "mere" $60,000 through Kaplan. I priced the in-state tuition cost of a university in Washington state which offers a full RD curriculum. Would take longer but cost less than 1/3 what the Kaplan "degree" does.

:banghead: