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For-profit schools may face new rules
A graduation cap with money symbolizes student loans
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TEXT OF STORY
Kai Ryssdal: Last year, we reported, along with ProPublica, on some of the high-pressure recruiting tactics that are being used at for-profit colleges, like at the biggest one, the University of Phoenix.
Brandon Burke: One thing we would be told to do is call up a student who was on the fence and say, "All right, I've only got one seat left. I need to know right now if you need me to save this for you." Well, that wasn't true.
It turns out the federal government been looking into recruiting and student debt loads at some of those for-profit schools as well. Today, they came out with a new set of rules.
From the Marketplace Education Desk, Amy Scott reports.
Amy Scott: Jessica Jasper had always wanted to be chef. So a few years ago, she enrolled in the Art Institute's culinary school in Denver.
Jessica Jasper: For a one year's program, which took me two years, it cost me about $40,000.
She dropped out when she realized she'd never be able to pay her loans making $8 or $9 an hour as a line cook.
Career colleges are booming, as more people go back to school for job training. But critics say many students graduate with more debt than at traditional colleges, and are more likely to default on their loans. Many for-profit schools get most of their revenue from federal student aid programs.
Pauline Abernathy: We've seen some really troubling signs that taxpayers are subsidizing programs that over-promise and under-deliver.
That's Pauline Abernathy with the nonprofit Institute for College Access and Success. Under the proposed new rules, the Education Department would have more power to go after schools that misrepresent their programs. Abernathy says the new rules would also make it harder for schools to pay enrollment counselors and financial aid officers based on how many students they sign up.
Abernathy: When people are paid on commission, it leads to the kind of boiler-room situation where all that matters is getting students signed up.
The new rules would also prevent schools from paying bonuses when students graduate. Harris Miller is head of the Career College Association. He says those bonuses can pay off for students.
Harris Miller: We want everybody on the campus to continue to encourage that student, to say, "Don't give up just because you hit a bump in the road." And there's no reason that the admissions office or the financial aid officer shouldn't be part of that team, providing that kind of support.
For-profit colleges had been much more worried about another change that the Obama administration has delayed for now. It would have required schools to prove that their graduates can earn enough to pay their student loans. In the mean time, officials opted for more disclosure on student debt and job placement rates.
In New York, I'm Amy Scott for Marketplace.
"Taxpayers are subsidizing programs that over-promise and under-deliver." Indeed. Most notably public universities and other *non-profit* schools, and for that matter just about every program in every area that the government subsidizes.
Of course, if the government simply did not provide student loans or loan guarantees at all, 1) the cost of such schools would go down, as the free market strives to provide what people want and need at a price that they can afford, and 2) rational people would not pay $40,000 for a certificate to get a $9/hour job, as they are far more likely to do a cost-benefit analysis when it is their money at risk. So, government interference in the name of "equal opportunity" drives up the cost, in reality creating *less* opportunity for most.
Yes, I can relate to this story as it is very similar to what has happened to my daughter. College America caters to young people and then charges so much for the school that she will be paying for a long time for basically nothing. She too "drop out", but then registered with a state community college to continue her education. She will get a degree and be marketable compared to the hoax College America has claimed they can do. For the cost of a bachelor's degree at this for-profit school it is more than a Masters degree at a state university. Something needs to be done to keep these types of schools in line and accountable. Thank goodness my daughter finally caught on to their game and got out of their system, although she still has to pay back for what little they provided to her while she was enrolled with them. Thank you for reporting on this issue.
this is such poor reporting. "dropped out" after two years because she was afraid she couldn't pay her loans? would she be better able to pay them as a dropout? did she not know how much her school cost? how much does a starting "journalist" learn, if they can even find a job? does that make journalism schools somehow suspect? Don't traditional colleges also get most of their revenue from federal student aid programs? does that make them shady? Sad.
