The New Poor - For-Profit Schools Cashing In on Recession and Federal Aid

[one...two...tree 2,762]

One fast-growing American industry has become a conspicuous beneficiary of the recession: for-profit colleges and trade schools.

At institutions that train students for careers in areas like health care, computers and food service, enrollments are soaring as people anxious about weak job prospects borrow aggressively to pay tuition that can exceed $30,000 a year.

But the profits have come at substantial taxpayer expense while often delivering dubious benefits to students, according to academics and advocates for greater oversight of financial aid. Critics say many schools exaggerate the value of their degree programs, selling young people on dreams of middle-class wages while setting them up for default on untenable debts, low-wage work and a struggle to avoid poverty. And the schools are harvesting growing federal student aid dollars, including Pell grants awarded to low-income students.

"If these programs keep growing, you're going to wind up with more and more students who are graduating and can't find meaningful employment," said Rafael I. Pardo, a professor at Seattle University School of Law and an expert on educational finance. "They can't generate income needed to pay back their loans, and they're going to end up in financial distress."

For-profit trade schools have long drawn accusations that they overpromise and underdeliver, but the woeful economy has added to the industry's opportunities along with the risks to students, according to education experts. They say these schools have exploited the recession as a lucrative recruiting device while tapping a larger pool of federal student aid.

"They tell people, 'If you don't have a college degree, you won't be able to get a job,' " said Amanda Wallace, who worked in the financial aid and admissions offices at the Knoxville, Tenn., branch of ITT Technical Institute, a chain of schools that charge roughly $40,000 for two-year associate degrees in computers and electronics. "They tell them, 'You'll be making beaucoup dollars afterward, and you'll get all your financial aid covered.' "

Ms. Wallace left her job at ITT in 2008 after five years because she was uncomfortable with what she considered deceptive recruiting, which she said masked the likelihood that graduates would earn too little to repay their loans.

As a financial aid officer, Ms. Wallace was supposed to counsel students. But candid talk about job prospects and debt obligations risked the wrath of management, she said.

"If you said anything that went against what the recruiter said, they would threaten to fire you," Ms. Wallace said. "The representatives would have already conned them into doing it, and you had to just keep your mouth shut."

A spokeswoman for the school's owner, ITT Educational Services, Lauren Littlefield, said the company had no comment.

The average annual tuition for for-profit schools this year is about $14,000, according to the College Board. The for-profit educational industry says it is fulfilling a vital social function, supplying job training that provides a way up the economic ladder.

"When the economy is rough and people are threatened with unemployment, they look to education as the way out," said Harris N. Miller, president of the Career College Association, which represents approximately 1,400 such institutions. "We're preparing people for careers."

Concerned about aggressive marketing practices, the Obama administration is toughening rules that restrict institutions that receive federal student aid from paying their admissions recruiters on the basis of enrollment numbers.

The administration is also tightening regulations to ensure that vocational schools that receive aid dollars prepare students for "gainful employment." Under a proposal being floated by the Department of Education, programs would be barred from loading students with more debt than justified by the likely salaries of the jobs they would pursue.

"During a recession, with increased demand for education and more anxiety about the ability to get a job, there is a heightened level of hazard," said Robert Shireman, a deputy under secretary of education. "There is a lot of Pell grant money out there, and we need to make sure it's being used effectively."

The administration's push has provoked fierce lobbying from the for-profit educational industry, which is seeking to maintain flexibility in the rules.

http://www.nytimes.c...p&smid=fb-share

[mawilson 2,133]

Fraudsters abusing government programs? You don't say! Breaking news, everyone!

[james&olya 1,121]

Simple solution. Require 'truth in advertizing' here! Require as a condition of any federal money being received that they use valid, up to date statistics on job prospects, the range of salaries expected, and how much their loan repayment will total as a deduction from those earnings. Why would anyone oppose this?

[one...two...tree 2,762]

Simple solution. Require 'truth in advertizing' here! Require as a condition of any federal money being received that they use valid, up to date statistics on job prospects, the range of salaries expected, and how much their loan repayment will total as a deduction from those earnings. Why would anyone oppose this?

Profitability has no place in education.

[Mr. Big Dog 10,747]

Fraudsters abusing government programs? You don't say! Breaking news, everyone!

Good point!

[Obama 2012 1,714]

Profitability has no place in education.

Why not? Why should you not be able to capitalize if you're better at the way your school teaches than the next guy?

[james&olya 1,121]

Profitability has no place in education.

Money always motivates!

[one...two...tree 2,762]

Money always motivates!

Oh, yes. I forgot. I leave a trail of money to the shower stall to entice myself to bathe.

[james&olya 1,121]

Oh, yes. I forgot. I leave a trail of money to the shower stall to entice myself to bathe.

Note I did not say that it is ONLY money that can motivate. And there are probably a few exceptions to my 'rule'!

[one...two...tree 2,762]

Note I did not say that it is ONLY money that can motivate. And there are probably a few exceptions to my 'rule'!

Okay. I'll stop paying myself to bathe. Can I pay myself to sleep?

[james&olya 1,121]

Okay. I'll stop paying myself to bathe. Can I pay myself to sleep?

You could even pay yourself to...

(but what would that make you? )

[Ban Hammer 12,837]

Fraudsters abusing government programs? You don't say! Breaking news, everyone!

need more regulations to prevent that......

[BishopM 114]

For profit skoolz are the scuk.