Recovery threatened by runaway student loan debt

[SomeGuyInEagan]

36. A big part of this is "predatory institutions" ...

For-profit schools which blatantly lie to prospective students about transferability of credits, worth of their degrees and job placement, share fill out aid applications on students' behalf (sometimes without the knowledge of the students), charge tuition much higher (for an education inferior to) community colleges, etc.

Some of these "schools" look for fully-accredited schools in financial trouble to step in and buy, then apply their business model (see first sentence). The students in these "schools" have a much higher loan default rate than those who attend non-profits.

Watch Frontline's "College, Inc." (http://www.pbs.org/wgbh/pages/frontline/collegeinc/view/)

This is part of what led to the U.S. Senate hearings in the fall of 2010.

Another part is the continual erosion of money from states to state public schools. Forty years ago, a student at a public school paying full tuition (no loans or grants) typically paid about 30-40% of the actual cost of the education with the state taking up the rest. Today, it is flipped, worse in some states.