Mother Jones: For-Profit College Loan Fail

[marmar]

Here's a shocking new statistic that puts the ongoing regulatory battle between for-profit colleges—the University of Phoenix, Kaplan University, and so on—and the Department of Education into context.

According to new data from the DoE released on Wednesday, 46.3 percent of all loan money lent to students at two- and four-year for-profit colleges in 2008 would eventually go into default. By comparison, the overall default rate in 2008—lumping together loan money given out to students at community colleges, for-profits, and traditional undergraduate and graduate schools—was only 15.8 percent. You know something's wrong when the for-profit default rate, dollar per dollar, is nearly three times higher than the rest of academia.

And 2008 is no anomaly, either. Looking at the graph below, you can see that, since 2004, the for-profit college default rate has always exceeded all other colleges by a healthy margin.



So what does this mean? It certainly gives the DoE more ammunition to defend its proposed "gainful employment" regulations, a crackdown the for-profit industry has fought tooth and nail. The DoE's regulations would mandate that for-profit college graduates earn enough to repay their federal loans, or else the schools could lose access to federal loan funding. That would be a serious blow to much of the industry, which relies on such funds to survive. Most colleges receive 75 percent of more of their revenue in federal loan funding; at others, like the University of Phoenix's parent company, Apollo Group, federal dollars comprise upwards of 90 percent of the revenue. (The legal limit is exactly 90 percent.) .............(more)

The complete piece is at: http://motherjones.com/mojo/2010/12/profit-college-loan-fail

[Frustratedlady]

1. Did they check the loans to see if a student was actually involved?

It's not impossible to have ghost students. For some reason, I don't trust any of these for-profit schools, prisons, etc. So often, they are fraudulent.

I know of one charter pre-school under investigation where the owner employed her 80+ year old mother and her husband. She paid each $40K, paid for the beauty shop charges for herself and her mother, bought all kinds of things for the house, on and on and on. She had a good thing going for a while.

[xchrom]

2. recommend

[LuvNewcastle]

3. I get email from those schools all the time.

One in particular was calling me regularly, doing her best to get me to take online courses. When I told her I didn't have any money to go to school, she told me not to worry, that they would make sure I got the loans I needed. She even told me that I could get some "extra" money to cover any "expenses" I might have. A lot of these colleges are conspiring with their students to commit fraud on the government.

I think that it might be possible for people to earn certain degrees online, but the way they're going about it now is pretty shady. The government needs to investigate these 'colleges' ASAP and guidelines need to be drawn up for them. If they won't accept federal regulation, they shouldn't get any federal money.