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A lifetime of debt, a worthless degree

The U.S. Education Department works to support students lured by for-profit schools’ false advertising


The closed for-profit ITT Technical Institute campus in Rancho Cordova, Calif., in 2016 Associated Press/Photo by Rich Pedroncelli (file)

A lifetime of debt, a worthless degree

Jennifer Hall graduated from college in 2013 with about $75,000 in student debt and an associate of science degree employers told her they wouldn’t accept. Everest University had promised flexible online courses and job placements. But it couldn’t deliver. In 2015, Everest’s then–parent company, the for-profit Corinthian Colleges, abruptly shut down in the face of lawsuits and investigations and filed for bankruptcy.

By then, Hall had found a job that didn’t require a degree. She thought she would likely never pay off all her debt. But this spring, she discovered defrauded borrowers could apply for relief from their federal student loans. Hall had saved her admissions counselors’ misleading emails promising Everest would help her format her resume and that her degree would land her a job. She filed a claim, and the Education Department approved it in April. “Thank you GOD,” Hall wrote on Facebook.

This year, the Education Department has forgiven loans for tens of thousands of students defrauded by for-profit schools that lied about job placement rates and students’ ability to transfer credits to other schools. Last week, it announced relief for another 18,000. The department has moved to curb for-profits, reversing more lenient Trump-era policies. But outside Washington, D.C., for-profits are gaining ground due to their flexibility for nontraditional students.

While traditional nonprofit schools must reinvest all excess income into operations and academics, for-profit schools can pay that income to shareholders. In 2019, for-profit schools enrolled about 759,000 students compared to public schools’ more than 13 million and private nonprofits’ nearly 3 million. For-profit programs are typically taught online, and many focus on technical skills like culinary arts or health services. Most accept any student with a high school diploma or GED.

Low-quality for-profit schools can saddle students like Hall with high debt and worthless credits. Some spend heavily on advertising, promising graduates great jobs at companies like Microsoft and AT&T. But some for-profit graduates have told the Education Department their schools’ poor academic reputation instead scared off employers. For-profits’ tuition is typically four times that of the average community college, according to a 2020 Brookings Institute analysis. Nearly half of for-profit students default on their loans in the 12 years after entering college, compared to 13 percent at community colleges. When Corinthian Colleges abruptly shuttered, students had to choose between debt forgiveness or keeping the credits they had earned. Corinthian’s nontraditional accreditation made it difficult for students to transfer credits to finish degrees elsewhere, a common problem at for-profit schools.

The Trump administration tended to give for-profits more leeway and was careful about doling out loan forgiveness. In 2019, a federal court fined the Trump administration’s Education Department $100,000 for billing defrauded students despite a court order. Betsy DeVos, then education secretary, argued the borrower defense program didn’t require enough proof of fraud. The Biden administration has been more favorable toward students. It reversed DeVos’ formula to forgive loans on a sliding scale based on income, which had meant some students had no debt forgiven even though the department agreed they’d been cheated. The Biden administration also revoked approval of an agency that accredited several for-profit schools, meaning their students no longer qualify for federal loans. But some are concerned that the Biden administration’s approach means the government will pick up the tab any time students take on ill-advised debt.

Despite a checkered track record, for-profit schools continue to appeal to students who need extra flexibility. They often streamline enrollment and loan applications compared to complicated admissions processes at other schools. Their online classes, open enrollment, and career-focused training appeal to nontraditional students who may be working or raising kids. “I received a good medical education,” Dr. Nicholaus Mize, a graduate and adjunct professor of a for-profit medical school, told NPR. “I have stayed friends with many of my classmates, and all are doing well in their careers.”

The flexible business model is paying off for many schools. Community colleges in California are losing enrollment to for-profits, EdSource reported. Online coursework gave them a leg-up during the pandemic: While national community college enrollment dropped significantly during the 2020-2021 school year, for-profit, four-year undergraduate enrollment grew by about 3 percent, according to the National Student Clearinghouse. And NPR reported that since 2015, five for-profit medical schools have opened in the United States.

Meanwhile, the Education Department still has more than 100,000 fraud claims like Hall’s waiting for review. For students currently considering enrolling at for-profit schools, Hall had simple advice: “Do your research.”


Esther Eaton

Esther reports on politics for WORLD from Washington. She is a World Journalism Institute and Liberty University graduate and enjoys bringing her parakeets on reporting trips.

@EstherJay10

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FIMIKI

In general I'm all for a free and open market driven by informed consumers and competitive businesses. Flexible coursework and programs targeted towards high-demand professions reflect the benefits of for-profit schools. The problem is that businesses often have a natural incentive to obscure the effectiveness of their product behind false advertising. It'd be nice if the tuition charged by an institution came with some kind of satisfaction or employment guarantee, but working that out is tough when employment requires additional incentive and effort on the part of the student that's outside of the institution's control.

Joanna and Steve

Why do the colleges/trade schools cost so much? How about lowering the cost?