Many For-Profit Institutions Do Little to Benefit Students - Higher Education
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Many For-Profit Institutions Do Little to Benefit Students

by Matthew Boulay

110314_Matthew_BoulayIt is said that the road to the American dream is through schoolhouse doors. Often young people choose to serve their country in the military before they reach the hallowed halls of higher education. Today, the Post-9/11 GI Bill, the Montgomery GI Bill and other federal benefits are enabling more than one million veterans to go to college or attend a career school.

These bills are America’s best ways of thanking veterans for their service and helping them launch successful civilian careers. Unfortunately, veterans and active-duty military (approximately 30% of whom are minorities) are under attack from unscrupulous for-profit education companies. These institutions see service men and women returning from Afghanistan and Iraq as goldmines, since each one represents tens of thousands of dollars in federal benefits and federally subsidized student loans.

Similarly, minorities – military and civilians alike – are targeted for their access to federal education assistance. While most attend public colleges, minorities are disproportionately enrolled in for-profits. African Americans are more likely than all other ethnic groups to go to for-profits. African-American and Hispanic undergraduates (together) at for-profit colleges are more than twice as likely to borrow federal student loans – and more than three times as likely to take out private, high-interest rate education loans – as their counterparts at other colleges.

But many for-profits leave students with substandard educations, non-transferable credits, useless degrees or no degrees at all, and with heavy student loan debt. The U.S. Department of Education has reported that students at for-profit colleges represent 13 percent of all college enrollments but account for nearly half of all loan defaults. Approximately 95 percent of the for-profits’ revenue comes from taxpayer-supported benefits.

There are more than 3,000 for-profit education companies in the U.S. They spend hundreds of millions of dollars to lure students with TV, radio and Internet advertising, as well as direct marketing tactics, such as an avalanche of spam email and constant phone calls. Their recruiters aggressively pursue members of vulnerable populations. For-profits’ sales people are often paid by how many students they enroll, not by how many graduate. They promise a high-quality education that will lead to high-paying jobs.

What they really deliver is often far less. More than half of the students who enroll in a for-profit program leave without a degree or diploma after only a few months.  Shockingly, students sometimes complete their degrees only to find that the “college,” or a specific degree or certificate program, was not properly accredited. That means that even graduates of those schools or programs are ineligible for licensing exams in the professions they studied for, including public safety, plumbing and electrical, law and healthcare.

What is more, opportunities are being missed to use their benefits to attend county and state schools or private, non-profit colleges, where they could get high quality, fully accredited degrees at far lower cost. For example, qualified veterans can use their Post-9/11 GI Bill benefits to pay for their entire tuitions (plus cost of living allowances) at state schools.

As a veteran myself and currently a student, I am happy to report that a coalition of veterans’ and consumers’ groups, state attorneys general, and the federal government are fighting back. To better protect veterans – and all students – the Obama Administration and Congress have enacted new rules requiring more transparency and honesty about cost, graduation rates, loan default rates, accreditation and job placement rates. The Veterans Administration has launched new tools for veterans to file complaints (Postsecondary Education Complaint System and VA GI Bill Feedback System) and compare colleges. The Department of Justice, the Federal Trade Commission, and other federal agencies are investigating allegations of fraud and false advertising.

On the local level, more than 30 state attorneys general have intensified their scrutiny of for-profits. Some have filed lawsuits on behalf of aggrieved students and proposed tougher state regulations to curb the for-profits’ predatory marketing practices. A coalition of 14 AGs in conjunction with the Department of Justice are currently investigating dozens of for-profits.

But we need to stay vigilant. Unfortunately, the for-profit education industry is fighting back, launching multi-million advertising and lobbying campaigns to block any new legislation or regulation under the laughable pretense that it is trying to safeguard educational opportunities for poor people.

To ensure that a college degree leads to the American dream and not to a life-long student loan nightmare, our voices must be heard. So that government agencies do not buckle under the weight of the industry’s lobbying clout, we need to encourage investigators and regulators to bring pressure on the industry to clean up its act. And, we must publicize this issue and educate people about their options and alert them to the pit-falls of attending unscrupulous for-profit education companies.

Matthew Boulay, a veteran of the Iraq war, is the Director of The Veterans’ Student Loan Relief Fund (VSLRF), which provides grants of up to $5,000 to assist veterans and qualifying family members who incurred excessive education loans to attend for-profit institutions.

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