With President Obama here in snowy Denver today talking about student loan issues, I thought it fitting to talk about this very serious issue. I think what the President is proposing is a step in the right direction, student loan interest rates and payments are crippling. With the current job market, and 'job creators' pocketing money; it is troubling times for students entering the job market. As higher education costs keep going up and jobs going away, a perfect storm is on the horizon regarding the student loan bubble. According to the Wall Street Journal, student loan debt is now greater than credit card debt (http://blogs.wsj.com/economics/2010/08/09/student-loan-debt-surpasses-credit-cards/). With that said, I think what the President is proposing is admirable, however, it is treating the symptom and not the main cause. So what is the cause?
FOR PROFIT INSTITUTIONS!
Schools like The University of Phoenix, Devry, Kaplan, and Argosy are plain and simply predators! 90% of their profits comes in the form of Federal student aid (aka tax payers dollars). It is blatantly obvious that they prey on students of color and first generation students. As David Moltz, of Inside Higher Ed states:
“Many low-income and first-generation students are not achieving success after participating in for-profit programs. Instead, we are seeing students who emerge with considerable loan burdens and without the ability to obtain meaningful employment or transfer the credits earned at for-profit institutions to accredited, publicly supported or independent institutions.”
Read more: http://www.insidehighered.com/news/2011/03/18/legislators_criticize_gainful_employment_rules#ixzz1bufHu7XL
Inside Higher Ed
Many of these programs lower admissions standards, invest significantly less in students, and restrict transferring to not-for-profit institutions by holding up financial aid dollars. This past year, there was legislation to regulate this corrupt behavior. It was called the Gainful Employment Act. "Under the regulations, a draft of which came out in February, for-profit colleges would not be eligible to receive federal student aid if their graduates’ debt load was too high to be repaid, over 10 years, with 8 percent of their starting salary" (http://www.nytimes.com/2010/06/06/education/06gain.html). Unfortunately, this bill was totally watered down and altered, due to the very aggressive lobbying efforts of the for-profit-institutions. Possible only because corporations are now considered "people" and can donate to campaigns in gross amounts (Citizens United v. Federal Election Commission).
Inside Higher Ed
Many of these programs lower admissions standards, invest significantly less in students, and restrict transferring to not-for-profit institutions by holding up financial aid dollars. This past year, there was legislation to regulate this corrupt behavior. It was called the Gainful Employment Act. "Under the regulations, a draft of which came out in February, for-profit colleges would not be eligible to receive federal student aid if their graduates’ debt load was too high to be repaid, over 10 years, with 8 percent of their starting salary" (http://www.nytimes.com/2010/06/06/education/06gain.html). Unfortunately, this bill was totally watered down and altered, due to the very aggressive lobbying efforts of the for-profit-institutions. Possible only because corporations are now considered "people" and can donate to campaigns in gross amounts (Citizens United v. Federal Election Commission).
Despite attempts to 'reign in' this for-profit monster and study after study showing that students who go to these institutions are not getting jobs and defaulting on students loans at unbelievable levels, nothing is being done (http://www.huffingtonpost.com/2011/02/03/for-profit-students-default-loans-new-data_n_818507.html). Our leadership in Washington and at the State level are failing in this situation; cutting educational funding to K-12 and State community colleges, colleges and universities. There is a direct correlation to de-funding public education and the rise of for-profit institutions. If students are being ill prepared in elementary, middle and high school, and they cannot get into to competitive institutions, their only option is to attend these for-profit schools, with less support, less investment and mediocre instruction. (http://www.huffingtonpost.com/2011/10/26/college-prices-up-again-a_0_n_1032336.html).
I encourage each of you to reach out to your Congress woman and men and convey how dangerous these for-profit institutions are and how you are aware that the student loan bublle paralels the housing crisis of just a few years ago (it is appalling they do not see the similarities, citizens getting loans they shouldn't have and not being able to pay them back, seems remedial).
If you want to learn some more about this I encourage you to check out Frontline's College INC. http://www.pbs.org/wgbh/pages/frontline/collegeinc/view/
¡Ciao!
Robert
Robert
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