It seemed until recently that regulators and law enforcement agencies would never rein in the predatory for-profit colleges that enrich themselves and their shareholders by misrepresenting their programs, saddling students with high-cost loans and then shoving them out the door with useless degrees or no degrees at all. The situation began to change in 2011, when a group of state attorneys general led by Jack Conway of Kentucky joined forces to investigate a growing number of complaints from students who had been exploited. With so much happening at the state level — 36 attorneys general are now involved — federal agencies had no choice but to take notice.
The first company to feel the full effect was Corinthian Colleges, which recently collapsed under a federal probe. But Corinthian is not the only for profit school standing in the spotlight. Education Management Corporation, ITT Educational Services and Career Education Corporation, among other familiar names, are also facing investigations. The lengthy list of inquiries and enforcement actions published by Republic Report shows that regulatory bodies generally are waking up to a serious problem.
It is no longer a secret that some companies profit by misleading and exploiting poor, vulnerable students. And as David Halperin writes in his e-book, “Stealing America’s Future: How For-Profit Colleges Scam Taxpayers and Ruin Students’ Lives” the problem with the for-profit model as many companies practice it is quite clear. Tuition is far too high, as compared to public community colleges that students could attend; too many of the students admitted are incapable of succeeding in the programs; the programs and their job placement efforts are often weak and have deservedly poor reputations.
All this means that many students never get jobs at the salary levels they expect. When they default on their loans, as they often do, they leave taxpayers holding the bag and their financial lives in ruins. The outrageous part is that these companies are allowed to leech off the federal government, getting as much as 90 percent of their revenue from federal coffers.
The state attorneys general have come to the conclusion that the for-profit sector needs more regulatory scrutiny. But well-paid lobbyists are pushing a different story in Washington, arguing that everything is just peachy as it is. If the federal government falls for that, billions of dollars will continue to be wasted and many more people will come to harm