Janet Morrison's List: College students

• Everest College
• “Now I know exactly where I am going. And now I’m making very good money,”  enthused a former student named Anjali B.
• she was told she would receive hands-on training from experienced nurses in  state-of-the-art labs with the most modern equipment—including a recently  purchased $30,000 mannequin that could simulate the birthing process. She also  says recruiters told her that she would be able to do rotations at the  University of California, Los Angeles Medical Center, one of the nation’s best  hospitals.

  • They outright lied to her.
• she was initially put off by the $29,000 tuition.
• But the school’s recruiters assured her there was nothing to be concerned about:  Everest had an exceptional track record of helping students find employment—they  claimed the typical Everest College LVN graduates landed a job paying between  $28 and $35 an hour straight out of school. And the school would arrange a  financial aid package to cover her costs.
  
• the recruiters rushed her through the process and discouraged her from taking  the forms home to look over
• They told her that she would be taking out private loans in addition to federal  loans that are traditionally used to pay educational expenses, but did not  explain what the terms of those loans would be.
• Only later did she learn that those private loans—which made up two-thirds of  her “financial aid” package—carried double-digit interest rates and other  onerous terms
• make
• Instead of really teaching, she says, they usually just read textbooks aloud in  class and sometimes offered students the answers on tests ahead of time
• Instead of the promised rotations at UCLA Medical Center, her clinical training  consisted of helping pass out pills at a nursing home.
• Since graduating in 2008, Leveque has been unable to find a nursing job, perhaps  because she never learned how to perform basic tasks such as giving shots.
• As a result, her loan balance has ballooned to $40,000, and she has no idea how  she will ever pay it off.
• Each year, more than two million Americans enroll in for-profit colleges, also  known as proprietary schools, and their popularity has only grown since the  financial crisis
• Some of the largest for-profit chains say their numbers have doubled over the  last year
• The students who are flocking to these schools are mostly poor and working  class, and they rely heavily on student loans to cover tuition.
• According to a College Board analysis of Department of Education data, 60  percent of bachelor’s degree recipients at for-profit colleges graduate with  $30,000 or more in student loans—one and a half times the percentage of those at  traditional private colleges and three times more than those at four-year public  colleges and universities.
• Proprietary school students are also much more likely to take on private student  loans, which, unlike their federal counterparts, are not guaranteed by the  federal government, offer scant consumer protections, and tend to charge  astronomical interest—in some cases as high as 20 percent.
  
• the median graduation rate for proprietary schools is only 38 percent—by far the  lowest rate in the higher education sector.
• What’s more, even those students who make it through often can’t find jobs.
• This will create tens of billions of dollars in cost savings that will go toward  larger Pell grants for low-income students. But that measure, vital as it is,  affects only lending within the federal student loan program. It leaves  untouched the private loans that are increasingly being foisted on students like  Leveque and the loosely regulated schools that are profiting as a result
• In the 1980s and early ’90s, it came to light that hundreds of fly-by-night  schools had been set up solely to reap profits from the federal student loan  programs, in part by preying on poor people and minorities.
• The most unscrupulous of them enrolled people straight off the welfare lines,  and got them to sign up for the maximum amount of federal student loans  available—sometimes without their knowledge or consent.
  

  • So disturbing! These people should go to prison for a crime like that!
• But Congress ultimately stepped back from the brink and instead strengthened the  Department of Education’s authority to weed out problem institutions. Under the  new rules, for-profit colleges had to get at least 15 percent of their tuition  money from sources other than federal loans and financial aid
• in 1992 Congress also barred schools from compensating recruiters based on the  number of students they brought in.
  
• These changes shook up the industry. The old generation of trade schools  gradually died off and were replaced by a new breed of for-profit  colleges—mostly huge, publicly traded corporations. The largest, the Apollo  Group, owns the University of Phoenix, which serves more than 400,000 students  at some ninety campuses and 150 learning centers worldwide. Others include the  Career Education Corporation, which serves 90,000 students at seventy-five  campuses around the world, and Corinthian Colleges, which serves 69,000 students  at more than 100 colleges in the United States and Canada

  • Need to remember this and discourage U of Phoenix!!
• University of Phoenix
• University of Phoenix
• University of Phoenix
• University of Phoenix
• In reality, the new breed of schools had quite a bit in common with their  predecessors; in some cases, they even operated out of the same buildings and  employed the same personnel
• What’s more, rather than making them more accountable, the fact that they were  publicly traded created a powerful incentive for them to game the system.
• With so much at stake, these schools quickly found ways to skirt the new rules.  To get around the caps on student loan default rates, for instance, many of them  began hiring agencies to help former students get forbearances or offering lines  of credit so alums could make their student-loan payments—but only during the  initial two-year window, when defaults were counted against the school by the  Department of Education
• After that, students were left to wrestle with the debt on their own.
• As for the rule requiring schools to get at least 15 percent of tuition from  nongovernment sources, it had some unintended consequences. Rather than, say,  enrolling people who could afford to pay some tuition out of pocket, many  schools started pushing students to take out private student loans
• In exchange for pots of private student loan funds that they could dole out at  will—meaning without regard for students’ ability to repay the debt—the schools  gave Sallie Mae the right to be the exclusive provider of federal student loans  on their campuses
• Lenders vie fiercely for this privilege because federal loans are guaranteed by  the government, meaning the Treasury pays back nearly all the money if the  borrower defaults. Thus lenders get to pocket generous fees and interest and  bear almost no risk
• From the schools’ perspective, it didn’t much matter whether students would be  able to pay off their debt any more than it mattered if they stuck with the  program or graduated with the skills they needed. As long as students were  enrolled long enough to be considered a “start,” meaning that they attended  classes for a week or two, the schools got to keep some of the money, and they  got to include students in their official enrollment tally, which gave Wall  Street the impression they were expanding
• corporate bosses at the University of Phoenix routinely pressured and  intimidated their recruiters to put “asses in the classes.”
• in recent years dozens of former students have filed suits alleging they were  misled about classes and programs proprietary schools offered, as well as about  their prospects for graduating and getting jobs in their fields of study.
• The frenzy only intensified after Congress passed the Bankruptcy Abuse  Prevention and Consumer Protection Act in 2005.
• With a traditional federal student loan, for example, if a borrower dies or  becomes permanently disabled, the debt is forgiven, meaning they or their kin  are no longer responsible for paying it off. The same goes if the school  unexpectedly shuts down before a student graduates. But none of this is true of  private loans.
• took out about $100,000 in private loans between 2003 and 2006 to study  photography at the Brooks Institute in Santa Barbara, which is owned by the  Career Education Corporation
• Looking back, Sweet admits that she was naive in trusting the recruiters. But  she can’t help but wonder how she ever qualified for the loans in the first  place, especially given that when she applied she was unemployed. “If it were  me, I never would have loaned me the money,” she says. “Who in their right mind  would lend $100,000 in unsecured debt to an art major?”
• Like Sweet, graduates of proprietary colleges often struggle to find jobs in  their fields. This is because, in many cases, they don’t get the skills they  need to compete.
• Other chains have better reputations on these fronts, among them the University  of Phoenix and DeVry University. But even they have a spotty record of  graduating students.
• former students of Colorado-based Westwood Colleges allege they were duped into  borrowing institutional loans at a staggering 18 percent interest. According to  the complaint, the college’s corporate bosses advise their admissions officers  to sign students up for these loans without revealing how costly they are going  to be. Thus borrowers don’t learn about the steep interest until after they  leave school and receive their first loan bill. Worse, the lawsuit alleges that  some students have been signed up for loans without their permission.
  
• “They knew they’d never be able to enroll these students if they were up front  with them,”
• Career Education and Corinthian Colleges only expect to recover roughly half of  the money they distribute through their institutional lending programs,  according to communications with shareholders. Why would they lend knowing they  won’t get the money back? Because any loss is more than offset by federal loans  and financial aid dollars, which, despite the surge in private educational  lending, still fund the bulk of tuition at proprietary schools. Say a student  gets a $60,000 federal financial aid package and supplements it with a $20,000  institutional loan. The school comes out $40,000 ahead even if the borrower  ultimately defaults. Plus, getting students in the door pumps up enrollment  numbers, which makes for happy shareholders.
  
• Once forced out of the federal student loan program, traditional lenders will  have a powerful incentive to seek profits by wading deeper into the private  student loan market, and for-profit schools, with their exponential growth,  could once again be an appealing target.
  
• the Obama administration seems more inclined than its predecessor to stand up  against the abuses of proprietary schools.
• “Our overall goal at the Department of Education in post-secondary education is  to make sure that students … have the information they need to make good  choices,”

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