The Great Recession prompted many people who were laid off to look into enrolling in college as a way of increasing their chances of finding a job. Since public schools around the nation were facing huge cuts in their funding due to the economic collapse, they were unable to meet the demands of hundreds of thousands of new students. Unfortunately, there were plenty of for-profit colleges out there that were more than willing to enroll low-income students, as long as they were eligible for federal student loans. As a result, the Brookings Institute has found that former students are now defaulting on their loans at twice the rate they were prior to the recession, with the majority of that increase coming from students who attended for-profit universities.
The report also indicates that those who attended for-profit schools were less likely to have earned their degree and had a more difficult time landing a job than those who went to traditional, non-profit institutions. Even worse, the students who did find work earned a median wage of less than $21,000 and carried a loan balance of nearly $10,000. Meanwhile, the U.S. Department of Education has established that in some fields, a degree from a for-profit school could actually wind up getting you a lower income than a person who has dropped out of high school and is doing the same job.
These schools have come under fire in recent years, facing closings, lawsuits and investigations by state and federal authorities, but Congress still has yet to act in any meaningful way to keep for-profit colleges from taking advantage of their students. Evidence suggests that the companies running them are aware that the product they are offering is of no real benefit to those enrolled in their schools, but they continue to encourage people to take on unsustainable levels of debt in order to increase their own profits.
Three years have passed since the U.S. Senate Committee on Health, Education, Labor and Pensions published a report on the unethical actions of many for-profit schools and the only real improvement we’ve seen has been a small action to discourage these colleges from targeting military veterans. It’s time Congress acts to bring relief to every student who has been taken advantage of by for-profit colleges and to stop these schools from preying on the next generation of Americans.
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If you feel you were defrauded by the school you attended or you are being treated poorly as a distressed borrower by your creditors, take the free challenge debt review to find out what options you have regarding your student loans.