For-Profit Colleges Prey on Homeless Students and Need to be Regulated

Kevin M. Ryan
Aug 31, 2018 · 4 min read

Students from for-profit schools account for 35 percent of all college loan defaults, and their debt grew from $39 billion in 2000 to $229 billion in 2014. And 52 percent of students at for-profit colleges default on their student loans, twice as many as those who attend community colleges.

Talk about students AND taxpayers NOT getting their money’s worth!

So the news from Washington about for-profit colleges is troubling — Department of Education officials are poised to remove or seriously weaken safeguards meant to protect students who are defrauded by these institutions. And taxpayers — who stand behind the federal student loans such colleges survive on — stand to lose in the proposed deals.

Secretary of Education Betsy DeVos is reportedly moving to scrap or gut rules that would protect student borrowers at schools that defraud them or go out of business, and that would keep federal funds from schools that fail their students — leaving them without “gainful employment,” earning less than would justify the cost of attending college.

Today, Covenant House is proud to join 80 organizations supporting rules that protect students who have taken out loans to attend for-profit schools. You can see the letter to Secretary DeVos that we signed, from The Institute for College Access & Success, here.

The biggest victims, from my perspective, would be the students such schools actively recruit: low-income kids, veterans, and young people overcoming homelessness, many of whom pin their dreams on such schools, only to find themselves deep in debt, lied to, and unprepared for employment, after attending them.

Why is the federal government working to help for-profit colleges that defraud vulnerable students who want to earn a degree? Students like Jayson and A., who have been helped by Covenant House, but whose dreams were squelched by corrupt schools?

“The school is a scam,” said A. about TCI College, also known as Technical Career Institutes, based in Manhattan, which closed last year. When he got in, he remembers feeling so excited.

“I was doing something with my life,” he said.

But he complained that the coursework was not challenging, and the credits he earned could not be transferred anywhere else, contrary to what the school had promised. He’d also been told the school would help him find a job, another fabrication. Later in his first semester he discovered the school had also lied when it said his financial aid had been approved. Turns out he owed the school $1500 just to finish the term.

Another former Covenant House resident, who attended the for-profit ASA College in Brooklyn, said the school was not challenging, and that school officials hadn’t explained his loan situation well, leaving him $7,000 in debt, when he thought he would owe $3,000.

Lyndell Pittman, director of education and work force development at our New York City program, said in his five years running JobCorps in Brooklyn, he saw many young people recruited to for-profit colleges, who would enroll them even if, due to poverty and changing schools frequently, they lacked the academic foundation for college. Some for-profit colleges admit students who haven’t completed high school, offering them GED classes they could get elsewhere.

“These schools tend to prey on young people of this nature,” he said. The schools use up a year of their financial aid that could be better used in a community college that would not saddle them with high-interest private loans.

“Young people are almost willing to believe whatever anyone’s selling, because they desire an education, and have been told by so many of us at they should get an education,” Pittman said. But many are left with loans they can’t pay, and, eventually, a ruined credit history. “Then the promise of completing their education is that much more far-fetched,” he said. “Their discouragement becomes another form of trauma — ‘I’ve been abused in a different way, mistreated by the educational system that’s supposed to teach me to do better, and left me further behind.’”

Covenant House redirects young people to scholarships, and partnerships with area schools that recognize the struggles of young people facing adolescent homelessness. “There are quite a few colleges that really do bend over backwards to help young people out of that problem situation they’ve gotten into with for-profit schools,” Pittman said, adding that when such a student finds the right school, they’re more driven and successful than average.

Many for-profit schools receive up to 90 percent of their income from federal student loans, but graduates of almost three quarters of them go on to earn less than high school drop outs. In fact, a non-partisan study of for-profit graduates and dropouts found they did not earn sufficiently more after leaving school, factoring in loans, to do better than young people who did not attend post-secondary school at all.

Some assistance for the 925,000 students who attend such schools may be coming from attorney generals in 18 states and the District of Columbia, who have sued to keep the Department of Education from scrapping the rules on for-profit schools. Top law enforcement officials from 30 states, teamed with the National Governors Association, have protested a move by some in Congress to block states from regulating companies that service student loans.

There will be a public comment period about the proposal to remove the gainful employment provisions, once it is issued. I hope the department gets an earful, from all of us who want to encourage vulnerable young people to build their futures on a foundation built from a valuable, affordable education.

Kevin M. Ryan

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