Are for-profit colleges behind the next loan default meltdown? (Full Version)

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EternalHoH -> Are for-profit colleges behind the next loan default meltdown? (10/21/2010 2:56:27 PM)

http://www.pbs.org/wgbh/pages/frontline/collegeinc/view/?utm_campaign=viewpage&utm_medium=grid&utm_source=grid

I must say that I agree that the private sector is once again doing what it did when it completely overshadowed the antics of Fannie & Freddie and pursued unqualified people to take on "liar's loan" mortgages. With these for-profit colleges, they are getting people into education debt (rather than mortgage debt) who really should not be there in the first place.  Just like there are people who really would never qualify to own a house, there are people who really never qualify to be taking on debt to get an advanced education. The same fact of life that applies to housing ownership rears its ugly head here. And just like what went wrong with the mortgages, eligibility here is wrongly based on the profit motive, too, and not student (borrower) educational qualifications.

Are these capitalists the for-profit, collegiate version of Fannie & Freddie, in the same way that the banks became the for-profit version of Fannie & Freddie as it pertained to the housing debacle?

Notice how so many of these schools charge twice as much as a non-profit, regular college, how they fudge their success stats, lobby to have legal and regulatory definitions tweaked to aid their marketing 'truthiness', and funnel money straight from federal student loan programs to their investors.  Like those commercials you hear from "The Scooter Store", its just another example of capitalism sucking at the taxpayer tit, and throwing a party with the proceeds. Wealth redistribution, from the poor to the wealthy.

When this debt pile blows, you can't pin this on government.  This pending problem is squarely driven by capitalism, and its ability to 'innovate'. In the same way that capitalism 'innovated' and overshadowed the government lending mandates pertaining to the housing debacle, and drove the larger share of the fraud problem.



samboct -> RE: Are for-profit colleges behind the next loan default meltdown? (10/22/2010 6:46:10 AM)

I'm not that worried about it for a few reasons-
1) These schools will likely lose accreditation, and along with that- federal funding.
2) The reputation of producing students that don't get good jobs will also become better known.
3) Lawsuits demanding students money back and damages will proliferate.

There have always been fly by night diploma mills- the internet has just made their reach a little further.

Sam



tazzygirl -> RE: Are for-profit colleges behind the next loan default meltdown? (10/22/2010 6:55:59 AM)

Since when did any school promise a career upon obtaining a degree?



cpl4third -> RE: Are for-profit colleges behind the next loan default meltdown? (10/22/2010 7:28:19 AM)

Recruiting kids directly from homeless shelters and troubled teen centers? From street gangs, hooking, and stripping, direct to college student?  Is that how the higher education experience is supposed to be?

These schools represent 10% of all college admissions, while responsible for 50% of student loan defaults?



EternalHoH -> RE: Are for-profit colleges behind the next loan default meltdown? (10/22/2010 9:30:17 AM)

For-profits are not serving an undeserved student market as they claim, but rather they are serving an unqualified student market. Just like sub-prime mortgage lenders served an unqualified homeowner market.

The academic qualifications of students are being overlooked because the motive behind enrollment is 'asses in chairs', more profit, just like what happened with mortgages. They were paid on the consummation of the deal, not the integrity or legitimacy of the borrower.

This is the collision between the American capitalist system, where any dope can be a business success, and the academic world, where in the desire to keep the system legitimate, dopes generally are not allowed to advance to the next level.  This industry is being fueled by our present "race to the bottom" that goes along with global competition. As wages are pushed down in our competitive quest with other low wage countries, traditional academics are getting replaced with these glorified trade schools.

When the size of the University of Phoenix is bigger than the entire California state collegiate system, this isn't your ordinary 'fly by night' diploma mill operating from some obscure Caribbean country. And never underestimate the desperation of the unemployed needing a transition.  Its like the lottery. They know the odds of winning are not good, but they still buy a ticket, looking for that one success. Reputation of the school really does not matter in situations of desperation, when the 'lottery mentality' is in play.

And while I'm pretty sure that most smart Americans can understand that any mortgage capable of going from 4% to 14% on a whim is bad news in general, we did not reach critical mass in that understanding before the dollar values involved nearly imploded the economy. Some things simply cannot wait for that slow awakening to occur, they need to be stopped before it gets to that point.



samboct -> RE: Are for-profit colleges behind the next loan default meltdown? (10/22/2010 10:01:20 AM)

Three comments:

1) Most of the students getting sucked into Univ. of Phoenix aren't kids or out of homeless shelters- they're working adults who see a college degree as a step up the career ladder.
2) To Tazzy's point- wholeheartedly agree- but not the purpose of this thread. College grads from reputable schools not finding jobs is a function of our lame economy, not the education. If these schools provide a useful education, then they'll attract more students. If not, they'll fail- same as any other school.
3) There have always been schools with a strong religious tie in such as Oral Roberts University that are not well respected. If somebody wants to go to such a school, who am I to say no? Use my tax dollars to support them though? That's another issue. It's clear that federal funding is probably going to vanish from these schools, at which point, they will no longer be the darlings of Wall St.

Sam



Fellow -> RE: Are for-profit colleges behind the next loan default meltdown? (10/22/2010 3:25:48 PM)

Regular "non profit" state universities suck huge amounts of money out of students as well. Sate Universities are like a state inside the state. The presidents of the universities have often salaries several times the governors of the states, college football coach earns millions, the textbooks are sold 50 times production cost, students are forced to buy expensive health insurance... and so on. Everything in the US tends to turn into a scam under the current system.



popeye1250 -> RE: Are for-profit colleges behind the next loan default meltdown? (10/22/2010 3:31:08 PM)

All schools are "for profit", some of them just don't pay taxes.



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