Author Topic: Students go to fake school; are shocked they still have to repay student loans  (Read 16096 times)

randymarsh

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15 students are refusing to pay their federal student loans they acquired from some shitty for-profit school.

Why?

Cause...reasons. I guess

http://finance.yahoo.com/news/heres-letter-15-students-refusing-154329062.html

Some of them not only want the Department of Education to cancel existing debt from said shitty school but also to pay for their entire degree at a real school! 

It's bad enough that tens of millions of dollars go to students at real schools in the form of Pell grants and then they never even finish. Annoying, since I never qualified for those grants yet I actually finished my program and on time. Then these clowns have the nerve to think they deserve a do-over & a completely free education.

Most them appear to only owe 10-30K. Somehow I owe double that and can make minimum payments just fine.

They're all playing the victim as if these loans were somehow forced upon them. If you go to their site (https://debtcollective.org/studentstrike) and read the stories, many are now saying they want to go to an accredited school. Why didn't they want to go to a real school in the first place?
« Last Edit: February 28, 2015, 01:34:40 PM by thefinancialstudent »

ltt

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The Federal loan program should only be giving loans to those kids that are attending schools that have been accredited.  If not, no loan.

I don't know of many college-age kids or their parents that look to see if the school is accredited.

I'd think about suing also.

GueroKC

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These kind of schools frequently prey on people with the kinds of grades and test scores that wouldn't let them get into a lot of other schools, and they have a nasty habit of exploiting veterans who are susceptible to promises of college degrees that teach them what they need to know and none of the extra B.S.

Sue the hell out of 'em!

Argyle

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I think they have a point that the government tacitly gives credibility to institutions when it accepts them on the roster of places where you can use student loans. 

That said, it's clear the students are furious at the government in part because there's nobody else left to be furious at.  The people who ran the sub-standard school have melted into the woodwork.

The whole field of for-profit universities (or "universities") is a minefield of scam and deception.  I'm glad the government finally shut this outfit down, but disappointed that they didn't do it a lot sooner. 

caliq

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Wow....okay...rant incoming.

These types of schools are absolutely predatory.  And they actually do frequently falsify documents to sign students up for loans/grants they're not eligible for or aware that they're agreeing to. 

The kind of shit I've seen them try to pull on my veteran husband and his Marine buddies is absolutely disgusting.  When we first started dating he was contemplating doing an online degree at one of these schools and it took me a SUPER long time to convince him they were bullshit, because so many of his friends had been sucked in and they had all been brainwashed by an excessive amount of propaganda from these fake educational institutions.  These schools take their entire GI Bill eligibility and then sign them up for federal loans and grants ON TOP of what they earned for serving their country.  And many (most?) of these guys are either first generation college students or have been out of their family home for so long that they don't really discuss these kinds of things with their parents.  They don't really have anyone to turn to and ask, "hey is this legit?" who hasn't been exposed to the same excessive level of propaganda.  Plus, given the way military culture is, they inherently have a tendency to reject any criticism of a school like this as elitist, or looking down on a 'practical education' from the fancy pants liberal ivory tower (and I say that with love, I married the guy after all!).

Look up the graduation rates and retention rates of some of these schools.  Look up their job placement statistics.  Look up the percentage of their students that come from low income families, or are first generation students, or non traditional students (which could indicate they weren't college prep in high school).  Look up the percentage of their budgets that goes towards marketing and recruiting, and note the types of people they typically try to "recruit".  Look up the cost of an "education" from these bullshit schools and compare it to your local public university.  I'm pretty sure University of Phoenix has jacked their tuition up to 60k/year.  That's like Harvard level and it's disgusting. 

Sorry, but you're dead wrong on this.  These are companies that were (and are), from their birth, designed to take advantage of students and the federal government.  The distinction between a for-profit 'school' and an actual institution of higher education in this country is not clearly delineated, and not taught to high school students as a matter of course.  In fact I'd probably bet on the fact that you either have college educated parents, older siblings, or close family members; or don't come from a low-income family (since you seem to be resentful of Pell Grants that provide a more equal opportunity for education?); or were in a college-preparatory program in high school.  If none of those things apply to you, then congrats, you're probably just naturally pretty smart.  That's why you're so 'enlightened' about how to go about getting a proper post-secondary education.  Unfortunately, huge portions of this country do not share your privileges.     

I'm sure these students wanted to go to a real school, and thought they were going to a real school.  I'm sure they fully intended to, and still intend to, become contributing members of the work force -- after all, the majority of these types of schools focus on 'job training' type certificates, not a well-rounded liberal arts education.  I don't see anything wrong with the idea that they should have a fresh start.  I'd rather they get a do-over and get training for a career-type job then be saddled with loans they're trying to pay on minimum wage;  they'll definitely contribute more to society overall if they're allowed to get actual training and enter the workforce.  Leave them with these student loans and no career prospects and chances are they'd end up on welfare and SNAP and all the other stuff.  It's hard enough to make it with just a high school education in this country, I can't imagine it'd be very feasible with just a high school education AND student loans.
« Last Edit: February 28, 2015, 02:17:35 PM by caliq »

MoneyCat

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Fake for-profit "colleges" created to steal student loan money are the educational equivalent of payday loan companies.  They prey on the weak and desperate who have nowhere else to turn.  And here we have another thread bashing the poor and helpless for not being rich and supported.

Remember:  Your life might be really easy, but that doesn't mean that everyone else's lives are also really easy.

GueroKC

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Well said, caliq. Everything I wanted to say and more!

randymarsh

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Wow....okay...rant incoming.

These types of schools are absolutely predatory.  And they actually do frequently falsify documents to sign students up for loans/grants they're not eligible for or aware that they're agreeing to.

That's entirely possible, but asking for the entire amount to be forgiven is not the fix. Surely at least some of the loans were willfully agreed to. When I took out loans, I accepted the master promissory note on the DOE's website. The entrance counseling also occurs on a DOE website.

Quote
Look up the graduation rates and retention rates of some of these schools.  Look up their job placement statistics.  Look up the percentage of their students that come from low income families, or are first generation students, or non traditional students (which could indicate they weren't college prep in high school).  Look up the percentage of their budgets that goes towards marketing and recruiting, and note the types of people they typically try to "recruit".  Look up the cost of an "education" from these bullshit schools and compare it to your local public university.  I'm pretty sure University of Phoenix has jacked their tuition up to 60k/year.  That's like Harvard level and it's disgusting. 

So evidence that these schools are a scam is readily available and people are choosing to ignore it?

Quote
Sorry, but you're dead wrong on this.  These are companies that were (and are), from their birth, designed to take advantage of students and the federal government.  The distinction between a for-profit 'school' and an actual institution of higher education in this country is not clearly delineated, and not taught to high school students as a matter of course.  In fact I'd probably bet on the fact that you either have college educated parents, older siblings, or close family members; or don't come from a low-income family (since you seem to be resentful of Pell Grants that provide a more equal opportunity for education?); or were in a college-preparatory program in high school.  If none of those things apply to you, then congrats, you're probably just naturally pretty smart.  That's why you're so 'enlightened' about how to go about getting a proper post-secondary education.  Unfortunately, huge portions of this country do not share your privileges.     

My parents actually didn't go to school until their mid 30s and late 40s. My own mother likely received a Pell grant at some point during her BA and MA. My father received unemployment for a short period after a job loss that came completely out of left field. I was very lower middle class (perhaps even low income) during a chunk of my childhood. My point on Pell grants is that this money is effectively wasted on students who attend for just a few semesters. My mother has taught community college classes and sees it every semester.

Meanwhile, my parents' income prevented me from getting any government assistance aside from loans and a one time $500 grant. At this point they had their own educations to pay for but that doesn't matter for FASFA. So I borrowed. A lot. Some was frivolous and some was not. But I made damn sure my degree had a decent chance of a good starting salary and I knew my program was regionally accredited.

I'm fine with Pell grants. I'm sure they've helped many many students start and finish college. I'm not fine with students attending for 2 semesters, getting a C average, and then disappearing never to return. The thousands of dollars the school got for them could have gone to me. From a cost benefit perspective, it would have made more sense to give it to me. I finished school and immediately started making decent money, meaning I pay more in taxes and likely will for my entire working career. A pell grant investment in me is better than a pell grant investment in Joe Somebody who quit school and will not make the money I will.

Couldn't you say this about any issue where people make bad decisions? "Oh he didn't know any better...his parents weren't college educated." Where and when does personal responsibility begin? Many of the 15 people who signed this letter were non-trad students, 30+. They've been around the block.

The government I agree should not allow these "schools" access to funds. But the government allows all kinds of terrible decisions to be made with "their" money. FHA loans. Tons of people buy houses they can't afford with those loans. I've rarely seen anyone say we should do away with the program.

I would feel more sympathetic if these people owed 200K or something. But they owe like 25K. The minimum payments, on an income based plan, are around $160/month.
« Last Edit: February 28, 2015, 03:03:22 PM by thefinancialstudent »

randymarsh

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That said, it's clear the students are furious at the government in part because there's nobody else left to be furious at.  The people who ran the sub-standard school have melted into the woodwork.

Well that brings up a good point. In this situation, the government is only the lender. Sure they set standards, just like a bank won't originate a mortgage on a home without an inspection. But they didn't provide the education or build the house.

If I buy a computer on my CC, do I get to sue Apple or American express when it doesn't perform as expected? 


gimp

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I agree with Caliq.

If you buy a computer on your credit card, which the credit card company backed by only allowing you to buy certain computers, and the vendor disappeared - yeah, I'd go after the CC company, because they backed something fraudulent and now want to get paid for it.

You can paint these kids with brush strokes from either extreme of the opinion spectrum, but either one wouldn't be quite right. They're responsible for their fuckup - and they will have paid for it with years out of their life.

OneCoolCat

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They shouldn't pay their student loans, let congress explain why they allow our tax dollars to go to these crook schools.  However, its a "hell no" to paying for their real education.

Same thing happened with law schools.  There are a shitload of terrible for-profit law schools that blatantly lie to prospective students about their employment and salary rates. 

arebelspy

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For profit education is infuriating, and something that shouldn't be allowed to exist. It's absolutely predatory in nature and the way they hook people is a complete scam.

That being said, these people got taken for a con. That doesn't mean they get bailed out. Their complaint is with the for profit university, not the person who lent them the money to pay for it.

If you buy a computer on your credit card, which the credit card company backed by only allowing you to buy certain computers, and the vendor disappeared - yeah, I'd go after the CC company, because they backed something fraudulent and now want to get paid for it.

...what?  One guy selling laptops out of the back of his truck takes CCs and the other doesn't, I use the guy who does, and now it's the CC company at fault for "backing" him?

If I pay a con man with my Visa, I shouldn't be responsible for the credit card payment?

If a friend lent them the money to attend the university, would you say they didn't need to pay back the friend?

I agree that these colleges are shitty, and feel bad for the folks. Them not wanting to pay though is pretty silly. They made a mistake, and they'll learn. I've lost a lot more money than they're talking from my mistakes.  It's unfortunate, and regrettable, and not their fault, but that doesn't mean they should not have to experience consequences.
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Sofa King

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these people got taken for a con. That doesn't mean they get bailed out. Their complaint is with the for profit university, not the person who lent them the money to pay for it.


I concur.

These people will end up paying by having their pay checks garnished as well as any tax refund being taken before they get a chance to ever see it. 

GetItRight

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While fraud could be argued, I've been victim of fraud and theft by a university, the bottom line is government and schools and working together and the students have no recourse. All schools are a scam. Government drives up the price by ensuring loans cannot be discharged in bankruptcy, this promotes insane lending practices to unqualified borrowers. When students can borrow an essentially unlimited amount schools can charge whatever they want, so tuition prices skyrocket. School administrators get huge compensation packages, they build extravagant gyms, dorms, everything to entice more customers. When the government is directly paying as with government grants, scholarships, financial aid, and the proposed "free" college, the government actually becomes the customer. This is what happens when there is no free market the government and those on the welfare dole win, everyone else loses. If these students got off owing only $10k-$30k they should be thankful this life lesson came so cheap.

MrsPete

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I teach high school seniors, and one of the lessons I teach every year involves reading two informative articles about student loans.  Every year I get the same comments, which show a shocking lack of understanding from my 17-18 year old students:

- You mean you have to pay back student loans?
- You mean you have to pay back more than you borrowed? 
- You mean you have to start paying back even if you don't have a job within the time frame? 
- You mean you have to pay them back even if you do what you're supposed to do and graduate?
- You mean you have to pay them back even if you don't finish school and don't have use of the degree?

Not all our students are quite so uninformed, but every year I have a vocal few who ask these questions, and I always have more than a few who are listening intensely -- and I know that means they want to ask the same things but are ashamed to do so. 

Part of it you can blame on the way our society is set up.  They've attended school for free K-12, and at my school over half of them receive free breakfast and lunch as well as some of their clothing from the school.  Quite a few of these kids are living on government money at home.  So they're a bit flaberghasted at the idea that THEY should be required to pay for . . . anything. 

Part of it you can blame on the lenders and the university.  The message seniors tend to get is, Any college education is good and useful.  Paying back will be easy -- kind of like skipping a couple dinners out every month.

Part of it you can blame on the individuals, many of whom simply don't seek out guidance of any type -- lots of my students have very unrealistic expectations.  I have students with a .9 GPA who think they're going to become RNs.  I have students who say they're going to get engineering degrees from the local community college.  I'd say HALF my students really investigate their college choices, while the other half just do whatever's easy -- the bunch who are in this bad situation are in the "winging it" category. 


caliq

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Well I meant to reply to that really big response to mine but had a dog semi-emergency and spent all night at the vet/investigating surgery options -- my 10 month old puppy tore his ACL :(

Just wanted to clarify that I don't think they should get a FREE education at a legitimate school; I do however think that some sort of reparations needs to be done about the scam education and the loans they're stuck with.  Maybe loan forgiveness on those loans and a resetting of eligibility for federal aid so they can have the same chance at a legit school as anyone else does? 

The graduation/retention/job placement type rates I was saying to look up are NOT readily available; the only honest ones I've seen were in well-researched news articles about the Corinthian saga, and I believe they were calculated by the journalists, who had to dig very deeply for things like yearly enrollment numbers and yearly graduation numbers and such.  They're not published in an accessible manner even on public university websites, let alone on private for-profit scam schools.

The reason that having college-educated parents is highly relevant to a child's decision making process around higher education is because the system is, for a lot of people, VERY difficult to navigate.  I have personally been misled by financial aid officers at public colleges, and only due to my intelligence and prior research was I able to call them out on it immediately and stop them from signing me up for a loan I didn't want or need.  They like to give you "the simple explanation so you don't have to read all that paperwork" and often, that simple explanation includes a line item for "federal aid" -- they DO NOT DELINEATE between federal GRANTS and LOANS.  If you have people in your life who understand the basic principles of a system, it at least gives you a better shot at navigating the system yourself and not getting screwed over by it.  Honestly, this is very arrogant sounding, but I am well aware that I'm in the 99% percentile in pretty much every measurable academic/intelligence category in this country;  I am also very aware that I have a HUGE advantage due to that.  Sorry, but I don't think that someone with less innate capacity or nurtured ability should be precluded from higher education by a system that's so ass-backwards that they can barely hope to understand it, ESPECIALLY when the people who's JOBS it is to explain the system and help kids (yep, many are 17 when going off to college or at the very least, signing the enrollment documents) are misleading them. 

A lot of these for-profit colleges have degrees or certificates that advertise good starting salaries (but are usually just the median salary in that field) and actually are regionally accredited.  I'm honestly kind of flabbergasted at the idea that some of you seem not to have seen any of the sleazy commercials or ads...What they don't tell you in the shiny marketing material is that super low percentages of people even complete the programs in the first place, or that their readily-available 'job placement stats' only include the 10% of graduates who feel like answering their survey, or that they include graduates who are employed in ANY capacity (non-degree related, non-permanent, non-full time, unpaid internships, whatever) in their 'job placement' statistics.

These schools get their business from people who see their excessive marketing materials, which trumpet the idea of starting salaries of 40k after 6 months-2 years of schooling.  That honestly does, at face value, sound like a pretty sweet deal.  So the people call the phone number, or go to the website, and get bombarded with more of the same awesome sounding info.  They're like used car dealerships...the minute you give them your phone number or email, you're screwed for the next six months at least, cause they will contact you every 3 days until you give in or scream at them so much that they realize you're not a target.  And as MrsPete described, the target demographic is kids who would view 40k as an absolute fountain of money.  It's very easy for someone in or near poverty to have hopes beyond rationality because the alternative is just too damn depressing for the human mind to really bear; they're going to cling to anything that promises that those dreams will be fulfilled.  Why do you think the lottery is called a 'poor tax'?

Sorry, I know this is kind of disjointed and another rant but I'm getting a little tired of the stink of elitism in here. 

MrsPete, thank you for taking the time to educate your students about loans.  I wish that was more prevalent in our education system.

Capsu78

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Not sure who I agree or disagree with in this thread.  After clicking through to the article  and clicking through to the New Yorker article behind that, I find that my wife attended one of the California schools under the Corinthian brand that is under fire:

"The college was founded[7] in San Francisco, California, by Edward Payson Heald, on August 8, 1863, and known for many years as "Heald's Business College".[8]
In 2001, it changed its name from Heald Colleges to Heald College."

As she graduated HS, she had the grades to get into the UC system but her older brother was already studying at Berkeley and the household income couldn't handle 2 at the same time and there was no real "student loan industry"  to speak of at the time.  So she started taking certificate courses right out of HS.  She started with typing 50/ wpm which was easier for her as she had made it to "regionals" in typing in a HS business prep class.  Over the next several "credits" she was topping 87 / wpm.  Her other "certificates" were earned in shorthand theory, performance, Business English, Letter writing and other skill sets that those who went on to the UC system would look down their noses on- yet were appropriate for a young women just entering the business world- she was hired immediately upon certificate completion 18 months later.

So I am torn between her lone "affordable" educational opportunity  being called "fake school", particularly when the school has been around for 150 years.

Back to Wiki:
"A few years after that, in 2007, the then non-profit institution was acquired by a private investor group and turned into a for-profit college.[9]
In November 2009, Corinthian Colleges, Inc., purchased Heald College's parent company for $395 million, simultaneously announcing plans to begin in 2011 offering online-only courses leading to degree programs based entirely on online-only coursework. However, Corinthian planned to retain the Heald name, as well as its faculty and staff.[10]"

It would appear from that statement, that the "non -profit" business model was replaced with the "for profit" business model in 2007... tracking along with the explosion in Student debt levels on money provided freely by the semi governmental/ accreditation/ private investor industrial complex. I am starting to smell that the "for profit" label being spittled out in the direction of the schools themselves may have other root causes for stink...the same stink that emanates for self described "not for profit" ivy's who carry $Billion dollar endowments free from the burdens of taxation.

I think the OP's article is symptomatic of the air coming out of the higher ed bubble and not necessarily the result of the actions of a few bad actors.  Whose grand idea was it to make these Student loan debts non dischargable in bankruptcy ???  That is the rock to look under. 

(side note Caliq- your post puts a very human face on the military target demo and it does P me O when Vets get exploited like that.  Is the University of Phoenix really $60 grand??? wow, just wow)   

randymarsh

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I hope your puppy is ok caliq!

I really do feel bad for them, but I'm just not convinced discharging all their debt is right. Maybe I decide tomorrow my education wasn't quite good enough. Do I qualify? Like you or someone in this thread said, there's no clear line separating bad from good.

Everyone will have anecdotes and I'm not saying navigating college is easy. On numerous occasions, I've actually told my parents and friends that I think half or more of college is figuring stuff out like time management, FAFSA, course registration, getting advisors to approve classes for you early, etc. So I guess this is elitist, but IMO this stuff is part of college in some ways.



James

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For profit education is infuriating, and something that shouldn't be allowed to exist. It's absolutely predatory in nature and the way they hook people is a complete scam.

That being said, these people got taken for a con. That doesn't mean they get bailed out. Their complaint is with the for profit university, not the person who lent them the money to pay for it.

If you buy a computer on your credit card, which the credit card company backed by only allowing you to buy certain computers, and the vendor disappeared - yeah, I'd go after the CC company, because they backed something fraudulent and now want to get paid for it.

...what?  One guy selling laptops out of the back of his truck takes CCs and the other doesn't, I use the guy who does, and now it's the CC company at fault for "backing" him?

If I pay a con man with my Visa, I shouldn't be responsible for the credit card payment?

If a friend lent them the money to attend the university, would you say they didn't need to pay back the friend?

I agree that these colleges are shitty, and feel bad for the folks. Them not wanting to pay though is pretty silly. They made a mistake, and they'll learn. I've lost a lot more money than they're talking from my mistakes.  It's unfortunate, and regrettable, and not their fault, but that doesn't mean they should not have to experience consequences.

I think this covers what I was going to say, so I won't repeat it, simply agree.

But I will expand on one point, that any form of "reparations" by the government for this or other cons would have unintended consequences beyond the good intentions of helping them out. It absolutely sucks to get conned into these huge loans, but that has a deterrent effect both on their future lives and others who hear and learn about these things. Now imagine the government steps in, and despite not having an obligation they forgive these loans. Where does it stop? What about others who got their degrees but didn't find a job because the unaccredited school sucked. Or didn't finish degrees because of something they couldn't control. Or went to a credited school that sucked in their particular degree. Or whatever. You create a obligation to others by providing reparations to one group. More importantly pretty soon everyone stops caring about whether they might get conned or a raw deal, if that happens the government (in other words taxpayers like you and me) will bail them out. And the next step is people being conned on purpose just to scam the government who will then replace the money that was "conned" from them. Where does it end once the government steps into this?
« Last Edit: March 01, 2015, 11:57:43 AM by James »

M from Loveland

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Fake for-profit "colleges" created to steal student loan money are the educational equivalent of payday loan companies.  They prey on the weak and desperate who have nowhere else to turn.  And here we have another thread bashing the poor and helpless for not being rich and supported.

Remember:  Your life might be really easy, but that doesn't mean that everyone else's lives are also really easy.

Well said, MoneyCat

Capsu78

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As for the con side of this equation, this line brings it home for me:

"in 2013, the Santa Ana-based company made 84 percent of its $1.6 billion in revenue from federal student aid."

They were not in the education business, they are in the "pumping federal student aid" business. 

How about trying this hat on; Schools fund their own loan money and deal with the expectations/ pricing/ loan servicing themselves?  Might help them forgo that next "mega fitness center for the west side of campus" and focus on delivery of education at an affordable price.

randymarsh

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How about trying this hat on; Schools fund their own loan money and deal with the expectations/ pricing/ loan servicing themselves?  Might help them forgo that next "mega fitness center for the west side of campus" and focus on delivery of education at an affordable price.

I don't know if this would help unfortunately.  :-/.

The loans still wouldn't be dischargeable in bankruptcy and the school would refuse to release transcripts or diplomas if you were late or in default. That could be a worse result for the student. If I defaulted now, I could still get transcripts because as far as my school is concerned, I paid for everything.

Parents & students also have themselves to blame (partly) for the "mega fitness center" creep that's happening. Schools do that stuff because it wows prospective students. I think it also creates the thought "well if the fitness center is that good", surely the education is too!

Indexer

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To add to this I was recently reading an article about people taking out student loans... and then not even taking classes.  They just need the money to support their lifestyles.  I want to say the article was on the Wall Street Journal, or it was one of their linked columns(like MarketWatch).

However these people probably should attend the classes, they might learn something.... like the fact that student loans aren't forgiven in bankruptcy.

I tried searching for the article, but there is just so much on 'student loans' there was Google overload.

caliq

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Not sure who I agree or disagree with in this thread.  After clicking through to the article  and clicking through to the New Yorker article behind that, I find that my wife attended one of the California schools under the Corinthian brand that is under fire:

"The college was founded[7] in San Francisco, California, by Edward Payson Heald, on August 8, 1863, and known for many years as "Heald's Business College".[8]
In 2001, it changed its name from Heald Colleges to Heald College."

As she graduated HS, she had the grades to get into the UC system but her older brother was already studying at Berkeley and the household income couldn't handle 2 at the same time and there was no real "student loan industry"  to speak of at the time.  So she started taking certificate courses right out of HS.  She started with typing 50/ wpm which was easier for her as she had made it to "regionals" in typing in a HS business prep class.  Over the next several "credits" she was topping 87 / wpm.  Her other "certificates" were earned in shorthand theory, performance, Business English, Letter writing and other skill sets that those who went on to the UC system would look down their noses on- yet were appropriate for a young women just entering the business world- she was hired immediately upon certificate completion 18 months later.

So I am torn between her lone "affordable" educational opportunity  being called "fake school", particularly when the school has been around for 150 years.

Back to Wiki:
"A few years after that, in 2007, the then non-profit institution was acquired by a private investor group and turned into a for-profit college.[9]
In November 2009, Corinthian Colleges, Inc., purchased Heald College's parent company for $395 million, simultaneously announcing plans to begin in 2011 offering online-only courses leading to degree programs based entirely on online-only coursework. However, Corinthian planned to retain the Heald name, as well as its faculty and staff.[10]"

It would appear from that statement, that the "non -profit" business model was replaced with the "for profit" business model in 2007... tracking along with the explosion in Student debt levels on money provided freely by the semi governmental/ accreditation/ private investor industrial complex. I am starting to smell that the "for profit" label being spittled out in the direction of the schools themselves may have other root causes for stink...the same stink that emanates for self described "not for profit" ivy's who carry $Billion dollar endowments free from the burdens of taxation.

I think the OP's article is symptomatic of the air coming out of the higher ed bubble and not necessarily the result of the actions of a few bad actors.  Whose grand idea was it to make these Student loan debts non dischargable in bankruptcy ???  That is the rock to look under. 

(side note Caliq- your post puts a very human face on the military target demo and it does P me O when Vets get exploited like that.  Is the University of Phoenix really $60 grand??? wow, just wow)

I'm not sure how old your wife is, but it sounds like she attended that school before it was bought out by Corinthian.  So, it probably wasn't really the same situation. 

My biggest problem is that the for-profit schools put a ton of effort into making themselves seem like the only affordable option for people who get sticker shock at the price of a four year school.  Leaving aside the fact that the sticker price of a four year school is very rarely what a student actually pays, including any loans taken out, as long as said student actually fills out the FAFSA and institutional aid applications...there are so many better options than for-profit schools!

These days, community colleges have a HUGE selection of job training programs that provide certificates or Associate's degrees -- my local ones have things like cosmetology, manufacturing, IT, HVAC, adminstrative stuff...so many things!  They also have pipeline programs that feed into the state universities, often with guaranteed admission as long as you maintain a GPA above the cutoff -- you can sign up for these programs in your freshman year at the CC, and then off you go two years later for a fancy BA or BS degree at the flagship state university (or the lower tier ones, my state has programs for both).  These feeder programs go into almost all the 4 year degree programs at the universities, even stuff like engineering, hard sciences, nursing, etc.  Plus they have non-guaranteed feeder programs for a ton of local, private nonprofit colleges and various other programs at the state universities.  PLUS there's the option of just getting the Associate's from the CC and entering the work force.  And in my state, CC tuition is like $5k for the entire year, up to 21 credits per semester.  I attended one for a single semester before transferring and I didn't pay a dime -- I had institutional grants, state grants, and federal grants; pretty sure I got a significant chunk of money back for living expenses and books and such.  Granted, I have/had a high GPA and test scores, so I had access to scholarship and merit awards that others might not have, but either way -- community colleges are where it's at these days, and they're usually significantly cheaper than the for-profit schools.

FWIW I was quite off on University of Phoenix -- it looks like a bachelor's degree will cost you around $60k *total,* not per year.  But they offer ridiculous programs like an online BS in Biology --- uh sorry, I have never seen an employer or grad program that didn't want you to have actual lab experience.  That degree is utterly useless :/ 


caliq

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I hope your puppy is ok caliq!

I really do feel bad for them, but I'm just not convinced discharging all their debt is right. Maybe I decide tomorrow my education wasn't quite good enough. Do I qualify? Like you or someone in this thread said, there's no clear line separating bad from good.

Everyone will have anecdotes and I'm not saying navigating college is easy. On numerous occasions, I've actually told my parents and friends that I think half or more of college is figuring stuff out like time management, FAFSA, course registration, getting advisors to approve classes for you early, etc. So I guess this is elitist, but IMO this stuff is part of college in some ways.

Thanks...he's going to need surgery :( He seems fairly unfazed by it all (still being rambunctious as ever), despite not putting any weight on his leg, so at least I can hope that he's not in too much pain.

Sorry for coming at you pretty harshly -- sounds like I may have misinterpreted your intent.  I agree that learning how to navigate bureaucracy is a significant portion of college; I just don't think there's enough done to actually teach young people how to do it, at the college or high school level. 

A big part of my problem with the system in general is that we, as a society, have fallen into this trap of thinking that everyone should go to college, and needs to go to college in order to have a chance at earning a decent wage and enjoying a meaningful career or whatever.  I was never asked, "Are you going to college?" -- I was asked "where are you going to college?"  I think that's a problem.  There will always be people (like DH!) that don't fit in the educational system and we need to acknowledge that there are viable options for them, other than college/military/minimum wage.  Unfortunately, the accessibility and lack of accountability (both on the borrower side and the educational institution side) in relation to obtaining federal student loans is feeding this monster of an unsustainable system.  It's going to collapse sooner rather than later :/ 

In terms of your individual education, it seems like you got it from a non-profit private or public college -- so in my ideal situation, you wouldn't qualify for forgiveness like these folks would.  I think it would be fairly reasonable to set up a system based on the metrics I've mentioned above (grad rates, job placement rates, etc.) to identify "scam" programs and shut them down, and identify people who have been preyed upon by these scam systems and provide them with some sort of recompense. 

FWIW, I firmly believe that there are some things that should NOT be for-profit.  Education and healthcare, specifically.  I was reading an article the other day about a for-profit distance learning company taking over "home based magnet schooling" for North Carolina high schools; they're being funneled all the state and federal grants intended for our public K12 education through, essentially, a shell nonprofit that exists only to get the state contracts for running these schools (since the state is actually prohibited from hiring for-profit companies to do the work--the state can hire the non-profit, who can hire the company).  The success rate of students in these "educational programs" is as abysmal as the success rates of for-profit college programs, if not worse (because these kids are like 13!!).  It's absolutely sickening :/

fields

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I don't know whether this would apply to the students in this case, but at least some federal student loans are dischargeable due to fraud.  This is from the Dept of Ed website:

False Certification of Student Eligibility or Unauthorized Payment Discharge

You may be eligible for a discharge of your Direct Loan or FFEL Program loan in these circumstances:

    Your school falsely certified your eligibility to receive the loan based on your ability to benefit from its training, and you did not meet the ability to benefit student eligibility requirements.
    The school signed your name on the application or promissory note without your authorization or the school endorsed your loan check or signed your authorization for electronic funds transfer without your knowledge, unless the proceeds of the loan were delivered to you or applied to charges owed by you to the school.
    Your loan was falsely certified because you were a victim of identity theft.
    The school certified your eligibility, but because of a physical or mental condition, age, criminal record, or other reason you are disqualified from employment in the occupation in which you were being trained.

Argyle

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Some people have indeed tried to play the system by getting a loan and then not attending classes.  For this reason, whenever anyone fails a class, the teacher now has to report the last date of attendance and the overall record of attendance, so fraud can be identified.  They now have offices dedicated to hunting it out -- if a student getting loans is not attending and failing classes, that raises a red flag and the office goes after the student and the loans are stopped.

Capsu78

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How about trying this hat on; Schools fund their own loan money and deal with the expectations/ pricing/ loan servicing themselves?  Might help them forgo that next "mega fitness center for the west side of campus" and focus on delivery of education at an affordable price.

I don't know if this would help unfortunately.  :-/.

The loans still wouldn't be dischargeable in bankruptcy and the school would refuse to release transcripts or diplomas if you were late or in default. That could be a worse result for the student. If I defaulted now, I could still get transcripts because as far as my school is concerned, I paid for everything.

Parents & students also have themselves to blame (partly) for the "mega fitness center" creep that's happening. Schools do that stuff because it wows prospective students. I think it also creates the thought "well if the fitness center is that good", surely the education is too!

I am quite in favor of making them dischargeable in bankruptcy.  Then let the university who are offering the loans justify why 20% of there undergrads declare bankruptcy within 10 years of graduation.  The act of physically getting your transcript is less of a big deal, IMHO than explaining your bankruptcy to perspective employers... I am being snarky here but my point is at least some of these "for profit" schools have been in existence for a long time...In the case of my wifes, hers is older than my Big Ten Alma Mater!  I follow the money on this one and believe the easy access to the firehouse of Federal student aid has aided a "K Street" full of cronies more than students who need aid.

James

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Seems like we have been over this before, it's quite obvious why they can't be discharged in bankruptcy. Students would just start declaring bankruptcy the day after graduation. They have little to no money, and massive debt, bankruptcy would be the obvious thing to do other than any moral obligation they may feel. So nobody would lend money based on that risk other than the government, and the government would quickly be overrun by the demand for loans that would never be paid back.

Sofa King

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the bottom line is government and schools and working together and the students have no recourse.

Yes they do. They can go to a school they can afford. No one is forcing them to take out these loans with these terms. Stupidity is not an excuse. 

Capsu78

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Seems like we have been over this before, it's quite obvious why they can't be discharged in bankruptcy. Students would just start declaring bankruptcy the day after graduation. They have little to no money, and massive debt, bankruptcy would be the obvious thing to do other than any moral obligation they may feel. So nobody would lend money based on that risk other than the government, and the government would quickly be overrun by the demand for loans that would never be paid back.

James, I like your well reasoned posts, so I am simply posing this as a debate query: "...So then what happens?"  If the schools won't loan the money they would be on the hook for, what does the "invisible hand" do next?  Universities have been around for hundreds of years, yet major student debt did not occur until as recently as the late 90's?  What course change might a university consider if they could no longer afford their students instead of the other way around?

(as a point of reference, my 4 year UG experience in state at State U came out to $13,500- tuition, books, R&B- (not the beer) - in mid 70's $$$.   I could not get a CC, was largely considered a "poor college student" and had neither a sushi bar option or a climbing wall)

 

caliq

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the bottom line is government and schools and working together and the students have no recourse.

Yes they do. They can go to a school they can afford. No one is forcing them to take out these loans with these terms. Stupidity is not an excuse.

So your suggestion is to cash flow college? 

At my state's minimum wage of $8.70/hr, working 40 hours a week 52 weeks a year gets you a gross income of $18,096.  Our flagship university's estimated cost of attendance (tuition, fees, residence hall, meal plan) for in state students is $24,834.  So right off the bat, that's not happening. 

When you add in transportation costs, books, living costs for school breaks, etc, that $18k (minus taxes & insurance--if it's even offered--) isn't going to get you very far.  Plus, you'd be working full time and trying to attend school full time; the vast majority of minimum wage jobs expect complete schedule flexibility, so your attendance and therefore grades would be abysmal (actually this is a reason a lot of people get sucked into the for-profit online college thing).   

Upthread I was talking about the virtues of community college, and how they're pretty much free.  So, maybe that's a better option for someone who's working minimum wage, right?  Full-time at the local CC is $3866 per year, including only tuition and fees.  Well, you still have to pay for a place to live, and probably a car since you're going to be rushing back and forth between full time work and full time classes, and food, and books/school supplies, and utilities, and a computer (sorry, not an optional thing anymore for a college education), and medical care, and clothing, and whatever else. 

Community college might be doable, but again, you'd be looking at working full time and attending school full time.  Maybe it's because I'm in a fairly rigorous program at a pretty good research university, but I couldn't handle that.  I've worked throughout my education, pretty much since I was 14 (yay farm labor).  I'm currently working around 12 hours a week in between classes, and taking 14 credits.  I have at least 20 hours a week of schoolwork on top of actually attending class and labs, plus things like searching for research opportunities and applying to internships.  I definitely wouldn't be able to maintain my GPA if I was working full time, or probably even >20 hours a week.  And I'm not in an engineering program, or what I consider to be a more intense science program (aka I'm in bio, not physics or chem). 

Plus, there's the whole issue that starting out at community college, while very advantageous financially, can really screw you over if you're in an internship/lab-experience-required type field. 

It's not as simple as 'go to a school you can afford.'

Financial.Velociraptor

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<political rant>

Increasingly across Europe, University is FREE (paid by government).  [See the Scandanavian countries plus recently Germany.]  The people/government see it not as an expense but an investment in the productive capacity of the nation.  They usually even pay for foreign students.

What kind of results is this getting?  Let's take a look at the company Arcam.  That is a 3-D printing company with some whiz bang new technology that allows them to print metals. Their focus is printing replacement body parts such as hips and knees made of basically indestructible titanium.  These are precision custom printed prosthesis.  This company could have located anywhere in the world and Silicon Valley was strongly considered.

Eventual choice: Sweden.  Why would they locate in a socialist and high tax jurisdiction?  Because they need lots of eggheads with PhDs in multiple fields.  Scandanavia is where such people are being produced today.

What does the next twenty years hold for America if college becomes unaffordable so that fewer people go while Europe increases its share of graduates and post-grads?  Obama is on the right track.  We need to start giving it away.  Because if we don't, Europe will.  Our high tech industry will follow.

</political rant>

Sofa King

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the bottom line is government and schools and working together and the students have no recourse.

Yes they do. They can go to a school they can afford. No one is forcing them to take out these loans with these terms. Stupidity is not an excuse.

So your suggestion is to cash flow college? 

At my state's minimum wage of $8.70/hr, working 40 hours a week 52 weeks a year gets you a gross income of $18,096.

It's not as simple as 'go to a school you can afford.'

Yes it is. Go to school part time and get a better job or work 2 jobs. There ARE people who do this. No one said it would be easy, if it were easy everyone would be doing it.  Or even better be smart enough to know what you are getting into when you take out a school loan.  I have ZERO sympathy for all these cry babies who bitch about having to pay back loans that they agreed to the terms when they signed on the dotted line. These idiots think they wont have to pay up will have ther social security garnished!  LOL!!!

paddedhat

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Sure are a lot of arrogant folks on this one. Must feel good to sit in judgment of your lessors, eh?

 My seventeen year old son announced that he was going to be attending a "Music school" that I suspected was a scam. It was about $43K for an eighteen month program, and they claimed absolutely stunning placement rates. I spent a few minutes online, to confirm my hunch, and told junior to spend a few days learning everything he could about the school, and we would then decide if it was the place for him. He did what I asked, and it was a life changing experience for him. His response was, "Holy shit dad, did you know that the whole thing is a fraud? Or that the industry doesn't give a rat's ass if you show up with a degree from that place? There are even reports of graduates getting laughed at when they bring it up at interviews. I found out that they will claim their students are successfully placed if they are making a few bucks a week teaching guitar on the side, volunteering as a stage hand, or making $7/hr working at a music store? Dad, there are kids who can't find a job ANYWHERE in the music industry that owe sixty grand in student loans to those liars!"

News flash for all you holier than thou folks, not only are there hundreds of thousands of kids that walk into traps like this, there are just as many parents that lack the savvy that most of us here possess. As a licensed electrician, I have talked more than one family out of falling for a very well marketed local "technical school" that charges $25K per year to turn you into an electrician. Something my union will do for free, while giving you a decent job, or the local vocational school/ community college will do for a tiny fraction of that figure. I have also talked another friend out of signing the student loans for their son to attend the music school my kid wanted to attend.  They placed him in a two year program at the local community college,  covering the same material, for about $9K. Obviously the kid failed to find a decent job in his field, but he also avoided a lifetime of needless debt.

 It doesn't end there however, as this scam is just as much a part of public institutions.  My son ended up getting an engineering degree from a state university, and has a great job. However, he did spend his freshman year like all the others at his school. That being, surrounded by huge numbers of inner city kids, typically minorities, that were in WAY over their heads. Many of there kids were far too undereducated to be in any state university with any hope of succeeding. Many were gone by Christmas, and a majority were just a memory by the end of the second semester. The school however, was enjoying the $20K per failure in grants and student loans. It's easy to target the big for profits and see what a scam they can be, however few realize that it's a game that many allegedly highly regarded public schools have no issue with playing. Recruit hundred of inner city black kids every year, add millions to the general fund, wait until the vast majority wash out, and repeat.

Capsu78

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<political rant>

Increasingly across Europe, University is FREE (paid by government).  [See the Scandanavian countries plus recently Germany.]  The people/government see it not as an expense but an investment in the productive capacity of the nation.  They usually even pay for foreign students.

What kind of results is this getting?  Let's take a look at the company Arcam.  That is a 3-D printing company with some whiz bang new technology that allows them to print metals. Their focus is printing replacement body parts such as hips and knees made of basically indestructible titanium.  These are precision custom printed prosthesis.  This company could have located anywhere in the world and Silicon Valley was strongly considered.

Eventual choice: Sweden.  Why would they locate in a socialist and high tax jurisdiction?  Because they need lots of eggheads with PhDs in multiple fields.  Scandanavia is where such people are being produced today.

What does the next twenty years hold for America if college becomes unaffordable so that fewer people go while Europe increases its share of graduates and post-grads?  Obama is on the right track.  We need to start giving it away.  Because if we don't, Europe will.  Our high tech industry will follow.

</political rant>

Counter political rant- I visited Sweden last year and stayed with a former exchange student who we hosted in our home.. she lived with us for a year and she is part of our extended family as far as we are concerned.  She and her husband live in the Cambridge of Sweden- Lund.  Husband, a professor, she in university admin.  They are a rarity in that they have 3 children under 10.  Her biggest Scandinavian rant??? Can't afford to move back to Norway where they were both citizens, educated and raised.  Even though her youngest is 4 and a half, she still has "leave days" to burn from her second child...hasn't begun using the days in the bank from her 3rd.  Can you name one product from one major brand coming out of Sweden that will entice an Austin TX start up to relocate HQ to Sweden? 
Oh and the "angry immigrants whose religion must be unnamed" smolder in subsidized no-go zones just off in the distance...literally...you can see them from her rental house.  Sweden with a struggling for relevance Volvo and a "beaten by Apple" Nokia is just a Scandinavian Greece with better tax collection.

Edit: let me just mention, for our international MMM's who I sometimes forget about... My few days in Skone were beautiful and the people I met wonderful.  It is an awesome country with tremendous history and advantages.  I hope I get to visit again in my lifetime.
« Last Edit: March 01, 2015, 07:45:12 PM by Capsu78 »

Sofa King

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Sure are a lot of arrogant folks on this one. Must feel good to sit in judgment of your lessors, eh?



News flash for all you holier than thou folks, not only are there hundreds of thousands of kids that walk into traps like this, there are just as many parents that lack the savvy that most of us here possess.

 It doesn't end there however, he did spend his freshman year like all the others at his school. That being, surrounded by huge numbers of inner city kids, typically minorities, that were in WAY over their heads. Recruit hundred of inner city black kids every year, add millions to the general fund, wait until the vast majority wash out, and repeat.


Those damn minorities.


Annamal

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I used to teach for a for-profit school. (I prefer not to identify them by name) I quit because I became convinced that my school was providing a vastly inferior product compared to our local community colleges, and I couldn't in good conscience recommend our programs to anyone.

Adjuncting seemed like a great way to connect experienced professionals with students in a classroom environment. Why not have a CFO teach the accounting class, instead of a researcher who was going to foist most of the work onto a TA? My peers were business owners, practitioners, and executives - for the most part good folks. Our Dean cared deeply about the students and worked hard to put in place systems to help students gain real-world experience and succeed. For a while - it felt great. The faculty were hard working and caring - most of them with "day jobs" related to what they taught.

The problem came mostly in the "Admissions" department which were high pressure sales teams. As pressure on them ramped up to meet their numbers, they sent us students who couldn't read at a high school level, who had never used a computer, and occasionally active drug abusers. The admissions people were fired if they didn't get butts in seats, and (I suspect) many of our applicants were glad to get their financial aid as a living stipend - then disappear. As much as 50% of each freshman class seemed ill-prepared for the college environment.  I was even told that one student was terminally ill - presumably he needed the financial aid money even if he'd never finish school. Eventually, in-person classes were cancelled and students were ushered into more profitable online-only classes that many were ill suited for, having no internet at home. These problems got progressively worse over the years. Most of the sales people were just trying to make a living - they were told that they were helping people get an education, but they were just helping them rack up debt, for degrees with little market value.

Because I loved teaching, and cared about my students, and the motives of our faculty were good, I stayed longer than I should have. But it was wrong to be a part of such a screwed up system, and so I quit. It was one of those moments when you realize you've been working on the Deathstar and no matter how nice the department is, you're still serving Senator Palpitine.

I agree that we should be responsible for the debts we incur. But I also agree that for-profit-schools are exploitative, and offer little value for high cost. Buyer beware I suppose. But as someone who used to be a part of the system, I get how you can get sucked into it. It's easy to say "we all meant well" but that doesn't mean it wasn't a huge waste of money.

Ugh.

SIS

This was really interesting thank you, and good on you for getting out.

It sounds like a system where perverse incentives slowly distorted a working system over time.

I'm sorry you got caught up in it.

I remember John Oliver's piece on private universities being positively chilling

paddedhat

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Sure are a lot of arrogant folks on this one. Must feel good to sit in judgment of your lessors, eh?



News flash for all you holier than thou folks, not only are there hundreds of thousands of kids that walk into traps like this, there are just as many parents that lack the savvy that most of us here possess.

 It doesn't end there however, he did spend his freshman year like all the others at his school. That being, surrounded by huge numbers of inner city kids, typically minorities, that were in WAY over their heads. Recruit hundred of inner city black kids every year, add millions to the general fund, wait until the vast majority wash out, and repeat.


Those damn minorities.

Great job on missing the point, excellent cut and paste skills,  and if you are implying that I am a racist, please feel free to GFYS.

 Doesn't matter at all if it is a public system scamming poor Hispanics in the southwest, or another that does it in a northeastern city full of African Americans. The bottom line is that they are preying on the ignorance and hopes of folks who want to see their kids succeed. We attended our son's orientation and sat in an auditorium for a Q&A session. We were clearly the outliers in the room, as the vast majority of the room was filled with black women, and most were asking very basic questions about financial aid. Sadly, these were questions that should of been asked and answered WELL before these women signed anything, many months previously.

infogoon

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So I am torn between her lone "affordable" educational opportunity  being called "fake school", particularly when the school has been around for 150 years.

I'm not familiar with this particular for-profit school, but I know that a common maneuver for them is to purchase a struggling school (like Grand Canyon University, for example) and by doing so inherit that school's federal accreditation and become instantly legitimate. I wonder if that's what's happened here.

frugalnacho

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the bottom line is government and schools and working together and the students have no recourse.

Yes they do. They can go to a school they can afford. No one is forcing them to take out these loans with these terms. Stupidity is not an excuse.

So your suggestion is to cash flow college? 

At my state's minimum wage of $8.70/hr, working 40 hours a week 52 weeks a year gets you a gross income of $18,096.  Our flagship university's estimated cost of attendance (tuition, fees, residence hall, meal plan) for in state students is $24,834.  So right off the bat, that's not happening. 

When you add in transportation costs, books, living costs for school breaks, etc, that $18k (minus taxes & insurance--if it's even offered--) isn't going to get you very far.  Plus, you'd be working full time and trying to attend school full time; the vast majority of minimum wage jobs expect complete schedule flexibility, so your attendance and therefore grades would be abysmal (actually this is a reason a lot of people get sucked into the for-profit online college thing).   

Upthread I was talking about the virtues of community college, and how they're pretty much free.  So, maybe that's a better option for someone who's working minimum wage, right?  Full-time at the local CC is $3866 per year, including only tuition and fees.  Well, you still have to pay for a place to live, and probably a car since you're going to be rushing back and forth between full time work and full time classes, and food, and books/school supplies, and utilities, and a computer (sorry, not an optional thing anymore for a college education), and medical care, and clothing, and whatever else. 

Community college might be doable, but again, you'd be looking at working full time and attending school full time.  Maybe it's because I'm in a fairly rigorous program at a pretty good research university, but I couldn't handle that.  I've worked throughout my education, pretty much since I was 14 (yay farm labor).  I'm currently working around 12 hours a week in between classes, and taking 14 credits.  I have at least 20 hours a week of schoolwork on top of actually attending class and labs, plus things like searching for research opportunities and applying to internships.  I definitely wouldn't be able to maintain my GPA if I was working full time, or probably even >20 hours a week.  And I'm not in an engineering program, or what I consider to be a more intense science program (aka I'm in bio, not physics or chem). 

Plus, there's the whole issue that starting out at community college, while very advantageous financially, can really screw you over if you're in an internship/lab-experience-required type field. 

It's not as simple as 'go to a school you can afford.'

Don't forget about the payments on the f-250 so they can drive themselves to class.  Plus the $150/mo cell phone and $100/mo cable bill.  Clearly it's impossible for anyone to get a reasonably priced education.

Sounds pretty complainy pants.  Does everyone deserve to go to the flagship universities, even if they can't afford it?  I know I couldn't, and didn't have a trust fund to pay my expenses, so I opted for a much more affordable school.  I also took several courses at a couple of local community colleges (after ensuring credits would transfer). I also worked my entire way through and took out reasonable sized loans.  Then when I got a real job I lived frugally and *gasp* actually paid off my reasonable amount of loans in a short time frame.

randymarsh

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 It doesn't end there however, as this scam is just as much a part of public institutions. Many of there kids were far too undereducated to be in any state university with any hope of succeeding. Many were gone by Christmas, and a majority were just a memory by the end of the second semester. The school however, was enjoying the $20K per failure in grants and student loans. It's easy to target the big for profits and see what a scam they can be, however few realize that it's a game that many allegedly highly regarded public schools have no issue with playing. Recruit hundred of inner city black kids every year, add millions to the general fund, wait until the vast majority wash out, and repeat.

Are you saying the scam is that these kids were admitted in the first place?

CheapskateWife

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I teach high school seniors, and one of the lessons I teach every year involves reading two informative articles about student loans.  Every year I get the same comments, which show a shocking lack of understanding from my 17-18 year old students:

- You mean you have to pay back student loans?
- You mean you have to pay back more than you borrowed? 
- You mean you have to start paying back even if you don't have a job within the time frame? 
- You mean you have to pay them back even if you do what you're supposed to do and graduate?
- You mean you have to pay them back even if you don't finish school and don't have use of the degree?


Hi Mrs. Pete...care to share a link to these articles?  I have an 18yr old step son and a 16yr old I'm looking to educate before it is too late and the HS counselors fill their heads with dung.

galliver

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You know, I bet there was similar resistance to FDIC insurance for banks. "But they should have known what they were doing with their money! Stupidity is not an excuse!" But, we ended up deciding as a society in the 1930's that keeping money in banks was superior to keeping it in couch cushions and incentivized it by eliminating the risk of fraud/loss for basic checking and savings accounts. I, for one, am glad I don't have to worry about my money disappearing.

Now imagine the government steps in, and despite not having an obligation they forgive these loans. Where does it stop? What about others who got their degrees but didn't find a job because the unaccredited school sucked. Or didn't finish degrees because of something they couldn't control. Or went to a credited school that sucked in their particular degree. Or whatever. You create a obligation to others by providing reparations to one group.

I think all the circumstances you're suggesting are true. And if the lender and/or the school was responsible for these situations, I think it would prompt much more careful vetting of borrowers and evaluation of their potential to finish school. One side effect that has been suggested: the humanities, liberal arts, and other non-business, non-finance, non-technical degrees would be restricted to "The Rich" who can afford the degree, decreasing diversity in these fields. My verdict is still out on that subject, but I acknowledge that potential problem.

Re: community colleges: I remember reading a while back that there was a huge surge of enrollment during the recession, and the colleges couldn't grow fast enough, and thus couldn't enroll all the interested students. But upon doing a search now, it looks like CC enrollment has been falling. However, I'll still posit that if everyone switched from for-profits to CC's, they could not accommodate, right now. Perhaps in case of a gradual shift they could grow in tandem with enrollment numbers.

paddedhat

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 It doesn't end there however, as this scam is just as much a part of public institutions. Many of there kids were far too undereducated to be in any state university with any hope of succeeding. Many were gone by Christmas, and a majority were just a memory by the end of the second semester. The school however, was enjoying the $20K per failure in grants and student loans. It's easy to target the big for profits and see what a scam they can be, however few realize that it's a game that many allegedly highly regarded public schools have no issue with playing. Recruit hundred of inner city black kids every year, add millions to the general fund, wait until the vast majority wash out, and repeat.

Are you saying the scam is that these kids were admitted in the first place?

Absolutely. They are grads. of one of the biggest and worst public school systems in the nation and they are recruited by state university system that knows damn well that the majority are going to wash out. They also know that between grants and loans, every kid will bring a huge pile of cash to the table. It's all about the Benjamins. The school doesn't give a rat's ass if a few hundred minority kids end up failing. BTW, in this case, the vast majority of these kids came from one city. It's not like this is some failed, state wide initiative to improve the future of our state's minority population. This is a school harvesting suckers from a very limited market. On several occasions during my son's college career he listened to professors, and other university employees as they expressed disgust in the situation.

AH013

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It doesn't end there however, as this scam is just as much a part of public institutions.  My son ended up getting an engineering degree from a state university, and has a great job. However, he did spend his freshman year like all the others at his school. That being, surrounded by huge numbers of inner city kids, typically minorities, that were in WAY over their heads. Many of there kids were far too undereducated to be in any state university with any hope of succeeding. Many were gone by Christmas, and a majority were just a memory by the end of the second semester. The school however, was enjoying the $20K per failure in grants and student loans. It's easy to target the big for profits and see what a scam they can be, however few realize that it's a game that many allegedly highly regarded public schools have no issue with playing. Recruit hundred of inner city black kids every year, add millions to the general fund, wait until the vast majority wash out, and repeat.

This is a prime example of moral hazard.  Sadly not everyone deserves or is cut out for a university education, just like not everyone deserves or is cut out for home ownership.  They each carry their pros, cons, responsibilities and rewards.  When we create a society where everyone deserves the "American Dream" that is painted out for them of a 4 year college education,  professional career and a white picket fence home, people are made to feel inferior and embarrassed of a career in trade labor and renting a place to live.  When people are pushed into a 4-year degree or into owning a 3 bed / 2 bath home by societal pressure and easy access to government money earmarked for that explicit purpose, there are those who would have done better not to be in that situation but are shoved into it by peer pressure and a lack of a meaningful understanding of what it takes to be a college student or a homeowner.  Then when reality hits it not only financially impacts them and society in the short term (defaulted loans, foreclosures) but the longer term effects are equally if not more damaging (insanely inflated real estate values, sky high tuition prices, being so bitter about a failed 4-year education they don't even want to do a 2-year trade labor degree).

Capsu78

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So I am torn between her lone "affordable" educational opportunity  being called "fake school", particularly when the school has been around for 150 years.

I'm not familiar with this particular for-profit school, but I know that a common maneuver for them is to purchase a struggling school (like Grand Canyon University, for example) and by doing so inherit that school's federal accreditation and become instantly legitimate. I wonder if that's what's happened here.

I had not considered that, but that would make complete sense!  The other aspect I was considering is that the "private equity investors" outlined their vision in 2007 that they would be "completely online educational delivery" by 2011 but there were/are 12 physical campus properties:
Heald College campuses are located in 12 cities:
Concord, California
Fresno, California
Hayward, California
Modesto, California
Rancho Cordova, California
Roseville, California
Salinas, California
San Francisco, California
San Jose, California
Stockton, California
Portland, Oregon
Honolulu, Hawaii
In addition to Heald's physical locations, they also operate an online campus that offers 7 different degrees.

So in addition to instant federal accreditation and legitimacy, a "pipeline" filled with 20,000 paying customers (84% paying with EZ access credit), they also had some interesting high end properties.  Let's add they may have had a real estate play as well.   

caliq

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the bottom line is government and schools and working together and the students have no recourse.

Yes they do. They can go to a school they can afford. No one is forcing them to take out these loans with these terms. Stupidity is not an excuse.

So your suggestion is to cash flow college? 

At my state's minimum wage of $8.70/hr, working 40 hours a week 52 weeks a year gets you a gross income of $18,096.  Our flagship university's estimated cost of attendance (tuition, fees, residence hall, meal plan) for in state students is $24,834.  So right off the bat, that's not happening. 

When you add in transportation costs, books, living costs for school breaks, etc, that $18k (minus taxes & insurance--if it's even offered--) isn't going to get you very far.  Plus, you'd be working full time and trying to attend school full time; the vast majority of minimum wage jobs expect complete schedule flexibility, so your attendance and therefore grades would be abysmal (actually this is a reason a lot of people get sucked into the for-profit online college thing).   

Upthread I was talking about the virtues of community college, and how they're pretty much free.  So, maybe that's a better option for someone who's working minimum wage, right?  Full-time at the local CC is $3866 per year, including only tuition and fees.  Well, you still have to pay for a place to live, and probably a car since you're going to be rushing back and forth between full time work and full time classes, and food, and books/school supplies, and utilities, and a computer (sorry, not an optional thing anymore for a college education), and medical care, and clothing, and whatever else. 

Community college might be doable, but again, you'd be looking at working full time and attending school full time.  Maybe it's because I'm in a fairly rigorous program at a pretty good research university, but I couldn't handle that.  I've worked throughout my education, pretty much since I was 14 (yay farm labor).  I'm currently working around 12 hours a week in between classes, and taking 14 credits.  I have at least 20 hours a week of schoolwork on top of actually attending class and labs, plus things like searching for research opportunities and applying to internships.  I definitely wouldn't be able to maintain my GPA if I was working full time, or probably even >20 hours a week.  And I'm not in an engineering program, or what I consider to be a more intense science program (aka I'm in bio, not physics or chem). 

Plus, there's the whole issue that starting out at community college, while very advantageous financially, can really screw you over if you're in an internship/lab-experience-required type field. 

It's not as simple as 'go to a school you can afford.'

Don't forget about the payments on the f-250 so they can drive themselves to class.  Plus the $150/mo cell phone and $100/mo cable bill.  Clearly it's impossible for anyone to get a reasonably priced education.

Sounds pretty complainy pants.  Does everyone deserve to go to the flagship universities, even if they can't afford it? I know I couldn't, and didn't have a trust fund to pay my expenses, so I opted for a much more affordable school.  I also took several courses at a couple of local community colleges (after ensuring credits would transfer). I also worked my entire way through and took out reasonable sized loans.  Then when I got a real job I lived frugally and *gasp* actually paid off my reasonable amount of loans in a short time frame.

I actually do not believe that education should be restricted at all by the financial situation of a student (or realistically, their parents).

So yeah, if they have the academic ability to go to a flagship university, they deserve to be there. 

Education is one of the biggest factors in social mobility.  I don't know about you, but I'd really like to see the US move towards meritocracy, not the plutocracy we've been sliding further and further into. 

Sofa King

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 Doesn't matter at all if it is a public system scamming poor Hispanics in the southwest, or another that does it in a northeastern city full of African Americans.

First you say "Blacks" now you say "African Americans".  LOL!!!!  Also you sure do alot of generalizing of minorities.

KodeBlue

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If the schools were fake, can't they just pay them back with fake money?