The crux of the problem, however, is issue number three: the fact that these schools are businesses tied to Wall Street. Wall Street requires that the businesses continually grow and make a substantial profit each and every quarter. Thus, schools are always pressured to enroll more students. Many, many schools have been accused of unscrupulous recruitment practices where they pressure potential students into enrolling, admit non-qualified students with no chance of completing a degree, offer courses in areas where there is no job market, and in some cases, flat out lie to students to get them to sign up.
The schools arrange the students loans, so basically, the recruiter cajoles the potential student to sign on the dotted line, and suddenly the new student is straddled with a massive debt. When the student later decides that they really didn’t want to enroll in school, or realize they are incapable of doing the coursework, that debt doesn’t go away. Numerous law suits have been filed against for-profit schools by former students, former school employees, and by the US government over these practices.
A year and a half ago, the Department of Education (DoE) and congress began to jointly tackle this problem. For 18 months, there were public hearings and negotiated rulemaking sessions in which thousands of people, including unsatisfied former for-profit school students, participated. Of course, the schools, backed by Wall Street, hired an army of lobbyists to try to stop/soften new regulations. On October 28, 2010, the DoE rolled out new regulations, which make it harder for students to to get federal financial aid for these schools and harder for schools to mislead students. Here they are: (more…)