For-profit colleges swindle students

Education comes second to institutional income at a steep price

Congress's shrillest voices on waste refuse to even look at the industry. Despite sitting on the Senate committee examining for-profit fraud, Rand Paul (R-Kentucky) has expressed no curiosity about this money pit. Nor have fellow committee members Lamar Alexander (R-Tennessee) or deficit hawk John McCain (R-Arizona). Not one responded to repeated interview requests for this story.

President Obama has stepped into the breach, though with customary timidity. In July, the Department of Education made it once again unequivocally illegal to base salespeople's pay on enrollment. But other reforms were so watered down they were meaningless. Taxpayers should probably be thankful Obama did anything at all. At hearings last year, Sen. Tom Harkin (D-Iowa) called the schools' efforts the most intense lobbying campaign he'd seen in his 32 years in Washington.

To truly appreciate how weak the final regulations are, consider this: The day they were revealed, for-profit stocks soared. The stock prices of EDMC and ITT Tech in particular increased by 20 percent. In one day.

Barmak Nassirian, former official with the American Association of Collegiate Registrars and Admissions Officers: "Over-advertise, oversell, overcharge, and under-deliver. They found a system where the pitch goes to one guy and the bill to someone else."
courtesy of Barmak Nassirian
Barmak Nassirian, former official with the American Association of Collegiate Registrars and Admissions Officers: "Over-advertise, oversell, overcharge, and under-deliver. They found a system where the pitch goes to one guy and the bill to someone else."
Rick Kriseman, a Florida State representative, represented Mary in her suit against Argosy University: "When the school did not have those [internship] slots, they found reasons to either dismiss the students or to make it so uncomfortable for them that they left on their own accord."
courtesy of Rick Kriseman
Rick Kriseman, a Florida State representative, represented Mary in her suit against Argosy University: "When the school did not have those [internship] slots, they found reasons to either dismiss the students or to make it so uncomfortable for them that they left on their own accord."

The government ignores the problem at the country's peril. Total student loan debt, now over $1 trillion, has surpassed credit card debt. These burdens will limit students' ability to contribute to our consumer economy for years to come. Worse, unlike an underwater mortgage, Congress has made it illegal for people to walk away from student loans they can't pay. The debt will follow them the rest of their lives.

"This is basically a parasitic industry that is preying upon not just some of the most vulnerable members of our society, but the best of these most vulnerable members, people who listen to the rhetoric we feed them and who are actually attempting to better themselves," says Nassirian. "This is an industry that takes people's hopes and dreams and cashes them out."

And they won't stop until they've emptied the till.

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