Frontline exposes for-profit education
In this great episode of Frontline, there’s a telling quote from Rep. George Miller, in which he compares for-profit educators to purveyors of liar loans. Too true. Both amount to finding a warm body willing to borrow money to pay for an inflated asset.
Of course, the education offered by for-profit schools is hardly an asset.
One telling stat is that default rates on loans to for-profit students (the vast majority taxpayer-funded) are manipulated. Officially the default rate is about 10%. In reality, it could be closer to 50% according to Frontline’s source.
Another interesting stat: Though for-profit colleges represent about 10% of college students, they generate 44% of student loan defaults. The report doesn’t explain if that’s using the official or unofficial default rate.
“Degrees” from for-profit schools can’t be said to have value when so many students end up in debt slavery. And slavery is the right word. Student loans can’t are very difficult to escape, even in bankruptcy. Meanwhile students are stuck with a piece of paper that often promises no incremental income over what’s achievable with a high-school diploma.
Don’t expect much to change at the federal level. As the Frontline report makes clear, politicians need the for-profit education industry to help more Americans attain a “college degree.” Unfortunately, it’s the appearance of education that matters, not the reality. And taxpayers are funding this effort to keep up appearances through subprime loans — how can loans that default at a rate of 10% (50%?) not be called subprime?
One is reminded how the need to grow “homeownership” drove politicians to encourage subprime mortgage lending. Of course the reality was these people often put no equity into the house. That is, they never actually owned anything. Again, it was the appearance that mattered, not reality.