Admissions ‘fraud’ adds to college debt

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In the news: Strippers listed as “admissions representatives” were hired to recruit students for a dodgy for-profit Florida trade college that FBI raids eventually put out of business.

That’s the shocker in a federal lawsuit the Miami Herald reported last week.

According to the suit, the school “purposely hired attractive women and sometimes exotic dancers and encouraged them to dress provocatively while they recruited young men…”

“Well, that figures,” you say? “Stuff like that can only happen in Florida.”

Don’t be so sure.  Wherever the government puts sacks of money on the table — as in defense, Medicare, and now education — it will attract people looking for easy plunder.

The Miami-based FastTrain College, whose CEO was already facing criminal charges over falsified records, is only an extreme example of how innocent kids are being exploited for the sake of education.

Much of it is, in fact, altogether legal, committed by people with advanced degrees on their walls and friendly politicians in their Rolodexes.

The government enables it.

Student loan debt in the United States is now estimated at a staggering $1.2 trillion, the greatest part of it in federally guaranteed loans. Student debt — some of it still owed by people past retirement age — exceeded revolving credit card debt four years ago.

As the Sarasota Herald-Tribune reported in September, student debt has become a significant brake on the housing market. A generation ago, young people would set aside all they could afford toward the purchase of a home.  Today, the student loan has priority. Unlike other debts, federal law makes it virtually impossible to shed it in bankruptcy.

Student debts have soared along with tuition, even as states like Florida have slashed support for higher education and direct federal grants to students have plummeted.

This is the only industrialized nation that burdens its youth with such exorbitant entrance fees to compete in the 21st century economy.

The system can be justified, perhaps, when the investment in an education results in a good one that’s applicable to what the student wants to do with his or her life.

Nor does the payback need to be measured by the paycheck, as Gov. Rick Scott occasionally suggests.  Liberal education is essential to a national character and conscience. Imagine the Declaration of Independence having been written by someone who, unlike Thomas Jefferson, didn’t have one.

An English or a philosophy major doesn’t guarantee a job — and no reputable college pretends that it will –but it is invaluable preparation for advanced study in professional fields such as law and even medicine.

The universities commit malpractice, though, when they encourage students to pursue advanced degrees — the really expensive investments — in seriously oversupplied subject areas such as the humanities and law. This isn’t an argument for quotas, but for candor. Give students the odds; let them make the choice.

Candor, regrettably, is the conspicuously missing attribute of many professional schools, particularly those operated for profit that are the principal targets of regulations the Obama administration has been struggling to adopt.

According to the Los Angeles Times, for-profit colleges enroll about 11 percent of all college students but are responsible for 44 percent of student loan defaults. The article said some for-profits derive up to 90 percent of their income from federal loans and grants.

A federal court threw out one set of regulations that would eventually deny loan participation to schools whose graduates don’t secure enough jobs. The new set would hold them to account according to the debt-to-earnings ratios of their students, and would apply as well to certificate programs at junior colleges and private non-profits.

The for-profit lobby sees that as an existential threat, which it deserves.  Unless an operation really screws up, as FastTrain allegedly did, education is a win-win situation for the establishment, but it can be a lose-lose situation for the student who is left with a crushing debt and no prospects of employment in the field for which he or she was ostensibly trained.

The schools recruit the students, harvest their loans, and leave it to the government and its private lenders to be repaid. Tony Soprano never had a more sure-fire racket. When the former students default, the taxpayers are stuck.

An article in the September issue of the Atlantic, highly critical of several private law schools including the Florida Coastal School of Law for enrolling students with poor prospects of passing bar exams, pointed to a 2006 change in the Federal Direct PLUS Loan program. It allows any graduate student admitted to an accredited program to borrow the full cost of tuition and living expenses directly from the federal government. There is no limit on what the schools can charge and no obligation to show that the student will actually be able to repay the loans

So let’s not obsess on the oversexed “admissions representatives.” Such glaring frauds are the least of the problem.

Martin Dyckman is a retired associate editor of the St. Petersburg Times.