Students who attend for-profit college and training programs are more likely to borrow, borrow more and struggle to repay their loans. Not only that, but the overall graduation rate at for-profit institutions is just 27 percent. Meanwhile, a number of schools have shuttered, leaving former attendees with debt and no way to pay it back. Special correspondent Lizzie O’Leary reports.
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Marketplace’s Lizzie O’Leary has the story. It’s part of our series How the Deck Is Stacked. It’s in partnership with «Frontline» and Marketplace, and funded by the Corporation for Public Broadcasting.
Before she became a mother, New Yorker Danielle Adorno (ph) dreamed of working as a pastry chef. When she came across ads for the Art Institute of New York, it seemed like a great fit. And she says school administrators promised her a lot.
They were very adamant on like their job placement rates, boasting over like 90 percent job placement, boasting about their chef instructors working at Nobu and all these high-end restaurants. You would think, oh, OK, I’m going to get the quality education that I’m looking for, because that’s what it’s about, quality.
You know, I figure, if I’m going to pay that much – that amount of money for such a short program, I’m going to be getting something out of it. And that wasn’t what happened.
She claims the school never helped her get work in her field. And she says employers don’t value the degree in the way she thought they would. She’s no longer paying her loan company her $25,000 debt.
I did. And I also thought if – I feel like it stopped being about education and started becoming about consumerism. I’m paying you for a service. I paid you for an education. I paid you to train me. I paid you to give me this 90 percent job placement rate that you boasted about. You told me you were going to place me in a job.
The Art Institute’s parent company, Education Management Corporation, was the target of a federal investigation. Department of Justice officials say the company acted as a recruitment mill. It reached a $95.5 million false claims settlement. But there was no determination of liability.
The Art Institute of New York’s Web site says it is no longer accepting students. And the campus has been put on probation by their accreditor.
Why so many students cash loan payday Arizona from for-profit schools are left in debt limbo
In the last few years, the Obama administration put many new regulations in place to address aggressive marketing and job placement claims by several for-profit schools.
Too many of these for-profit colleges – some do a fine job, but many of them recruit kids in. The kids don’t graduate, but they’re left with the debt.
Earlier this month, the Department of Education released a report saying many for-profit graduates aren’t earning enough to reasonably repay their loans. One out of four career training programs are at risk of losing their federal funding.
I didn’t have a degree. And I thought that getting one would allow me to advance in my career better, faster. It would allow me to earn more money.
Trimble took out a private loan for $30,000 in 2008 to study business management, but dropped out before finishing, and then fell behind on his payments. He says that had a domino effect.
It’s decimated my financial life. My credit score is probably 150 to 200 points lower than it should be. I couldn’t get a mortgage if I wanted one. My house is in my wife’s name.
There was very rapid growth in the for-profit sector, much of it big companies. The University of Phoenix is a prime example. They signed up all kinds of people who had no idea what they were getting into. So, that’s a problem.