The real student-loan scandal

Charlie Harper, writing at Peach Pundit, notes the worrisome parallels between the college-loan situation and the housing-loan bubble just before it burst a few years ago:

“Virtually anyone that applied got a loan. There was no consideration given to how the loan would be repaid. No calculations for repayment ability were required. Most borrowers overestimated the value of their purchase and underestimated the income that would be available in the future to retire the debt. The government subsidized an unlimited amount of borrowing, and then the problem was so large that when an alarm was sounded, too many people were invested in the status quo that the system could not be changed until it was too late.”

There’s a lot of truth to that. Outstanding student loan debt hit an estimated $1 trillion this week. And according to the most recent numbers available, more and more students are defaulting on those loans. The annual default rate has risen from 6.7 percent in 2007 to 8.8 percent in 2009, and today, three years later, it’s undoubtedly higher still. In this economy, it can’t be easy coming out of college with a degree and $60,000 or $100,000 in debt.

However, it’s important to point out that college graduates with large debt aren’t really the problem. The larger problem is the predatory for-profit schools that have popped up around the country to try to separate students from their college-loan money and in the process deliver little in the way of useful education.

The industry is large and growing rapidly. During the 2008-2009 academic year, those schools collected $4.3 billion in Pell grants and $20 billion in federal loans. That’s more than double the amount that they received as recently as 2005.

More importantly, the default rates on those loans are very high and rising.

In 2009, just 5.2 percent of students who had attended four-year public schools such as Georgia State or the University of Georgia defaulted on their loans. Just 4.5 percent of those who had attended non-profit private colleges defaulted.

However, the default rate among those attending four-year for-profit proprietary schools was 15.4 percent. Between 2007 and 2009, the number of students from for-profit proprietary schools who defaulted on their loans increased by 65 percent.

(It’s important to note that some for-profit schools do a good job for their students and have a relatively low default rate. If you have questions, the U.S. Department of Education maintains a database that allows you to check the default rate for each institution.)

Why are the default rates among for-profit schools generally so high? As the schools point out, part of it can be explained by the fact they serve non-traditional students. That’s a valid point. But in far too many cases, those students don’t get the education or the degree that they pay for and end up tens of thousands of dollars in debt to the taxpayer without the means to repay it.

The Education Trust, a Washington think tank specializing in higher-ed issues, released a report in November 2010 noting that just 22 percent of full-time students who began a four-year program at for-profit schools actually got a degree within six years. And while some schools do better, some do much much worse.

To many of these schools, the guaranteed federal loan programs are simply a cash cow to be milked. They exist solely because of taxpayers’ money. So in an effort to bring at least some rationality to the industry, the federal government instituted the so-called “90-10″ rule. Colleges are allowed to collect no more than 90 percent of their revenue from federal sources, leaving 10 percent to be generated through actual tuition payments and other private sources.

It’s a good rule. But what did the proprietary schools do in response? In many cases, they created their own, private in-house student loan programs to provide that missing 10 percent. According to a 2011 study by the National Consumer Law Center, the schools finance those loans to their own students knowing full well that many will never be repaid. And they don’t care:

“As documented in this report, the default rates on most institutional loans are shockingly high. The schools seem to view these loans more as “loss leaders” to keep the federal dollars flowing… Schools make unaffordable loans as a way of filling up the 10% category with vapor revenues derived from loans that will never be repaid.”

(The NCLC also points out the great discrepancy in executive pay at for-profit colleges, noting that “the chairman and CEO of the for-profit education company Strayer Education was paid $41.9 million in 2009, 26 times the compensation of the highest-paid president of a traditional university.)

Again, it’s important to stress that these colleges are not surviving in the private marketplace on private money. They are preying on federal dollars funneled through their students. Nonetheless, the issue has become caught up in the ideological warfare in Congress. The Republican-led House has generally taken the position that trying to reduce abuse of federal student-loan programs by proprietary schools amounts to government regulation of private enterprise.

In addition, the proprietary-school industry spent some $6 million in lobbying in 2010 alone. It has also been active on the campaign finance front. According to the Minneapolis Star-Tribune the industry contributed more than $100,000 in 2010 alone to U.S. Rep. John Kline, R-Minn., chairman of the House Education Committee.

Most of the media attention on this issue has focused on the plight of middle-class kids. Politicians, including President Obama, are also playing to that demographic for votes. But in return for their debt, those students are at least getting good educations from good schools. They at least have a fighting chance to turn that education into a career that will allow them to repay that debt.

But millions of others who are largely invisible to the rest of us are being played for suckers, with Uncle Sam as a silent financier in the scam.

– Jay Bookman

354 comments Add your comment

Normal Free, Plain and Simple

April 26th, 2012
11:35 am

We don’t need no edgy-kay-shun…

Normal Free, Plain and Simple

April 26th, 2012
11:39 am

Would it be considered irony if the U. S. financial system was felled by a student loan bubble?

Thomas Heyward Jr.

April 26th, 2012
11:40 am

“But millions of others who are largely invisible to the rest of us are being played for suckers, with Uncle Sam as a silent financier in the scam.”
.
Uncle Scam is pervasive.

Butch Cassidy

April 26th, 2012
11:40 am

Normal – “Would it be considered irony if the U. S. financial system was felled by a student loan bubble?”

Not as ironic than if it happened under Romneys watch.

Fly-on-the-Wall

April 26th, 2012
11:40 am

Just like with everything else the Republicans look to private business to solve we find out that they just step up to the feeding trough and no one says a thing about it because it is ‘privatized’.

Kamchak ~ Thug from the Steppes

April 26th, 2012
11:41 am

Charlie Harper, writing at Peach Pundit, notes the worrisome parallels between the college-loan situation and the housing-loan bubble just before it burst a few years ago:

Aren’t these loans also bundled and sold as investment vehicles?

Brosephus™

April 26th, 2012
11:41 am

The Republican-led House has generally taken the position that trying to reduce abuse of federal student-loan programs by proprietary schools amounts to government regulation of private enterprise.

Wouldn’t that place them in an ideological conundrum? It has the appearance of wasteful spending of taxpayers dollars. It appears to be government spending running out of control. However, since the private sector is prospering because of it, any attempt to correct things is regulation of private interprise? If they don’t want government regulation, then don’t take government money. That would solve everything very quickly.

ByteMe - Political thug

April 26th, 2012
11:41 am

Just checked on one of my clients — a non-traditional trade school whose students receive federal money — around 8% default rate in 2009. Not bad, not great.

Thanks for that link Jay!

Over/Under on “but… but… but… Obama!” is 35 with this thread. Place yer bets!

barking frog

April 26th, 2012
11:42 am

Wow. Privatization in
education is working.

Aquagirl

April 26th, 2012
11:42 am

But…but….more regulation of business is bad, they should be left unfettered and the invisible hand of the market will take care of everything.

Kamchak ~ Thug from the Steppes

April 26th, 2012
11:43 am

Over/Under on “but… but… but… Obama!” is 35 with this thread. Place yer bets!

I’ll take the under.

ty webb

April 26th, 2012
11:44 am

No private, for-profit schools should receive any federal money. They should be allowed to create their own loan programs and charge any rate they want…That being said, they also shouldn’t be able to come to the federal government with their hands out when their loans are defaulted on.

ByteMe - Political thug

April 26th, 2012
11:46 am

Would it be considered irony if the U. S. financial system was felled by a student loan bubble?

The bubble is in education, not in education loans.

The bubble will burst when some enterprising college like Stanford decides to take their best instructors in each field, record their class lectures, throw it up on the web for $500 per course and another $500 for testing/certification for credit hours that are accepted at any accredited institution. Do that and the bubble pops and the price of education starts to fall. As long as supply — the available space at all colleges — is artificially kept limited and demand remains high, colleges can keep their tuition costs high.

ByteMe - Political thug

April 26th, 2012
11:47 am

What’s the default rate on “Glenn Beck University”?

USinUK

April 26th, 2012
11:47 am

I’m with Kam’s 11:43

barking frog

April 26th, 2012
11:50 am

Can the problem be solved
by making the for profit
schools into non profit
schools?

carlosgvv

April 26th, 2012
11:50 am

It seems reasonably certain that this student loan situation will be the next big bubble to burst. When this happens, look for another recession.
What is absolutely certain is that if and when this happens, the Democrats and Republicans will vigorously blame each other for the mess and both Parties will be essentially powerless to do much about fixing it.

[...] Bookman takes our discussion yesterday regarding student loans and extends it into the area of subsidies for for-profit institutions: In 2009, just 5.2 percent of students who had attended four-year public schools such as Georgia [...]

Paul

April 26th, 2012
11:52 am

I know the main theme is the predatory schools, but on the issue of student loans, I’ll note my experience with kids in college: it’s “cosign.” As in “Sorry, little Timmy? Didn’t get your payment? We’ll call dad and demand a credit card number.”

I don’t have any idea if my situation is the minority or not, but I think there are a lot of parents on the hook.

Now to wait for the “we don’t need no stinkin’ regulations, this is free ennerprise” chorus to start regarding those ’schools.’

ByteMe - Political thug

April 26th, 2012
11:53 am

When this happens, look for another recession.

Nope. These are basically “unsecured loans”. No additional assets are being created to for these loans, so no inventory or business adjustment will take place. The government backs the loans, so they’ll just print money to cover the cost and no one will notice it except for the whining class.

Simple Truths

April 26th, 2012
11:56 am

I’ll take the under bet…

Simple Truths

April 26th, 2012
11:56 am

But… but… but… Obama

getalife

April 26th, 2012
11:56 am

How can they pay back the loans with no jobs?

ty webb

April 26th, 2012
11:57 am

and I don’t know if “predatory” is a good adjective for some of theses schools…If someone sees a commercial for a “school” during “Jerry Springer” or “Sixteen and Pregnant” and decides that it may be a good opportunity for them, then their not really be hunted, it’s more like their brain dead minds are being picked clean by a scavenger.

Finn McCool (Class Warfare === Stopping Rich People from TAKING MORE of OUR MONEY)

April 26th, 2012
11:58 am

Why are the default rates among for-profit schools generally so high?

Try to get a job with one of those degrees. You are better off leaving the school name off your application/resume.

[...] The real student-loan scandalAtlanta Journal Constitution (blog)Outstanding student loan debt hit an estimated $ 1 trillion this week. And according to the most recent numbers available, more and more students are defaulting on those loans. The annual default rate has risen from 6.7 percent in 2007 to 8.8 percent in … [...]

Peadawg

April 26th, 2012
11:59 am

Everytime we cut funds to schools, they raise tuition and add more “special fees”, which causes more student loan debt.

Moral of the story – STOP CUTTING FUNDS TO SCHOOLS.

It’s not rocket science.

Obama is over

April 26th, 2012
11:59 am

Nice post. You are right. The for profit schools have been milking the taxpayers for several years. $80k for a culinary degree? When junior graduates and is disappointed that he is chopping onions as a sous chef making minimum wage, it becomes pretty tempting to default on student loans. One of the hardest decisions one makes is what you want to be when you grow up ( I change my mind on a regular basis). The purpose of higher education is not training to get a job, it is learning how to think and express yourself. If you are looking to learn a specific skill set to get employment, you should go to trade school or if you have an undergraduate degree, go to grad school to refine your skills if that is the direction you so choose. Our parent’s generation got a job, worked, and retired. 2012 graduates will probably change jobs 5 or 6 times during their career. The ability to think, express yourself, and frankly learn new skills to adapt to a constantly changing world are going to be the keys to success. I have hired many young people at various positions during my career. I always went for the hungry ones who wanted to learn and grow rather than the Harvard MBA’s who were going to tell me how to run my business with no real world experience.

Carroll sterne

April 26th, 2012
12:00 pm

Why does the Federal gov’t have to guarantee all loans? “Students” at the for profit schools attend so that they can live off the student loans that cannot be included in bankruptcy. Sinful.

Simple Truths

April 26th, 2012
12:00 pm

Jay, how much of the $1 trillion in student loan debt is held by students at for-profit schools versus non-profit schools?

It seems to me you are throwing up a smoke screen and not focusing on the real problem: that most of the debt is from non-profit schools.

Redneck Convert (R--and proud of it)

April 26th, 2012
12:01 pm

Well, it serves the librul punks right if they wind up in debt the rest of their life. All colledge does is turn good kids into godless unAmerican libruls. Alot of them are on this blog with their fancy/smancy writing. You can tell alot of the Conservatives hee ain’t never been to colledge because they don’t write too good. They think American.

If these colledge people wind up busting the economy because of their big debts I say let’s lock them up. It works for everything else.

It’s beans & weenies time and I got to get to it. Have a good Thursday everybody.

barking frog

April 26th, 2012
12:01 pm

Simple Truths
Clearly you are a student..

getalife

April 26th, 2012
12:02 pm

It all comes back to the issue the gop lied about last election.

Jobs.

Simple Truths

April 26th, 2012
12:03 pm

barking frog,

I’m only a student of life at this point. I graduated 10+ years ago…

Jefferson

April 26th, 2012
12:04 pm

Working your way thru college used to take 10 years or so, work part time go to school part time, now it seems kids want to finance their food, room and board. Financing food is never a good idea.

Kamchak ~ Thug from the Steppes

April 26th, 2012
12:05 pm

I graduated 10+ years ago…

Time to go back for some continuing education courses, then.

cranky old man

April 26th, 2012
12:05 pm

“The Republican-led House has generally taken the position that trying to reduce abuse of federal student-loan programs by proprietary schools amounts to government regulation of private enterprise.”

Given the rhetoric we typically hear from Republicans, it’s kind of bizarre that they aren’t simply clamoring for the end of all federal funding for student loans and grants. That would be more consistent with their stated ideology that the market knows best, and any interference from the government will always cause distortion and less-than-optimal utilization of resources.

Soothsayer

April 26th, 2012
12:06 pm

A trillion here, a trillion there. Pretty soon, you’re talking about some real money, Jay.

barking frog

April 26th, 2012
12:07 pm

Simple truths
just commenting on
the ‘bet fixing’.

Jefferson

April 26th, 2012
12:07 pm

When asked about student loans Romney replied “Shop Around”… fine if you tell business when they want help to “shop around”.

kayaker 71

April 26th, 2012
12:07 pm

If we could just work on a lower graduation rate from high school, we might have fewer student loans to worry about. In Macon, with our graduation rate at 41%, we are in fat city. Many of the students in college today do not need to be there. The drop out rate is much more than publicized. What do you think happens to a student loan when the student hangs around for a year or two and then drops out. I would imagine that the default rate on those kinds of loans is pretty high.

UNCLE SAMANTHA

April 26th, 2012
12:09 pm

the student loan industrial complex…………….

Jay

April 26th, 2012
12:09 pm

Simple, I haven’t seen the total debt broken down like that.

In general, though, the proprietary-school students end up having more debt than students in other categories, and of course a much higher default rate. And in 2009, proprietary-school students amounted to 28 percent of those beginning to repay loans, up from 25 percent just two years earlier.

TaxPayer

April 26th, 2012
12:10 pm

I thought Republicans were supposed to be in favor of eliminating taxes. So why are they pushing to give more tax dollars to those for-profit schools.

Michael

April 26th, 2012
12:10 pm

barking frog

April 26th, 2012
12:11 pm

When a student loan
defaults the money
or part of it should be
be recovered from the
school that got the money.

ty webb

April 26th, 2012
12:11 pm

does this mean Obama’s next campaign stop is going to be at Devry?

Lord Help Us

April 26th, 2012
12:13 pm

The problem here is clearly CRA, Barney Frank, Fannie and Freddie…

Jefferson

April 26th, 2012
12:13 pm

When a man with money hooks up with a man with the know-how, after a while the man with money will forget he doesn’t have the know-how.

Kamchak ~ Thug from the Steppes

April 26th, 2012
12:14 pm

does this mean Obama’s next campaign stop is going to be at Devry?

Or Romney either, for that matter.

They both seem eager for that demographic.

Just sayin’.

barking frog

April 26th, 2012
12:15 pm

ty webb
April 26th, 2012
12:11 pm
does this mean Obama’s
next campaign stop is going
to be at Devry?
———
to pick up his transcript?

carlosgvv

April 26th, 2012
12:16 pm

ByteMe – 11:53

The student loan debt amount actually exceeds the credit card debt amount. If there is a substantial amount of default, I don’t think just printing more money will solve the problem. We are talking about one trillion dollars of debt, and, if a large portion of that is defaulted, there’s no way our economy will go unaffected.

kayaker 71

April 26th, 2012
12:16 pm

Georgia law states that any Georgia resident over 65 can attend a state sponsored university or college tuition free. Followed that up at Macon State University last month, and, to my surprise, the breakdown on tuition and fees was pretty amazing. Tuition per semester hour was a little over $200. However, when you add the fees per semester hour, the total is well over $1,000 per semester hour. Try that on a 15hr schedule/semester and the money skyrockets. And that is just for some jerkwater Georgia school with no claim to fame.

GT

April 26th, 2012
12:16 pm

The very word education has been blurred in the last few decades. Republicans don’t want an educated public nor does a Murdock, who is going to watch FOX News if you see the bias accounting and 2 plus 2 equals 6. You can steer an uneducated public just about where you want them with money. You play their weakness like race cards, and crime. You make homosexuality become a choice like Communism, and you make a worthless degree make them think they are armed for intellectual warfare. More and more America is living in a parallel universe where language is spoken but with different meaning than conventional language for the same words. And more and more people are figuring out ,like Murdock, how to make money by manufacturing idiots, like cattle farmers producing cows,as opposed to caughting game in the wilds, I am surprised FOX hasn’t joined this scam and formed their own university, yet why waste the time when so many are doing it for them.

Mary Elizabeth

April 26th, 2012
12:17 pm

“According to a 2011 study by the National Consumer Law Center, the schools finance those loans to their own students knowing full well that many will never be repaid. And they don’t care:”

“Don’t care” are the key words of that statement.
===============================================================

“Again, it’s important to stress that these colleges are not surviving in the private marketplace on private money. They are preying on federal dollars funneled through their students. Nonetheless, the issue has become caught up in the ideological warfare in Congress.”

And, now, private-sector ideologues want to dismantle public elementary and secondary schools for essentially a privately controlled “school choice” mantra, using public tax dollars to subsidize “for- profit” private schools. Can one not see the financial results that will occur if this ideological, and predatory plan of using governmental and public funds for private market profit, is fully implemented?
==================================================

“ ‘Virtually anyone that applied got a loan. There was no consideration given to how the loan would be repaid. No calculations for repayment ability were required.’ ”

This same approach reminds me of the thinking behind the decisions to go to war in Afghanistan and Iraq. “Act first, and consider the financial cost to the nation, later.” Of course, if one does not care (those words again) about the size of the deficit, as a result of one’s actions, it is easy enough to forge ahead with unbudgeted wars – uncaringly.
==================================================

Enough of the immoral use of governmental and public tax dollars, via corrupted legislators, to subsidize the pocketbooks of the wealthy and powerful few, at the expense (with several connotations implied) of the many.

Brad Steel

April 26th, 2012
12:17 pm

government regulation of private enterprise.

That argument has really worked out well …… for for lobbyist and 1% of the population.

Jay

April 26th, 2012
12:17 pm

Cranky:

“The Education Trust, a Washington-based advocacy group, estimates that the (Ryan) budget would reduce total Pell Grants and student loans by about $166 billion over the next decade. The lost funding would leave more than 1 million students without grants.

Kate Tromble, the legislative director for the Education Trust, called the GOP’s proposed cuts a “double whammy” for low-income students. Pell Grant recipients are more than twice as likely to as other students to have student loans.”

Meanwhile...

April 26th, 2012
12:18 pm

What a surprise, no comments yet on one of Jay’s key points, i.e., “…Most of the media attention on this issue has focused on the plight of middle-class kids. Politicians, including President Obama, are also playing to that demographic for votes. …”

Hopefully student loans are not the next bailout!!!! As we continue to socialize the mortgage debts of home purchasers who thought they were guaranteed a profit when buying, will we now forgive loans to people that “need” it because they made dumb choices and majored in worthless fields and refused to work during school, at the expense of the rest of us who actually contribute to society.

Looking back I feel really stupid for working as hard as I did/do. Future generations will learn quickly that hard work is punished and poor choices are rewarded/mitigated.

Jm

April 26th, 2012
12:19 pm

People are responsible for their own decisions

Duh

Liberals: not advocates for individual responsibility

Lord Help Us

April 26th, 2012
12:20 pm

‘Future generations will learn quickly that hard work is punished and poor choices are rewarded/mitigated.’

Only if you are a person named Goldman, Merrill, AIG, etc…

ty webb

April 26th, 2012
12:20 pm

“nor does a Murdock…”

well in his defense, he and the rest of the “A-team”, have been busy fighting bad guys.

Jm

April 26th, 2012
12:20 pm

Non profit schools run the same scam as for profits

TaxPayer

April 26th, 2012
12:21 pm

I didn’t think the law allowed one to absolve one’s student loan debt via bankruptcy.

Kamchak ~ Thug from the Steppes

April 26th, 2012
12:22 pm

Future generations will learn quickly that hard work is punished and poor choices are rewarded/mitigated.

The current generation learned that hard work is punished and greed is rewarded.

Jm

April 26th, 2012
12:23 pm

The non profit scam just distributes profits to teachers and outside for profit school vendors

(see SCAD)

TaxPayer

April 26th, 2012
12:24 pm

Non profit schools run the same scam as for profits

And what “scam” would that be? Making a profit. :roll:

Jay

April 26th, 2012
12:24 pm

Taxpayer, it does not.

When you default on a student loan, you end up with the IRS on your butt to collect.

ty webb

April 26th, 2012
12:24 pm

“Only if you are a person named Goldman, Merrill, AIG, etc…”

funny, you left off Chrysler and GM(though I guess that would be initials, and not a name per se)

Jm

April 26th, 2012
12:25 pm

Government should get out of the student loan biz, but if it is going to stay in, it should only be for STEM majors

We don’t need more lawyers and journalism majors

Oscar

April 26th, 2012
12:26 pm

GT

April 26th, 2012
12:28 pm

And that is the purpose of the Republican Party, double whammy to the poor, had to make a majority of the GOP’s day.

The Republicans killed the Hope. If you look closely at the budget you will see what really killed the Hope, or keeps the tire fund from collecting old tires on the highway, is an agenda not written into the law when it was passed. The Republicans dip into the money earmarked for other non right purposes like education and environment and in doing so promote their cause by diversion and deprivation.

TaxPayer

April 26th, 2012
12:28 pm

Are student loan securities from places like Yale and Harvard given a AAA rating while those from Phoenix U. given a junk rating.

barking frog

April 26th, 2012
12:29 pm

Is Jay looking to the day
when he is sent to the
UGA School of Communications? But
he must get a Pulitzer
first.

Latigo1026

April 26th, 2012
12:29 pm

Just like the Wall St. investment banks, these institutions don’t have any skin in the game. Perhaps they should be required to co-sign for at least SOME part of the loan — say, a minimum of 10%. If a failure to get work after graduation resulted in loss of a good chunk of their profit, these institutions 1) might think twice about the quality of education they were providing, and 2) even have an assistance program to help students get work after graduation.

Paul

April 26th, 2012
12:31 pm

Hey Kamchak

“Charlie Harper, writing at Peach Pundit, notes the worrisome parallels between the college-loan situation and the housing-loan bubble just before it burst a few years ago:

Aren’t these loans also bundled and sold as investment vehicles?”

Did you know Barney Frank forced the banks to loan the money to students who are poor and likely to drop out?

Really… he did…. I think I heard it somewhere….

Kamchak ~ Thug from the Steppes

April 26th, 2012
12:32 pm

We don’t need more lawyers and journalism majors

Or supply-side, trickle-on, phlogiston economists.

Lord Help Us

April 26th, 2012
12:33 pm

‘funny, you left off Chrysler and GM(though I guess that would be initials, and not a name per se)’

What’s the diff? Big corps with lots of political connections and lobbyists…

BTW: you are much more of a Judge Smails than a Ty Webb…

GT

April 26th, 2012
12:33 pm

Paul blind secondary funding too big to fail fed by pension funds bribed by Wall Street had nothing to do with Barney Frank.

Poor Boy from Alabama

April 26th, 2012
12:35 pm

JB,

I suggest you take a look at a March 2012 report from the National Center for Education Statistics (Part of the US Dept of Education). They released a detailed report that covers many of the themes you touched upon in your blog post:

Enrollment in Postsecondary Institutions, Fall 2010; Financial Statistics, Fiscal Year 2010; and Graduation Rates, Selected Cohorts, 2002-2007

http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2012280

What you’ll find is that while private, for profit schools are weak performers, they’re only a small part of the problem.

Let’s start with enrollments for Title IV schools . Here are the numbers for fall 2010 (See Table 1):

Total students: 21.588,124
Total at public institutions: 15,280,273 (71% of total)
Total at private non-profit institutions: 3,881,906 (18% of total)
Total at private for-profit institutions: 2,426,925 (11% of total)

Let’s look at revenues

Total revenues: $493.8 billion (See Table 5, calculations required)
Public institutions: $295.2 billion (60% of total)
Private non-profit institutions: $169.0 billion (34% of total)
Private for-profit institutions: $29.6 billion (6% of total)

Now let’s look at six year graduation rates (See Table 7)

All 4-year institutions (2004 cohort): 55.1%
Public institutions: 53.6%
Private non-profit institutions: 64.6%
Private for-profit institutions: 32.3%

There’s no doubt that many of the for profit private schools are doing a poor job. It ought to be obvious, however, that the student debt bubble is being driven by public and private non-profit institutions. They account for 89% of the students and 94% of the money sloshing through higher education. They have better graduation rates than private for-profit schools, but none of us should be happy with an overall six year graduation rate of only 55%. More accountability across the board is needed.

Soothsayer

April 26th, 2012
12:35 pm

I think a tax cut and some deregulation will solve this problem in no time. After all, it works for everything else.

Normal Free, Plain and Simple

April 26th, 2012
12:36 pm

JamVet - Stay ignorant, my friends...

April 26th, 2012
12:36 pm

“Only if you are a person named Goldman, Merrill, AIG, etc…”

funny, you left off Chrysler and GM(though I guess that would be initials, and not a name per se)

Just one itsy bitsy little difference.

Chrysler and GM did not set off the hydrogen bombs that caused our current apocalyptic economic landscape…

Finn McCool (Class Warfare === Stopping Rich People from TAKING MORE of OUR MONEY)

April 26th, 2012
12:37 pm

Here is the free education our kids should be getting when not in school. One lesson a week for a year. Each lesson takes about 3 hrs to get through.

http://codeyear.com/

Knowing a little programming can’t hurt.

ty webb

April 26th, 2012
12:38 pm

Lord help us,
and you remind me of a D’annunzio…or a Lacey Underall.

Normal Free, Plain and Simple

April 26th, 2012
12:38 pm

GT

April 26th, 2012
12:33 pm

To understand Paul, you need to understand dry humor…and sharp minds…jus’ sayin’

Jm

April 26th, 2012
12:38 pm

Maybe jay can do an expose on a non profit like Scad and get a Pulitzer

I doubt it tho

stands for decibels

April 26th, 2012
12:38 pm

jm sez: “…it should only be for STEM majors. We don’t need more lawyers and journalism majors”

Given that Mitt’s degrees are in English and law… oh well.

Guess you can always write in Herbert Hoover.

TaxPayer

April 26th, 2012
12:40 pm

Murdoch bought Wireless Generation, a US educational technology firm, for $360m, and gave it to Klein to run. Murdoch’s vision was that he would digitise the world’s so far unexploited classrooms. He told investors: “We see a $500bn sector in the US alone that is waiting desperately to be transformed by big breakthroughs.” He envisaged some of News Corporation’s large library of media content being beamed to pupils’ terminals.

Murdoch probably wants to start charging for those FOX broadcasts that he beams to his for-profit “schools”.

RB from Gwinnett

April 26th, 2012
12:40 pm

No worries Jay. They’ll just add it to the burden the 53% is already carrying. After all, they’re not paying their fair share anyway, right?

Jm

April 26th, 2012
12:41 pm

Kam
Of all people economics majors should pay their own way

And business majors

Kamchak ~ Thug from the Steppes

April 26th, 2012
12:42 pm

Did you know Barney Frank forced the banks to loan the money to students who are poor and likely to drop out?

I’m sure it’s somehow James Ready’s fault too.

Jm

April 26th, 2012
12:44 pm

As a matter of fact everyone should pay their own way

But if we’re going to blow money, better to do it on STEM majors than anything else

Soothsayer

April 26th, 2012
12:44 pm

Why would anyone want to major in the STEMs? When you graduate, you’ll find that an H1-B visa Indian has already taken your job.

Why would anyone go to law school only to find out that entry-level work in the law profession is routinely outsourced to India?

Why would anyone want to major in Journalism? When you graduate, you’ll have to write what your boss tells you to write.

BeeJay

April 26th, 2012
12:44 pm

Ah yes, let’s blame it on the schools.

TaxPayer

April 26th, 2012
12:45 pm

JamVet - Stay ignorant, my friends...

April 26th, 2012
12:47 pm

As a matter of fact everyone should pay their own way.

WHAT????

That chump capitalism is only for those of us small enough to fail.

For the BIG boys its the kind of socialism that you trickled on Republicans love…

Soothsayer

April 26th, 2012
12:48 pm

Kam: thanks for helping me with that stupid Meebo bar last night.

Donovan

April 26th, 2012
12:49 pm

What’s wrong with this picture:

It’s not the fault of Obama, liberal elitist professor’s greed for huge tenured salaries, or “the plight of middle-class kids”. It is the fault of “predatory for-profit schools”.

“Obama plays to that demographic for votes. In return for their debt those students are getting good educations”. Oh really? Go ask your darling Occupy Movement students with dumb degrees in African American Studies, Cultural Strategic Studies, etc. how many relevant jobs are available to them. Absolutely none.

Like I said yesterday, your Democrat brothers in Congress in 2007 voted for the student interest loan to increase on a sliding scale. Now that this rate increase is to become inacted, it is a hot potato with you guys to exploit. Obama is quite the snake oil salesman masquerading as a would-be Santa Claus trying to win the college age vote. Disgusting!

Nice try, Jay. Only your liberal audience reads your essay and agrees with the pablum you dish out. Is that the best you can do?

JamVet - Stay ignorant, my friends...

April 26th, 2012
12:49 pm

For example your bankster heroes at Bank of America?

They have paid ZERO DOLLARS in federal income taxes for THREE STRAIGHT YEARS.

You chumps could too if you only spent over $20 million in lobbying and political campaigning since the 2008 elections—with someone else’s bailout money.

Occupy that, twits…

Kamchak ~ Thug from the Steppes

April 26th, 2012
12:50 pm

Of all people economics majors should pay their own way

Of all people, economists should be relegated to the 1-900 industry with all the other psychics scamming people willing to spend $x on a per-minute basis.

They’re kinda like hookers, too.