In Hard Times, Lured Into Trade School and Debt

[tainted]

The New Poor - For-Profit Schools Cashing In on Recession and Federal Aid - NYTimes.com

Critics say many schools exaggerate the value of their degree programs, selling young people on dreams of middle-class wages while setting them up for default on untenable debts, low-wage work and a struggle to avoid poverty. And the schools are harvesting growing federal student aid dollars, including Pell grants awarded to low-income students.

Ms. Wallace left her job at ITT in 2008 after five years because she was uncomfortable with what she considered deceptive recruiting, which she said masked the likelihood that graduates would earn too little to repay their loans.
As a financial aid officer, Ms. Wallace was supposed to counsel students. But candid talk about job prospects and debt obligations risked the wrath of management, she said.
“If you said anything that went against what the recruiter said, they would threaten to fire you,” Ms. Wallace said. “The representatives would have already conned them into doing it, and you had to just keep your mouth shut.”

The Career Education Corporation, a publicly traded global giant, last year reported revenue of $1.84 billion. Roughly 80 percent came from federal loans and grants, according to BMO Capital Markets, a research and trading firm. That was up from 63 percent in 2007.


The Apollo Group — which owns the for-profit University of Phoenix — derived 86 percent of its revenue from federal student aid last fiscal year, according to BMO. Two years earlier, it was 69 percent.

For-profit schools have proved adept at capturing Pell grants, which are a centerpiece of the Obama administration’s efforts to make higher education more affordable. The administration increased financing for Pell grants by $17 billion for 2009 and 2010 as part of its $787 billion stimulus package.

When TJ Williams arrived in Portland from his home in Utah to enroll at Le Cordon Bleu in 2007, he was shocked by the terms of the aid package the school had arranged for him: One loan, for nearly $14,000, carried a $7,327 “finance charge” and a 13 percent interest rate.
“They told me that halfway through the program, I could probably refinance to a lower rate,” he said.
When he tried to refinance, the school turned him down, he says.

In case you were wondering what's happening with all your EDU leads.

 

[vgeek]

So that's how they pay for all of the commercials on TV?

 

[Sonny Forelli]

eh - dunno how I feel about this.

I know plenty of people who racked up $150-200k in private undergrad & private law school debt only to never pass the bar OR get some position working for the DA where they couldn't afford those loan payments at ~5-7%.

Is this any less bad? I suppose there isn't as much active recruiting nor the huge for profit schools financing packages however the availability of funds is there, AND of course you have to actually be bright enough to get in.

Those who aren't have little other options, besides of course a library card and drive to educate themselves, but those in this position aren't hard up for work because of being dumb in the first place.

And now with budget cutbacks you could easily argue that 4 year programs from good schools taking 5-6 years to finish to staff/class cutbacks/availability is very difficult financially and puts many into a much bigger (50% larger) hole, coupled with the poor economy many of them are in this same position of difficulty repaying given expected salaries.

 

[$uperMarketer]

this would be a great article to quote on a biz opp lp

and my friend who's just about to finish college tells me about all the time and money he's wasted by taking classes there that don't mean jack shit when he's applying for a job. they need certifications, not degrees.

 

[justo_tx]

eh - dunno how I feel about this.

I know plenty of people who racked up $150-200k in private undergrad & private law school debt only to never pass the bar OR get some position working for the DA where they couldn't afford those loan payments at ~5-7%.

Is this any less bad? I suppose there isn't as much active recruiting nor the huge for profit schools financing packages however the availability of funds is there, AND of course you have to actually be bright enough to get in.

Those who aren't have little other options, besides of course a library card and drive to educate themselves, but those in this position aren't hard up for work because of being dumb in the first place.

And now with budget cutbacks you could easily argue that 4 year programs from good schools taking 5-6 years to finish to staff/class cutbacks/availability is very difficult financially and puts many into a much bigger (50% larger) hole, coupled with the poor economy many of them are in this same position of difficulty repaying given expected salaries.

Yeah but the quality and scope of education as well as the opportunities that await afterward between a university degree and a vocational school are vastly different. You can get pretty wide range of jobs with a BA, marketing, economics, or even interdisciplinary studies degree, but you don't have a lot of wiggle room if you get a cooking degree or something like diesel repair.

If you got suckered into 40K of debt and a just about useless degree your life is going to suck pretty hard pretty quick. That being said, I'm a college drop out doing just fine by teaching myself and it's hard to feel sorry for people that only see the value of education when things are bad, so I'm conflicted too.

 

[canucksfan19]

agreed, most degrees are pretty useless, i know a couple, both have degrees, 1 took a 5 year program, an yet she works at the local gift shop...he wokrs in a vinyard, pretty good job but relative not all that great.

i know so many people who ahve degreees and just got get an unrealted job, or w/e. its kinda BS i feel bad for them, but their choice i guess. but if they dont know better....

 

[Sonny Forelli]

Yeah but the quality and scope of education as well as the opportunities that await afterward between a university degree and a vocational school are vastly different. You can get pretty wide range of jobs with a BA, marketing, economics, or even interdisciplinary studies degree, but you don't have a lot of wiggle room if you get a cooking degree or something like diesel repair.

If you got suckered into 40K of debt and a just about useless degree your life is going to suck pretty hard pretty quick. That being said, I'm a college drop out doing just fine by teaching myself and it's hard to feel sorry for people that only see the value of education when things are bad, so I'm conflicted too.

yeah agreed - however the bottom line is there ARE jobs for diesel mechanics - you just may need to be willing to go to Iraq as a private contractor and risk your life if you want a well paying one.

 

[S M W]

i want to be an underwater deep-sea welder. are there online classes for that? i could probably practice in the tub...

 

[efeezy]

My sister just graduated with her B.S. in nursing (at 28 years old mind you) and has about $100,000 in student loan debt. However, she passed RN exam and is now working at the local hospital making about $65,000 a year. Not sure how long it's going to take her to get rid of those loans, but I think she's on the right track.

Her B.S. is from a California State school, not from one of the trade school deals like you're talking about. Those commercials are on all the time, and I'm sure they sucker a lot of people into paying the tuition for X number of years and then they either drop out or never get into the field of their degree.

 

[onlinemoniez]

eh - dunno how I feel about this.

I know plenty of people who racked up $150-200k in private undergrad & private law school debt only to never pass the bar OR get some position working for the DA where they couldn't afford those loan payments at ~5-7%.

Yeah, law school is the worst. There are tons of lower tier schools that no one has heard of that are still 35-45k a year. They accept people who should never have been accepted in the first place, and many of them fail out their first year as a result. They've just racked up another 40k in debt with no law degree. Even if they do make it through, only the very top students have a solid chance of getting a decent job. In short, these places are selling dreams. Top jobs go to students at top schools.

 

[amanda11]

When you're in debt, you're a slave. That's why I never attend university.

 

[onlinemoniez]

When you're in debt, you're a slave. That's why I never attend university.

++rep

 

[Ben89]

The Career Education Corporation, a publicly traded global giant, last year reported revenue of $1.84 billion. Roughly 80 percent came from federal loans and grants, according to BMO Capital Markets, a research and trading firm. That was up from 63 percent in 2007.

I find it pretty interesting that a government program such as the Pell grant for low income students which Obama supports and has increased funding for ends up serving the interests of the owners of these schools.

 

[eVandals]

I don't think this is really suckering, education is what you make it out to be. You either are interested in the knowledge, do your research on what you are going to get, then get as much as you can for your dollar and apply it or not. I saw a lot of worthless generic business grads who coasted through courses not caring about any of them somehow graduate from a reputable university, while drinking 7 days a week and now they are still leeching off their parents. Wasteful pathetic morons.

In my eyes it's the two different kinds of people; those that have interests and are motivated to pursue those interests and those looking for the easy way out. Higher education can give you resources and access to much more educated people in whatever you're studying so it can't be discounted, especially in certain fields.

These new age for-profit companies/schools are definitely marketing their enrollment, but if you think you are going to just coast through any school and get a nice cushy job just by being mediocre and passing classes you deserve to learn an expensive lesson. Figure out what you want and go get it, whatever that may take. Not everyone makes it in this world, and I for one am okay with that.

Fuck these "coach" websites, make a competitive digital marketing college and get half a billion in federal aid.

 

[papajohn56]

When you're in debt, you're a slave. That's why I never attend university.

I went for free to a top 50 university in the country, so that's why I did attend. I did a degree in something you can't just learn at home; physics. For the sciences, engineering, etc, a degree is a necessity.

 

[Mikesev]

I went for free to a top 50 university in the country, so that's why I did attend. I did a degree in something you can't just learn at home; physics. For the sciences, engineering, etc, a degree is a necessity.

Funny you say that, I taught myself the final year of my Physics degree from home, I only went in for lab sessions.

You're right though that a degree is a prerequisite in these fields.

EDIT: to say is that what you meant? It's necessary to attend for practical sessions?

 

[TylerDurden]

I worked for a career college (Remington) and I have to admit the entire time I was there I felt bad about it. It just didn't feel right convincing someone to pay $40k (for an associates) to get a degree in a field where the avg. starting pay is $11/hr. I got the impression that most people I worked with felt it was wrong too but putting food on their own table was more important.

I don't really agree with the argument that someone would end up paying just as much to go to a traditional university because at least the criminal justice degree from that university will be recognized by the local police department because of their accreditation. Most of these career colleges are only nationally accredited which means only the federal government will recognize their degree.

 

[ZeroOne]

brb starting a college

 

[papajohn56]

Funny you say that, I taught myself the final year of my Physics degree from home, I only went in for lab sessions.

You're right though that a degree is a prerequisite in these fields.

EDIT: to say is that what you meant? It's necessary to attend for practical sessions?

Yeah, because it's impossible to get research experience or lab experience from home.

 

[papajohn56]

I worked for a career college (Remington) and I have to admit the entire time I was there I felt bad about it. It just didn't feel right convincing someone to pay $40k (for an associates) to get a degree in a field where the avg. starting pay is $11/hr. I got the impression that most people I worked with felt it was wrong too but putting food on their own table was more important.

I don't really agree with the argument that someone would end up paying just as much to go to a traditional university because at least the criminal justice degree from that university will be recognized by the local police department because of their accreditation. Most of these career colleges are only nationally accredited which means only the federal government will recognize their degree.

There are a few where it does make sense if they get an accredited associates in nursing or so, where they can get higher pay.