For-Profit Colleges Only a Con Man Could Love

Barbarians in the Ivory Tower

Comments (0) By Chris Parker Thursday, Aug 2 2012

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Congress' shrillest voices on waste refuse to even look at the industry. Despite sitting on the Senate committee examining for-profit fraud, Kentucky Republican Rand Paul has expressed no curiosity about this money pit. Nor have fellow committee members Lamar Alexander (Republican of Tennessee) or deficit hawk John McCain (Republican of Arizona). Not one responded to repeated interview requests for this story.

President Obama has stepped into the breach, though with customary timidity. In July, the Department of Education made it once again unequivocally illegal to base salespeople's pay on enrollment. But other reforms were so watered down they were meaningless. Taxpayers should probably be thankful Obama did anything at all. At hearings last year, Iowa Democratic Senator Tom Harkin called it the most intense lobbying campaign he'd seen in his 32 years in Washington.

Courtesy Barmak Nassirian

Barmak Nassirian, former official with the American Association of Collegiate Registrars and Admissions Officers: “Overadvertise, oversell, overcharge, and underdeliver. They found a system where the pitch goes to one guy and the bill to someone else.”

Courtesy Chris Pantzke

Iraq-war veteran Chris Pantzke ran up $26,000 in debt and burned through an additional $65,000 of his GI Bill benefits with almost nothing to show for it at the Art Institute of Pittsburgh.

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To truly appreciate how weak the final regulations were, consider this: The day they were revealed, for-profit stocks soared. The stock prices of EDMC and ITT Tech in particular increased by 20 percent. In one day.

The government ignores the problem at the country's peril. Total student loan debt, now more than $1 trillion, has surpassed credit card debt. These burdens will limit students' ability to contribute to our consumer economy for years to come. Worse, unlike an underwater mortgage, Congress has made it illegal for people to walk away from student loans they can't pay. The debt will follow them the rest of their life.

"This is basically a parasitic industry that is preying upon not just some of the most vulnerable members of our society, but the best of these most vulnerable members, people who listen to the rhetoric we feed them and who are actually attempting to better themselves," Nassirian says. "This is an industry that takes people's hopes and dreams and cashes them out."

And they won't stop until they've emptied the till.