For-Profit College Practices Predatory for Women

June 8, 2011

By Erin Matson, NOW Action Vice President

Diapers, baby food and household cleaning products: It doesn't take a marketing executive to see that daytime television targets women, and especially mothers of young children. You've probably also seen "degree programs" sold during these hours, which purport to sell women, particularly low-income women and women of color, better futures for themselves and their families, while instead offering predatory loans hardly anyone could realistically hope to pay back.

For-profit colleges and universities exist to make profits, and they do so by the simple mechanism of selling less value at a much higher cost. Examining both sides of that equation makes clear that taxpayers are supporting an educational-bankruptcy industrial complex that, in the absence of common-sense regulation, will continue to force more women and families into the debt horror of a lifetime.

First, the profits. A stunning 76 percent of for-profit college students are enrolled in schools owned by Wall Street corporations, including Apollo Group, which runs the University of Phoenix, and the Washington Post Company, which runs Kaplan Higher Education online.

This group is expert at charging high tuition; 96 percent of students at for-profit colleges need to take out federal student loans, whereas only 16 percent of public community college students do. Comparing the prices quickly reveals why: In one city pursuing the same degree goes for $40,000 more a year at a for-profit institution.

If only these prices led to good outcomes. While 10 percent of students attending for-profit programs take up 25 percent of the federal student loan budget, they account for about half of all defaults. This creates a natural comparison to the sub-prime mortgage crisis (and sub-prime mortgages were also intentionally marketed toward women, especially single moms and women of color), with an important catch: Student loan debts are non-dischargeable, meaning that bankruptcy won't erase the debt.

In fact, most students leave for-profit colleges without a degree -- staying enrolled for about four to six months. Those who do complete their studies are often stunned to realize their expensive degrees may be considered low- or no-value by prospective employers, in direct contradiction to the claims of the schools.

Instead of creating job placement, many for-profit schools are creating debt. A high percentage of students ultimately default, which can cause debts to balloon into garnished wages.

Education debt is not dischargeable in bankruptcy because it is thought to be "good" debt, in that the graduate's degree will lead to a good job with good benefits, so it appreciates in value over time. Unfortunately many for-profit schools have not demonstrated themselves to provide this value, though they continue to enjoy the protections of dollars fronted by taxpayers. Graduates of one major for-profit law school have been dismayed to realize their credentials are recognized in just one state -- a fact never advertised during enrollment or matriculation.

This is an issue of economic justice with strong implications for gender as well as racial justice. Students at for-profit schools are disproportionately women and people of color. One common-sense step is to task the new Consumer Financial Protection Bureau, created exactly to protect ordinary people from abusive financial practices, with examining this issue and creating recommendations. Another step is requiring for-profit schools to make accurate claims about their programs. While no one is arguing all for-profit schools are bad or the entire industry must be put out of business, it is clear that greater consumer protections are needed.

In the first quarter of 2011 alone, Wall Street has spent four million dollars in lobbying to stop the U.S. Department of Education from implementing meaningful gainful employment regulations. At least we know how they paid for that -- with debts disproportionately loaded on the backs of women, and in particular low-income women and women of color. Meaningful regulation is without doubt a feminist issue.

 

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