Bill would make for-profit colleges ineligible for federal student loans

CNBC Finance 3 weeks ago

For-profit colleges have been criticized for depriving their students of a quality education and burying them in debt. Now, some Democrats hope to cut the schools off from federal funding.

A bill introduced this month by Rep. Pramila Jayapal, D-Wash., and Sen. Sherrod Brown, D-Ohio, dubbed the "Students Not Profits Act of 2019," would ban the U.S. Department of Education from sending its federal grants and loans to for-profit colleges.

"It's time for taxpayers to stop subsidizing the institutions that put hardworking students through this heartbreaking mess," Jaypal said in a statement.

A number of consumer advocacy groups, including Americans for Financial Reform, the Debt Collective and the Project on Predatory Student Lending, have endorsed the legislation. The bill Democrats introduced recently to overhaul the Higher Education Act, which dictates the scope of federal aid for millions of students, would also crack down on for-profit colleges.

Democrats accuse Education Department Secretary Betsy DeVos of siding with for-profit colleges over the students they've harmed. Recent documents show the department sent more than $10 million to the Art Institute  chain, even though the schools were not accredited and ineligible for the funds.

According to student loan expert Mark Kantrowitz, the for-profit college sector takes in around 15% of the government's financial aid each year. And a third of the colleges — of which there are some 7,000 around the country — derive almost all of their revenue from federal sources.

The research about for-profit schools has been damning.

Their students go on to earn significantly less than public university students, despite the fact that for-profit colleges charge significantly more to attend. Half of student loan borrowers from for-profit schools prove unable to repay their loans, and tens of thousands of people have accused the colleges of fraud.

A ban on federal aid to for-profit schools would punish the one sector focused on career education, said Steve Gunderson, president and CEO of Career Education Colleges and Universities.

"This is just the latest congressional proposal that threatens to deny access to students who seek career skills," Gunderson said.

James Kvaal, the president of the Institute for College Access & Success, said that instead of cutting off for-profit schools from financial aid, the government should better regulate them. "Our view is that under the appropriate accountability system, for-profit schools can generate value for students," Kvaal said.

However, the for-profit industry has a record of resisting rules, said Alexis Goldstein, a senior policy analyst at Americans for Financial Reform.

"This is just an industry that has refused accountability," Goldstein said. "They should compete in the free market.

"They should not be able to get 90% of their revenue from the federal government," he added.

Brandon Schultz decided to pursue his dream of becoming a graphic designer in 2008. He enrolled in the online division at the Art Institute.

"I wanted to get into a field I enjoyed," Schultz, 38, said. "The Art Institute of Pittsburgh, it sounded fancy. "

He was disappointed to discover how basic the classes were. "It was just a bunch of beginner lessons on how to use these programs," Schultz said. "I never did any graphic design work."

He says communication with professors was sparse and his time with the school's tutors was limited. "I could only talk to a tutor for so long until they cut me off," he said. "A lot of them couldn't really speak English."

Schultz went on interviews for graphic design positions, but said he was unprepared for the common job tests such employers assign. Today, he strings a living together through odd jobs, including painting and landscaping, and he says there's no way he can repay the $90,000 he owes for his time at the Art Institute.

He makes $20,000 a year.

Source link
Read also:
Forbes › Finance › 1 week ago
When you refinance student loans, you can refinance your existing federal student loans, private student loans or both into a new student loan with a lower interest rate.
Chicago Tribune › 1 week ago
Three students from the shuttered for-profit Illinois Institute of Art sued the federal government to have their student loans canceled. The Department of Education, in a surprise move Friday, announced it is doing just that.
Business Insider › Finance › 0 month ago
Mandy Velez graduated from the University of Pittsburgh in 2013 with $75,000 in debt. She calculated that if she made monthly payments as expected, she would be paying her loans until she was in her mid-50s. She decided to pay off her loans sooner...
Business Insider › Lifestyle › 3 weeks ago
Robert F. Smith, the billionaire software investor who spent $34 million to pay off student loans for an entire college class, called American's $1.5 trillion in student loans "atrocious" in an interview with Ford Foundation president Darren Walker...
CNN › Politics › 3 weeks ago
A top Education Department official who oversaw student loans said he is resigning and will seek a soon-to-be vacant Senate seat, running on a plan to cancel student loans, The Wall Street Journal reported Thursday.
The Hill › 3 weeks ago
The Education Department provided $10.7 million in federal loans and grants to students at for-profit unaccredited colleges, according to ...
The Hill › Lifestyle › 1 week ago
Education Secretary Betsy DeVos said Friday that she would forgive the loans of more than 1,500 students who attended two for-profit colleges that closed last year.Students who attended the Ar...
The New York Times › Finance › 1 week ago
The U.S. Education Department is forgiving student loans for more than 1,500 borrowers who attended a pair of for-profit colleges that shut down last year.
ABC News › 1 week ago
The U.S. Education Department is forgiving student loans for more than 1,500 borrowers who attended a pair of for-profit colleges that shut down last year
Newsweek › Lifestyle › 1 week ago
Education Secretary Betsy DeVos announced the cancellation of around 4,000 loans to students of for-profit colleges whose parent company shut down in 2018.
Sign In

Sign in to follow sources and tags you love, and get personalized stories.

Continue with Google