Education is the path to self-improvement and advancing in life. The problem is when this desire is combined with a costly education system that makes students fall into debt and even scams, as it happens with some for-profit colleges. The result is that taxpayers end up footing the bill.
The Department of Education unveiled yesterday a program to forgive student loans, starting with Corinthian colleges students. This institution, which includes the Everest group, closed recently after being fined $30 million for having lied about their graduation rates and the number of jobs their graduates get. They did so to lure students to get into debt for tens of thousands of dollars in exchange of degrees of questionable value. It is estimated that Corinthian students received close to $3,5 billion in loans for the past five years.
It is estimated that the current student debt reaches $1.2 billon, and that 8 million students are already in default. If college education is already expensive by itself, it’s even worse when what you learn is of little use. This is what happens with many for-profit schools, which are characterized by their high dropout and non-payment rates.
For-profit colleges expanded rapidly since 2000, offering courses to quickly learn professions for those who lack access to a public college. Immigrants and racial minorities are the main market for those colleges, which were allowed to grow thanks to a lack of adequate regulation and the dreams of progress of students.
Condoning the debt is part of the efforts the Obama administration has launched for the past years to put some order and avoid scams. Regrettably, the GOP-dominated Congress thinks that the problem are not the unscrupulous college executives but the regulations to supervise them. That’s why they introduced the bill HR 970, which prohibits the intervention of the Department of Education.
It’s an egregious error to think that the problem is the financial illiteracy of the students who get in debt, instead of the companies who seek to make money at all costs, even harming the students.