Degrees of Debt, Not Opportunity

In the taxi ride on my way to the 2016 Women of Power Summit, the young African immigrant cabbie and I chatted amiably.

I soon learned that he had, unfortunately, attended a for-profit school and had since dropped out because of his onerous debt load.

I urged him to register a complaint with his state attorney general, and told him about the students of Corinthian College, who can apply to have their student loans discharged since they had been defrauded by the for-profit behemoth.

He went on to tell me

that his loans were now in forbearance–not always the best option since interest continues to accrue. I told him about income-based repayment plans, and encouraged him to call his lender and ask about his options.

By the time he dropped me off at the Hotel Diplomat, he felt empowered to move forward.

In a related vein, here is an excerpt from a New York Times editorial, “When the Degree Is Useless and the Debt Is Due”:

For-profit colleges that saddle students with crushing debt and useless degrees – while getting as much as 90% of their revenue from the federal student aid program – represent an especially destructive form of corporate welfare.

The United States Court of Appeals for the District of Columbia Circuit recognized exactly that on Tuesday when it upheld Obama administration rules that would deny federal aid to career training programs that bury students in debt that is beyond their capacity to repay.

In rejecting the industry’s challenge to the rules, the court said the federal law clearly requires career programs that receive federal aid to prepare students for jobs that at least allow them to repay their loans.

To ignore that standard, the court said, would encourage “a perverse system that, by design, wasted taxpayer money in order to impose crippling, credit-destroying debt on lower-income students and graduates.”

This language suggests that the court is familiar with data showing that for-profit schools typically target the poor – and that their graduates are more likely than graduates of other institutions to carry debt of more than $40,000.

The court ruling emphatically reaffirms the administration’s authority to rein in predatory education

companies – and comes at a time when federal education officials, state attorneys general, consumer advocates, and others are negotiating a proposed federal rule that will dictate how and when students who are defrauded by schools can have their federal student loans forgiven.

The state attorneys general have long been on the forefront of the battle against predatory schools and are rightly worried that the rule will make it too difficult for defrauded students who deserve debt relief to actually get it.

Read more at the New York Times.