NEW YORK POST: Not even DC could help for-profit colleges
Career College Central Summary:
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In 2012, former Senate Majority Leader Trent Lott was a busy man.
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For-profit colleges were desperate to beat back efforts by the Obama administration to stem the schools’ abuses and Lott, as a lobbyist for Corinthian Colleges, ITT Education Services and other for-profit higher-educational campuses, was trying to stop the effort dead in its tracks.
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For-profit colleges get $30 billion a year in student loans and the White House was trying to link the schools’ ability to deliver a meaningful education with their getting access to the loans.
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For years, the stocks of these for-profit colleges and the salaries of their executives had soared as they flouted Department of Education rules.
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The schools paid recruiters to boost enrollment, saddling unqualified, low-income students with loans they could never pay back while awarding them useless degrees, a Senate report found.
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Many of the loans are made to low-income students and end in default. Some were comparing them to the subprime mortgage crisis.
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The DoE was bent on passing gainful-employment rules — requiring a student’s debt not to exceed 8 percent of their total earnings. About five percent of career education programs wouldn’t meet the standard, it determined.
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The stocks of these for-profit colleges began to fall once new rules were announced.
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To try to stop reform, the Association of Private Sector Colleges and Universities — the lobbying group that hired Lott — spent more than $4 million and hired former Bush administration DOE official Sally Stroup.
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The first gainful employment rule was shot down in court, but a new one was announced Oct. 31.
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Since then, the stocks of for-profit schools like Apollo Educational Group, Strayer Education and DeVry are off sharply. And for good reason.
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As of 2012, 88 percent of students at for-profit colleges had loans and their average debt burden reached $39,950, according to the Institute of College Access and Success. At public colleges, the rate was 66 percent, and the loan average was $25,550. At private colleges, it was 75 percent and $32,300.
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Meanwhile, the tougher regulations weren’t the only headache for the schools.
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NEW YORK POST
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