This is partly a function of tuition, which the Wall Street Journal reports has increased at a rate of 5 percent a year. It is also a function of a flailing economy in which parents are far less able to help their children pay for college. It’s no wonder that a staggering 85 percent of 2011 college graduates are moving back home after graduation.
Still, for many, if not most, college students, the decision to take out loans to pay for a college degree will be one of the most important investments they will ever make in their future, and the cost of repayment, while historically high, will be worth it. Last month’s jobs report found that the unemployment rate among college graduates was 4.5 percent, half of the national unemployment rate. And according to a College Board report cited by the New York Times, the median bachelor’s degree recipient working full-time in 2008 made 65 percent more than the median high school graduate.
But there is a growing group of students who will find a harsh reality when they enter — or at least try to enter — the workforce. These are the students who have enrolled in the growing industry of for-profit colleges.
For-profit colleges aren’t new to the national landscape, but over the past decade their numbers have surged dramatically, creating a $23 billion industry. In 2000, about 670,000 students were enrolled in for-profit colleges. By 2008, nearly 1.8 million were enrolled, a 225 percent increase.
These companies make their profits by aggressively recruiting students and pushing them to take out large federal loans to cover the cost of tuition. Seventy-seven percent of the revenue at the five largest for-profits comes from federal student loans and grants.
That cost of attendance isn’t cheap. According to Forbes columnist Susan Adams, tuition at for-profits is twice as high as in-state public colleges and about five times as high as two-year public colleges. And while for-profits educate 11 percent of U.S. post-secondary students, those students hold 26 percent of the nation’s student loans and make up 43 percent of those who default.
The problem for these students is not just that they are being strapped with outrageously high debt. It’s that they are being preyed upon, misled into enrolling at institutions that often lack accreditation and have dismal records of job placement. The University of Phoenix, for example, quadrupled its enrollment over an eight-year period by targeting vulnerable students to join its ranks. That group, according to Bloomberg News reporter Dan Golden, included an intellectually disabled woman with an IQ between 65 and 70, who, not coincidentally, qualified for federal aid.