March 12, 2012

EXCLUSIVE: Gathering Of Subprime School Officials Blames Students For Student Debt

In recent years, the for-profit college industry — which runs veritable “subprime schools” which get billions of dollars from Uncle Sam and then deliver low-quality education while loading students up with debt  — has come under increasing scrutiny. As a result, it has ramped up its lobbying operations in Washington, D.C.

Earlier this week, I attended a conference hosted by a trade association for these subprime schools, the Association of Private Sector Colleges and Universities (APSCU), where they plotted their legislative strategy. I witnessed how they brought in high-level Democratic and Republican Party consultants to plan out astroturf campaigns and how the industry recruited former Senate Minority Leader Trent Lott to do its bidding by lobbying Congress.

During one session, the conference featured Rohit Chopra, a representative from the government’s Consumer Financial Protection Bureau, which will soon be providing oversight over private student lenders.

When the question and answer session began, one man, who identified himself as the president of a college in Pennsylvania, asked Chopra why the federal government won’t simply start empowering schools to deny federal loans to students, because the problem he saw was “overborrowing” among students. After the man finished his question, he was met with thunderous applause from the audience, which seemed fit to blame students for the student debt crisis rather than looking at the industry’s own behavior, which has included issuing billions in non-federal, high-interest private loans directly to students or courting banks to do the same. Watch it:

Chopra politely responded by pointing out that the CFPB does not have the authority to empower schools to deny students access to federal student loans. Yet it’s telling that, rather than looking at their own abusive practices, the representatives of these scam schools were so overjoyed to blame students first for the student debt crisis.

  • The problem is with the whole higher education system. Community colleges cost a fraction of the price, and often pay the professors more than other institutions. We already have affordable education. The problem is that people think that others will look down on a community college degree, and they’re often correct.

    Solution? The government should only be supporting affordable public institutions. The current system is like a voucher system, we need to replace it with a public school system.

  • skrbelly

    Privatization of the federal student loan system has caused this problem. Who is responsible? What elected official(s) are responsible for crafting the legislation that allowed the private take over of federal money administration to colleges and universities? Follow the money trail. Some former govt official (s) or their wife, son, daughter in law, and other family members and/or friends are holding private high administrative office in these companies that were supposed to streamline the student loan process. This is what has always happened and will always happen when government programs are privatized. The public money that is supposed to go into funding these loans goes instead to salaries and benefits. In turn, the business is allowed to do whatever they want to make a profit for themselves. The stated purpose is to ‘SAVE” taxpayers money by eliminating the government jobs that it takes to administer these programs. The government jobs never paid what these scumbags pay themselves, and the defaults are not the private sector’s loss, it is dumped on the taxpayer. This is a proven method for success, and maximum results are achieved when regulations are removed that might allow any restrictions or accountability on or for the use of the public’s money. Privatize the profit, publicize the losses, and NEVER, EVER use private money to get into the business to begin with.

  • This appears to be one of the EdCam’s –

  • Scott Amundsen

    I went to the College of Staten Island, part of the City University of New York, Class of 1985. The tuition in those days was less than $1,200.00 a year and many of the professors were Ivy League graduates; CUNY had the dual attractions of the lowest tuition and the highest-paid profs of any school in the Northeast. I was able to pay for most of my education by working; when I graduated my total student loan debt was a mere $2,500.00 which I repaid in a little over a year.

    I think in choosing a school, the mistake students often make is the prestige of the name and the question “Will it look good on a resume?” Which is not a minor concern these days, to be sure, but there is something wrong with a system in which graduating seniors with a Bachelor’s Degree are also saddled with a level of student loan debt that resembles the mortgage on a house.

    Something needs to be done. American individualism is all well and good, but as a community we have a responsibility to see to it that the next generation gets the best educational opportunities available, and such availability should not be tied to a student’s financial position.

  • CatKinNY

    I hate to say it, but that guy’s question was a good one. The GI Bill makes grants for education and money to live on while pursuing the education. If it’s set up so the GI gets access to all the money directly, before he has to pay the college, a surprisingly large percentage of them will use the money for other things, like buying cars. I’m an ex Army officer, and the poor financial skills of the American infantry grunt was something I found astounding. Drive into any town in the US that’s next to a military base, and you’ll see something that isn’t common on Main Street in Anytown, USA: pawn shops, as far as the eye can see. They thrive in military towns because more than a few GI’s will decide they want to host a Superbowl party, go to a local retailer, open a store account at high interest, and charge a 52″ plasma TV and the stereo equipment needed to provide surround sound on game day. A month or two down the road, he realizes he can’t afford the payments, at which point he sells the whole outfit at the pawn shop and takes the money to the retailer to reduce his principle. He now has a payment he can handle, but nothing to show for it. The government needs to pay the colleges directly to avoid this problem; of course, if the government were paying directly, they’d be in a position to demand standards that these ‘private’ chop shops can’t meet ~ like drop out rates lower than a specific number and job placement in the field pursued above a certain number. That would be a win/win, for GIs and taxpayers; the only loser would be these vampires.

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