Shut your eyes for a minute and visualize what a person with student loan debt looks like. I'm going to guess you are either envisioning one of two things: either yourself, as so many of us are struggling to repay our college loans, or you are imagining a fresh out of college 22 year old graduate. The reality of the situation in our country is that the rise in defaulted student loans is directly related to an increase in borrowers at for-profit colleges.
A lot of these online and job-placement schools are now under investigation and scrutiny from the Consumer Financial Protection Bureau, state attorney generals, and the U.S. Department of Education. The appeal of a for-profit education is to quickly and conveniently (with a lot of these colleges offering online courses) become equipped for a career in their chosen field. Instead, many of those enrolled found misleading information, excessive costs, programs that only provide training for low-wage jobs and in many cases, there were no jobs waiting for them after graduation.
In 1999, 29 percent of borrowers from for-profit colleges defaulted within five years.
In 2009, 47 percent of borrowers from for-profit colleges defaulted within the same time frame.
For-profit students are usually older than the average 22 year old borrower and tend to be in lower-income situations, but because they are older and usually independent borrowers, they have no trouble getting larger loans. This has quickly become a problem as for-profit colleges don’t reap the same recognition by employers of a 4 year college education. The career outcomes are poor and many of these students are ending up worse off than before they enrolled with.
For-profit college students have a number of factors working against their ability to make payments on student loans that aren’t an issue for graduates of traditional colleges.
Many traditional college graduates, although they may not have lucrative careers, are able to find decent jobs that allow student loan repayments. The problem is that for-profit college students, who are already low-income, they don’t reap the same benefits of a college education that would allow them to shoulder those debt burdens. Career outcomes for for-profit college students are poor, and often leave graduates in a worse economic state than before they attended college, which can inevitably lead to student loan default.
Some of the most notoriously known for-profit colleges such as Corinthian Colleges, The Art Institute, DeVry University and Kaplan College have begun shutting down their campuses. This is a result of the Department of Education promising to fine any of these chains up to $30 million for falsifying post-graduation job placement opportunities.
Here at Student Debt USA we believe if you were defrauded by a school, you deserve a full refund and a chance to start over. Call us today.