Sub-prime, for-profit predatory colleges

They Shoot Students, Don’t They?

Non-accredited for-profit college programs luring students into the bowels of predation has been the story for more than five years that I can remember.  The internet is littered with reports of students who have been black-bagged by military style recruiters in the great cattle herding called for-profit college education in America.  Their pockets lined with non-dischargeable debt, American college students have been the victims of one of the greatest frauds in America – and one that is surely coming home to roost as broke and unemployed taxpayers are forced to pick up the tab for the defaulted loans taken out by broke and unemployed students.

I posed as a for-profit college student back in late 2009 and reported about the experience in a four-part story in dissidentvoice.org, entitled:  Private Predatory Colleges: How the Neoliberal Alchemists Turn Debt into Profit and Citizens into Fools: The Impropriety of It All: Neo-liberalism, Predatory Proprietary Colleges and the Money-Changers (http://dissidentvoice.org/2009/12/private-predatory-colleges-how-the-neoliberal-alchemists-turn-debt-into-profit-and-citizens-into-fools/).

Now, Time magazine is joining the chorus, reporting recently that:

“Federal aid to students at for-profit schools has rapidly increased, approaching $24 billion last year, with an additional $36 billion Pell Grant boost approved in March. A report released late last week by chairman Senator Tom Harkin found that up to 90% of for-profit schools’ revenue comes from Washington and that for-profit students are graduating with more debt than students at public or private nonprofit universities. With 96% of proprietary students taking out loans, and nearly half of them defaulting, taxpayers foot the bill”
(http://www.time.com/time/business/article/0,8599,2000160,00.html#ixzz0sgsUWMj4).

Not only will there be no jobs when these poor students graduate, but they will find, along with duped citizens that the federal deficit has been fueled by the neo-liberal arrangement between the government and private for-profit colleges.  Literally billions have been transferred into the coffers of stockholders and the owners who run the stables for students.

Steve Eisman (famous for waging war against the subprime-mortgage market in 2008) testified to the Senate that at current increasing enrollment and loan rates, there could be $330 billion in defaults in the coming decade.  Or more, Steve.  For no one knows where the money is.

Senator Tom Harkin, the self-styled liberal tallywhacker noted:

“The taxpayers are being taken for a ride on this,”. Taxpayers, I think rightfully, are saying, ‘Yes, you can take my tax dollars to help educate kids;  that’s good for us and our country.’ But I don’t know that the taxpayers want their money to go to institutions to pay the shareholders huge profits” (ibid).

Thanks, Tom!  You’ve known about this through the Government Accounting Office for years (GAO) as I note in my article in Dissidentvoice.  The fact is the Senator and his colleagues have turned a beleaguered eye from the problem, allowing the public trough to be continuously siphoned off to the predatory colleges without hesitation and no oversight.

I interviewed Barmak Nassarian for my story in dissidentvoice.org back in October of 2009.  Nassarian is with the American Association of Collegiate Registrars and Admissions Officers and he has been leading the fight against the theft by predatory colleges for more than eight years.  Time interviewed Nassarian for their article as well.  When confronted by Time reporters who indicated that neo-liberal government money was being transferred to the ‘colleges’ (most of them are nothing more than video monitors and strip mall storefronts that give out useless online degrees for as much as $80,000 for a four year Home Land Security Bachelors Degree) with hardly any supervised institutions, unchecked supervising bodies and debt-trapped students — all sheet music familiar to those who remember the sub-prime-mortgage collapse, Nassarian stated:

“The analogies are unbelievable” (ibid).

They really are.  Simply reviewing history will find the for-profit education boom is linked to the savings-and-loan crisis of the 1980s, the dotcom boom of the ’90s and the recent mortgage bubble, which was helped along by lax credit-rating agencies and loose regulation.   The losers, students; perhaps for their entire lives as they face debt peonage, non-dischargeable debt, poor credit ratings and thus an inability to rent or participate in the economy.

Not so, say the eager representatives of capital and purveyors of youth exploitation.  Take Harry Miller, CEO and president of the Career College Association:

“It’s silly and simplistic.  The analogy between the [for-profit college] accrediting bodies and the [credit] rating service is absolute nonsense” (ibid).

Sure it is, Harry.  Tell this to the American people and the debt ridden students you helped schlep into economic purgatory. 

How can these people live with themselves?  The answer is easy, they simply do not care about other human beings – they are economic socio-paths and they work day and night to stock gold for their miserly masters.

No one knows for sure how the private for-profit colleges even spend tax payer monies.  They are virtually un-accountable, preferring to pay out millions in fines (see Phoenix University) for it is far simpler and cheaper to do business this way.  Full transparency and accountability is a no-no in the industry.  Recruiters are hidden (as I wrote) behind closed locked doors laboring in boiler rooms wrangling students into the useless schools for head-fees.  Sub-humans like Miller and his cohorts would like the public not to see the soiled accounting figures for their fiduciary responsibility is to their shareholders and ‘capos’.  They’ve sworn the oath of Omerta and thus are lively participants in the whole sub-prime fraud.

But in light of the Times article, my various articles and many, many others (not to mention the millions paid out in fines by the likes of Corinthian, Phoenix, Westside College and too many others to name) no meaningful regulations have been passed to stop the fraud and theft.  Talk, more talk and then again more talk is all the liberal and conservative coin operated politicians engage in.  Hand wringing replaces action as the for-profit New York Stock Exchange Colleges continue unabated in their lust for profits, leaving the corpses of college students to rot, with no jobs and monthly debt they can never discharge.

For more on this spiraling fraud please see the article referenced above in Dissidentvoice.org.  In the four part article, I go into copious detail as to how the predatory colleges work, how they recruit, how they advertise, who they predate and how Bush era government regulations and the now Obama era neo-liberal government policies, enable these institutions. 

You can also see my work in Counterpunch.com entitled: Diploma Mills and Debt Peonage A Neo-Liberal Arts Education (http://www.counterpunch.org/weil10152009.html), as well as an article on the American Military University, another stock exchanged ‘company’ (Does the American Military University (AMU) teach torture to its students or has it taught torture in the past? Wikileaks, (http://dailycensored.com/2010/03/29/does-the-american-military-university-amu-teach-torture-to-its-students-or-has-it-taught-torture-in-the-past-wikileaks/).

The manure is thick, the outhouse wide open.  This sub-prime college fraud has not even entered the public’s mind yet.  Wait until the bills come in, for this is an economic tsunami waiting to hit shore.  When it does, you can bet that the working class will be forced to pay off the mounting sub-prime fraud as they did in 2008, continue to do now, and will surely proceed to do so in the future.  For this is how capitalism works:  exploitation, greed, and socialized costs, while the gangster capitalists walk with the privatized profits.