On October 31, 2013 the Federal Trade Commission (FTC) released a pamphlet entitled, “Choosing A College: 8 Questions to Ask.”
The agency’s main mission is “to prevent business practices that are anticompetitive or deceptive or unfair to consumers” (ibid).
The FTC says it is now interested in protecting students from predatory for-profit colleges that steal around $33 billion a year in taxpayer-funded student aid. This is about a quarter of all such aid. The for-profit criminal colleges account for nearly half of all student loan defaults.
The FTC pamphlet states that:
“some schools manipulate the data or lie about how well their graduates fare” (ibid).
The pamphlet then goes on to include questions that student, veteran, and consumers should ask when picking a college to attend such as:
What’s the real total cost of a program? What percentage of former students are able to repay their loans? Will this degree get me where I want to go? Is there pressure to enroll? Can I transfer my credits?
Jessica Rich, director of the FTC’s Bureau of Consumer Protection stated:
“We want to help students evaluate their options and spend their education dollars wisely” (http://www.ftc.gov/opa/2013/10/choosingcollege.shtm).
Students do not have ‘education dollars’. They have to borrow them at usurious rates from both the feds and the private sector leaving them laced to debt for life.
According to Businessinsider:
“Today’s college grads, carrying unprecedented student debt burdens, won’t be able to retire until age 73, according to a new study by personal finance site NerdWallet. That’s 12 years later than the current average retirement age of 61.
In the last three decades, college enrollment has increased 11%, while tuition has shot up 200%, the report finds. That means members of the millennial generation are more likely to be saddled with loan payments that eat up their earnings and detract from their ability to save for retirement, pushing back their timelines for leaving the workforce” ( http://www.businessinsider.com/millennials-may-not-be-able-to-retire-until-age-73-2013-10#ixzz2jQbLc5Xf).
Admirable as the FTC’s move appears, one can only ask why it took the agency so long to even consider the crimes of for-profit colleges. After all, the issue has been in the press, front and center, for years.
The FTC is a day late and a dollar short. And as to the questions to ask and the ‘tip sheet’ provided by the FTC; they are basically common sense questions. Yet treating students as consumers is logical when education is boiled down to the sickening roux of big business.
The real issue is not what questions to ask — for with the public commons coming under attack and public colleges and universities not able to absorb the many students who wish to attend college, the migration to for-profit colleges has less to do with the ‘right questions’ to ask than with a policy that does not allow free and open access to public universities and colleges. And a cruel free market hoax that has gutted expenditures in public education.
The FTC has the power to sue businesses in court for deceptive practices. So why haven’t they done this over the past five years, given the widespread evidence of such criminal practices at companies like Corinthian Colleges and Career Education Corp, to name just a few.
The reason, as reported at Dailycensored.com (http://www.dailycensored.com/obamas-perfidity-profit-colleges-shame/): the Obama administration is hardly interested in protecting students from for-profit predatory colleges, although one has to see through the rhetoric to understand why. For-profit colleges have been accepted by the Obama administration and it’s Department of Justice for years.
In fact, major corporate democrats support for-profit colleges, like Governor Jerry Brown of California, for one, who has taken the most money from for-profits than any other democrat (http://open.salon.com/blog/stuartbramhall/2013/04/11/how_wall_streeet_gets_away_with_it), (http://www.dailycensored.com/hilary-2016-clinton-associates-lobby-for-vulture-capitalists-scandal-plagued-for-profit-colleges-and-uranium-polluters/).
Add to this the investment needs of teacher pension funds that invest heavily in these rackets, and it is hardly comforting that the FTC has now entered the fray. In fact, it is suspect. Obama has embraced the outright privatization of all education — from K-college and university.
We certainly need governmental agencies that will and can punish these for-profit syndicates, but to look to the Obama administration for anything more than ‘8 Tips’ from the FTC borders on the absurd once one understands how these drive-by colleges have and do operate.
What is needed is not simply strong enforcement of the law, which up to now has been absent from the Obama agenda, but a movement by teachers to force their pension funds to disinvest in these colleges.
But don’t hold your breath: pension fund managers are now little more than ‘hedge fund managers’ for teachers’ unions and until the rank and file force disinvestment, Wall Street will be the one that enforces the laws of the land — in their favor, of course.
Many for-profit schools continue to crash. Strayer, which targets African Americans, is facing serious reductions in enrollment. This may be worth monitoring.
Strayer plummets after reporting enrollment decline
Shares of for-profit education company Strayer (STRA) are tumbling after the company announced that its total enrollment had plummeted 17%.
WHAT’S NEW: Stayer reported that its total enrollment had dropped 17% during the 2013 fall term. Meanwhile, the company said it would reduce its tuition charges for new students by 20% starting on January 1, 2014 in order to “further address” the issue of college affordability. On a positive note, Strayer’s third quarter profits and revenue exceeded expectations. Despite the better than expected results, Strayer said it plans to close about 20 of its colleges and reduce its workforce by 20%.
ANALYST REACTION: In a note to investors, Deutsche Bank analyst Paul Ginocchio wrote that the number of new students at Strayer’s schools had tumbled 23% during the fall term, versus his previous estimate of a 10% decline. The company’s new enrollment trends continue to progressively weaken, he added. Strayer reported higher than expected third quarter EPS primarily because of its cost reductions, wrote the analyst, who kept a Sell rating on the stock. Similarly, BMO Capital analyst Jeffrey Silber reported that Strayer’s total enrollment had fallen more sharply than he had anticipated. The company’s EPS beat was caused by higher margins, mostly driven by cost reductions, the analyst stated. Silber kept a $40 price target and Market Perform rating on the stock.
PRICE ACTION: In mid-morning trading, Strayer dropped 19% to $39.80.
Some comments from the Strayer layoff site:
“Anonymous (Current employee), Monday 10/21/13 12:23:54
I could not have been happier to hear that Kimala McClendon was fired last week. She took a previously successful region and ran it into the ground. Under her “leadership,” I have never been associated with an organization with lower morale or less employee engagement. Strayer finally made a good move. Good riddance Kimala.”
“Anonymous , Thursday 10/17/13 00:40:36
“I loved, loved, loved my job with Strayer for years. And then the power structure changed, and it became a horrible, top-heavy, belittling place to work. Trust me, some of us worked hard for this company and were still let go. It was not always about who worked the hardest. Typically, it was more about who knew who, and what they did for them and with them. I understand that they are in lay-off mode once again…….”