QUARTZ: Face it: America’s experiment with for-profit colleges has failed
Career College Central Summary:
It doesn’t really get much more clear than this.
The Obama administration’s decision to effectively forgive the student debts of tens of thousands of students who attended schools run by the now-bankrupt for-profit education company Corinthian Colleges may be the first step to admitting that America’s experiment with for-profit higher education is a giant mess.
For taxpayers this is a painful lesson. Students attending schools operated by Corinthian Colleges took out some $3.6 billion in Federal student loans. So theoretically taxpayers could be forced to eat all that debt as a loss. (Though its unlikely every last loan will qualify for relief.) And the costs could climb, as the Department of Education has opened the door to offer further forgiveness for students of other schools who claim they were misled into taking out excessive debt to attend for-profit schools.
Still, let’s hope a lasting realization sinks in with the sting. There are terrible incentives inherent to a for-profit education system kept afloat on an endless river of government loans. For anyone who paid attention to the financial crisis, the situation seems reminiscent of run-up to the housing bust, in which shady mortgage brokers encouraged people to load up on debt to buy houses. When those loans ultimately went bad, the US taxpayer had to step in to keep the financial system and the economy from collapsing. Might the bankruptcy of Corinthian be a turning point similar to the bankruptcy of Lehman Brothers during the crisis?
At any rate, the problems are not strictly confined to the Corinthian Colleges catastrophe. Here are a smattering of troubling findings surrounding the for-profit education sector as a whole.
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