# For-Profit Colleges Mislead Students, Report Finds

#### Anthony DeAngelis

This is really true. When I came to US for work I bought a new car for $20K within a week on borrowed money. Later I realized I am paying 10% interest. Got a credit card in week. The headhunter who brought me to US paid my apartment security deposit, so I stayed in a luxury apartment. Finally I left with no savings, as I was paying most of my salary to car loan, credit card bills and rent. You could have bought a very nice used car for a lot less. You could of rented a more modest place. You could have used public transportation. Freedom was your problem, not debt. You have the freedom to buy what you want, get credit if you want, take a loan if you agree to the interest rate, etc. You also have the freedom to pay cash for everything and save your money. I will agree that people too easily fall into the consumerism trap. In my younger days I fell prey to this also. That was my choice though. As for the USA being a debtor prison, I have to respectfully disagree. Student loans are the only type of loans that are impossible to get rid off. Everything else can be discharged or negotiated through a Ch 7 or 11 bankruptcy. We have very strict consumer laws at both the state and the federal level. The problem stems from an ever increasingly complicated financial world and the average consumer who decides to not be informed. No one in this country is thrown in physical jail for debt. Before someone posts recent new stories "proving" that people are being thrown in jail, remember that people being locked up are those who ignore summons and do not show up to court. Your debt cannot put you in jail, but willful disrespect for a judge can. #### IlyaKEightSix I don't get it...why can't student loans be legislated to be rid of with a bankruptcy filing? I say there needs to be some way to put the creditors on the hook. If they fund a degree after which the person can't find a job because of having said degree in some reasonable period of time (one year max?), then why not just drop the loans? If education becomes a case of buyer beware to the point that the costs of an education outweigh the benefits, this entire country is going to hell in a handbasket in a generation when people just stop going to school and the only people who can afford it will be the already wealthy. Come to think of it, I guess that's the way it also works on Wall Street, huh...the only people who can get work are those with the connections. Anyone trying through the front door is laughed at and put into the garbage pile, more or less. #### atreides ##### Graduate Student I don't get it...why can't student loans be legislated to be rid of with a bankruptcy filing? I say there needs to be some way to put the creditors on the hook. If they fund a degree after which the person can't find a job because of having said degree in some reasonable period of time (one year max?), then why not just drop the loans? . This doesn't make much sense...Remember that nobody holds a gun to your head and forces you to take a loan for education. It's not a lenders responsibility to help you find a job to repay a loan #### IlyaKEightSix It might not be their responsibility, but they should be forced to have their skin in the game, since they are aggregates of capital, and the students aren't. Either way, the idea that you can't get rid of a student loan no matter what (bankruptcy, economic hardship, etc...) is ridiculous. People take out student loans in order to improve their lots in life. If the degree doesn't pan out, holding a 22-23 year old accountable for the rest of their lives for trying to fulfill a dream just seems like usury. #### Anthony DeAngelis I don't think the blame is with the banks on this one. I mean what kind of PR would a bank get if it started telling kids the honest truth about school? This is a tough situation. Should colleges be discouraging kids? Is it fair? How to go about it also. If someone wants to study medieval history at Harvard does that mean they cannot going into banking or something else. Would adcoms discourage people from liberal arts study at lower ranked schools? Honestly, this is something that individuals need to take responsibility for. There are too many factors that adcoms and bankers cannot know about when it comes to making decisions. Do I think student loans should be able to be discharged through bankruptcy? Maybe. There are other options though. There is income based repayments and there is also a public service option with loan forgiveness. More could be done, but at the end of the day it is up to the individual. I worked full time during my UG and came out with very small loans. I have since taken on more debt during grad school, but the amount of debt I have for what will be 2 graduate degrees and an undergrad (all from private schools) I consider reasonable. Maybe people should think twice before they get 6 figures in debt for a BA in basket weaving. Caveat Emptor #### IlyaKEightSix Put simply, the idea that you can sell a dream, force someone to take out severe loans for it, and then indenture them for the rest of their lives doesn't sit well with me. Furthermore, would it really harm our society if grantors and lenders said "engineering/math/science/etc. major--fund. Medieval history/English/sociology/XYZ studies major--go fund yourself"? And then on top of that, they'd still be on the hook if the economy tanks and there are no entry-level jobs to be had. It's basically the idea that you went to college to come out better than you came in--if the only thing you get out of it is the loans and you aren't any better off than if you even went to school, then you should get a full refund. In short, a money-back guarantee. If it's something that can destroy someone for the rest of their lives, there needs to be an out. And then maybe our government agencies like Sallie Mae will be more prudent with taxpayers' money. #### Anthony DeAngelis I agree with you that hard science or business majors are probably the smarter choice when you consider the earning potential coming out of school. 100K in debt isn't horrible if you are an accounting major at a well known school. 100K in debt with a English major from a school no one has heard of will be killer. Problem is how successful a person is depends a lot on how much effort they put into school. How are their grades, the EC's, internships, networking, etc. Do they do the minimum or go the extra mile? These are all things lenders and adcoms cannot really factor in. As for a money back guarantee I do not think that would work. Would the person return their college education and degree, plus a standard interest rate? Are they returning the degree because it is worthless or are they returning it because they didn't put the effort in? Would the return policy be null and void if the student partied too much, slept around too much, etc? There are plenty of options for a debt conscious consumer. Community colleges, state universities, part time school, etc. I think many of these kids who come out with outlandish amounts of debt do so because they have to live on campus, go on trips, spend spend spend. If you do not have a lot of money then live at home, commute, work part time, apply for scholarships and grants. The onus is on the individual in this situation. #### IlyaKEightSix The problem is, for instance, my case. I believe I have around$70k in total debts. I believe 20 Gs are on me from Lehigh, 20 on my mother (who also I believe covered my deadbeat father), who I want to someday pay back, and about 30G from Rutgers.

All of these degrees were in something quantitative. My undergrad was in engineering, with as many finance courses (more in fact, when counting the financial engineering one) as a finance major, and I got a 3.32 cumulative, 3.50 major GPA, and then a 3.81 MS statistics GPA.

Now in a normal economy, this might be enough to get a nice job that I could do what I studied and so on, and I could repay my debts.

But in this economy, the market literally tells me that I'm worth absolutely nothing. These degrees aren't in medieval history and basket weaving and random do-nothing garbage. I took no trips abroad, did nothing really extravagant (unless you call living on campus extravagant), but even if this were the case, I literally have zero income coming in, and I don't think my credentials are below bottom of the barrel.

To some, maybe a 3.32 cumulative GPA in engineering is pathetic--that if it isn't 3.5 or 3.6 or higher that it's junk. That's why I went and got the 3.81 GPA in the master's. Now maybe a 3.81 master's GPA is junk (8 courses, 6 As, 1 B+, 1 B, 2 transfered from Lehigh) because it isn't a 4.0 and in grad school, everyone's supposed to get an A and people only get Bs if they're terrible, terrible students (in the class I got a B in, that was the middle of the bell curve. 4 people got As, 4 got B+s, 8 got Bs, 4 got C+s, 3 got Cs, and 1 got an F).

The thing is--how exactly am I supposed to pay these loans when the bills come in around 9 months? Some employers might go so far as to talk to me, but the only offer I got was so bad that I might as well have asked "Do you want fries with that?" for the same amount of hourly wage.

In such cases, is it *really* the fault of the students that a job market is the worst it's been in 80 years? Should the lenders be completely off the hook? Should people who couldn't get a job with a BS and had to go further into debt for an MS now be just crushed by student loan debts because further education was their only recourse, and then they still can't find work because everyone wants those who already have 1-3 years of experience (I talked to the recruiter such a posted that position and he said that 0 years is absolutely off-limits in these kinds of postings. Those 1-2 and 1-3 years mean you already were working, and they don't want to mentor you).

In those cases, what exactly are the new grads supposed to do? Plead economic hardship and let interest accrue while their chances get ever diminished because employers will then ask them "so what have you been doing for the past X months/year+ ?"

I say the creditors need to be put on the hook. When people purchase bonds of a firm, if it goes under and they can't get repaid, tough. However, if a graduate can't find a job, then the creditors say "F you, your life is ours?"

If that's not usury, what is?

#### Andy Nguyen

Reading this just reminds me of the term "moral hazard". Are we ok with bailing home owners who take loans that they don't understand and mortgage they can't afford in the best of time?
In a society that allows you to get a loan in a first place, should we blame it if things don't quite work out?
Education is on of the biggest business decision you will ever made in your life. Some are smart enough to make the right one, some not quite so. Shop around, do research. That's why there is a need for website like quantnet.com

And ultimately, these "moral hazard" will come back to bite taxpayers like me and others who pay by the rule. Tell me why I should pay for your mistake?

Time to pay up bud. $70K is not too high. Probably just$1,000 per month to Uncle Sam. Once the interest rate goes up and the penalties start and the collection agency comes after you, your life will become a real nightmare. Ask your college to help you get a job. They owe you that much at least.

#### IlyaKEightSix

Reading this just reminds me of the term "moral hazard". Are we ok with bailing home owners who take loans that they don't understand and mortgage they can't afford in the best of time?
In a society that allows you to get a loan in a first place, should we blame it if things don't quite work out?
Education is on of the biggest business decision you will ever made in your life. Some are smart enough to make the right one, some not quite so. Shop around, do research. That's why there is a need for website like quantnet.com

And ultimately, these "moral hazard" will come back to bite taxpayers like me and others who pay by the rule. Tell me why I should pay for your mistake?

Is getting an education considered a mistake nowadays, Andy? The thing is, those degrees are considered mandatory or else nobody will hire you period. The thing is, why exactly are we bailing out homeowners and big financial institutions, yet promissory notes say "if you default, we will garnish your wages"?

Furthermore, I wonder, what would happen if there was no financial aid? People wouldn't go to school, be on welfare, become criminals, and so on and so forth, which makes me wonder...don't student loans pay for themselves with the added tax revenue of having higher pay? If so, why are new graduates being struck down with student loans, when if they weren't able to get a degree in the first place society would be worse off?

Oh, and traderjoe, I *am* asking my alma maters to help find me a job. Lehigh's director of career services says that the jobs simply aren't there, Rutgers I hope will give a better answer, but honestly my hopes aren't up. Lehigh's a better school than Rutgers.

I'm simply saying that in tough economic times, for there to be absolutely no out in terms of student loans is ridiculous. The thing is, in better economic times, degrees with math and science and statistics would be worth something to someone. Nowadays, it doesn't really matter what your degree is in for entry-level jobs unless it's computer science, and then you'll probably be paid bottom dollar because who knows how many programmers-in-a-box can be imported from overseas?

Basically, the disconnect between the repayment of student loans and the ability of graduates to pay should not exist. If Sallie Mae needs to higher people who do due diligence on applicants but would allow for certain clauses to erase debt due to a bad economy and so forth, so be it. I for one don't want to have my entire life ruined because I happened to graduate at the worst possible moment in nearly a century because Sallie Mae has draconian policies in place to be able to give any Tom, Dick, or Harry a student loan when some people with these loans have no business getting them to begin with.

#### alain

##### Older and Wiser
Put simply, the idea that you can sell a dream, force someone to take out severe loans for it, and then indenture them for the rest of their lives doesn't sit well with me. Furthermore, would it really harm our society if grantors and lenders said "engineering/math/science/etc. major--fund. Medieval history/English/sociology/XYZ studies major--go fund yourself"?

And then on top of that, they'd still be on the hook if the economy tanks and there are no entry-level jobs to be had.

It's basically the idea that you went to college to come out better than you came in--if the only thing you get out of it is the loans and you aren't any better off than if you even went to school, then you should get a full refund.

In short, a money-back guarantee. If it's something that can destroy someone for the rest of their lives, there needs to be an out. And then maybe our government agencies like Sallie Mae will be more prudent with taxpayers' money.

Nobody forced you to go to college or take a loan. That was your own decision so, now you need to man up and take responsibility.

Regarding the major, what makes you better than the kid that decided to study communications/sociology, etc? You haven't proved that you are any better than then or that your contribution to society is greater. You should stop whining and do something about it.

#### IlyaKEightSix

Come on now, Alain. I think you know as well as I do that not going to college is the fastest way to shoot yourself in the foot for life.

As for my contribution to society, I don't think anyone can contribute when they have no work and therefore no purchasing power. I was simply citing random liberal arts majors, but it seems that you might as well add any major that's not something that turns you into an expert programmer into the pile of garbage majors from what I can tell on this end.

Dude, your pontification and whining is all read with a great deal of sympathy. Unfortunately, you borrowed taxpayer money to pay for your education and Uncle Sam will come after you to get the money back. Sooner or later you will get a job and Uncle Sam will take 25% of your paycheck. You still have 25 years left for them to recover the money. Uncle Sam wants his money back. So get a job and pay back Uncle Sam.

#### alain

##### Older and Wiser
...I for one don't want to have my entire life ruined because I happened to graduate at the worst possible moment in nearly a century because Sallie Mae has draconian policies in place to be able to give any Tom, Dick, or Harry a student loan when some people with these loans have no business getting them to begin with.

how many people have graduated in the US in the last couple of years? Are all of them in your same situation? Somehow, I doubt it. So, don't blame some organization that decided to give money to the education of others.

IMHO, you are looking for an easy way out of your problems. I know it is tough but that's part of the ups and downs of life.

Regarding job prospects, look at Baruch employment statistics there are no gaps so, something is wrong with your approach to job hunting or with you.

#### atreides

Come on now, Alain. I think you know as well as I do that not going to college is the fastest way to shoot yourself in the foot for life.

As for my contribution to society, I don't think anyone can contribute when they have no work and therefore no purchasing power. I was simply citing random liberal arts majors, but it seems that you might as well add any major that's not something that turns you into an expert programmer into the pile of garbage majors from what I can tell on this end.

Without being too personal, I think you need to change your mindset. You've said you have some decent R skills, start an llc and look for contract gigs.

Do something, anything as long as you are building your skillset every day and making yourself better than the next guy

#### Andy Nguyen

Time to look outside the finance sector.
Move to Silicon Valley, start/join a start-up.
Read these posts for some fun
Why founding a three-person startup with zero revenue is better than working for Goldman Sachs. | AdGrok
New York will always be a tech backwater, I dont care what Chris Dixon or Ron Conway or Paul Graham say | AdGrok

---------- Post added 08-10-2010 at 12:51 AM ---------- Previous post was 08-09-2010 at 11:58 PM ----------

Young, college-educated, Internet-savvy, unemployed and hoping to find a place in the food world outside the traditional route, she is typical of the city’s dozens of new food entrepreneurs.

She could be you. Replace food with something else and you have a winner.
Home Cooking for Sale - NYTimes.com

#### Anthony DeAngelis

My dad works 60+ hours a week in a factory. Never had the chance to get his BS let alone an MS. He makes close to 20 bucks an hour. Stop bitching and get a job.

The economy sucks, yes, but it actually is not that bad for educated workers. Don't just fall back on that 9.5% number and think it applies to everyone. 70K for a masters is not a lot of money.

You should of just got a job after your BS. Most F500 programs hire people with 3.0's. I know a bunch of people with lowish GPA's making 50-60-70K a year. Maybe your attitude is something you should look at.

#### alain

##### Older and Wiser
Dude, your pontification and whining is all read with a great deal of sympathy.

Ilya,

I was sympatethic up to a point when I heard the story for the first time... like 2 years ago.

Fast forward to the present, I'm really tired of listening to the same BS. Two years, TWO YEARS HEARING THE SAME THING OVER AND OVER AGAIN! Don't you think you should've done something useful with your life by now? You can't even use the excuse that you don't have a visa to work in this country.

Sorry if I'm going to the deep end but it's time for you to wake up and smell the coffee.

Have you tried any other industry? Pharmaceuticals are always looking for statisticians and R is in high demand in that field. You did your MS at Rutgers. I'm sure Big Pharma (JNJ, PFE, MRK) came to campus recruiting since most of them are in NJ.

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