US college students face high debt, shattered dreams

On Oct. 1, Germany’s Lower Saxony became the last German state to make college free to all, including international students. Briefly breaking from a national tradition of free universities, Germany began charging a small amount of tuition in 2006, but that experiment failed. German leaders now say the tuition-based education is unjust and unfairly privileges students from affluent backgrounds. “Tuition fees degrade the educational opportunities for bright young people from low-income families,” Gabriele Heinen-Kljajic, state minister for science in Lower Saxony, told the state parliament in September.

By contrast, tuition in the United States at public and private colleges has risen steeply over the past 10 years. Even worse, private for-profit colleges have proliferated around the country, with enrollment growing by 225 percent from 1998 to 2008. These colleges prey on low-income students, leaving many deep in debt, without a degree and in low-paying jobs that bear little resemblance to the descriptions in for-profit college’s recruitment pitches and late-night television ads.

When I was 16 years old, I got very lucky. The oldest of 10 children in a low-income Minnesota farm family, I gained admittance to the University of Chicago. The school wanted small-town students, and federal student aid then was a lot more generous than it is now. A combination of federal grants and National Merit and University of Chicago scholarships covered most of the tuition. I worked part-time and took out student loans to cover the rest of my expenses, but the loans were manageable. I received a world-class education and a good start on life.

Today students from low-income households face a colder, meaner college world. Low-income students are more likely to enter college without adequate preparation and to drop out before completing a degree.

The miseducation of many college students is financed in part by the same government programs I used, but with enormously different consequences. Federal grants now pay a far lower proportion of college costs than they did in decades past. That means students finance a greater part of their own education through loans, leaving them in debt after they graduate or withdraw from college. This is not fair to the students or the taxpayers who partly foot the bill.

The worst predators in today’s college world are in the private, for-profit college sector. They spend lots of money on recruiting, focusing especially on low-income, first-generation college students and on students who may lack the test scores and high school grades to be admitted to other colleges. The for-profit college sector spends far more money on advertising and recruitment than on instruction. Both their television ads and recruiters paint enticing pictures of future career success, even though the schools’ coursework may not qualify students for jobs. Typically, they also spend little on job placement (PDF) for their students.

Students at for-profit colleges typically pay higher tuition, take out larger loans and default in larger numbers than those at public colleges or in private, nonprofit colleges, as documented by a U.S. Senate investigation. That investigation found that, of the students who enrolled in for-profit colleges in the 2008–09 school year, more than half left without degrees by 2010. Students at these colleges experience high rates of unemployment and lower incomes. 

For-profit colleges often charge higher tuition than their public counterparts or private, nonprofit colleges. They receive a high and growing percentage of their income from public funds.

Because grants are not enough to pay the high tuition, 96 percent of students at for-profit colleges also take out loans, a far higher percentage than at public or nonprofit colleges. Students at for-profit colleges usually take out larger loans, often from college-sponsored lending institutions charging higher interest rates (PDF).

Federal law says that for-profit colleges can get a maximum of 90 percent of their income from federal loans and grants. Last year 27 colleges in the U.S. violated this rule.

That’s not all. Veterans’ benefits are not included as part of the 90 percent rule. Military veterans can receive up to $20,235.02 per year for tuition and fees at a private school. This has made veterans a prime target for recruiters at for-profit colleges.

Earlier this month The Minneapolis Star Tribune ran a feature story about Stephen Chan. A Marine Corps veteran, he signed up for a criminal justice program at the Minnesota College of Business, planning for a career in law enforcement. He did better than most for-profit college students by completing all required coursework and graduating on time. Then his dreams fell apart when he found out that his degree doesn’t meet the requirements for employment as a police officer in Minnesota.

Last week the Department of Defense put the Minnesota College of Business and its national parent, Globe University, on probation. That means no new students may use veteran’s benefits to enroll in the school. But much more needs to be done to stop unethical colleges from preying on veterans and low-income students.

The Minnesota College of Business is not the only culprit. In 2010, PBS published a similar story about students in Corinthian Colleges’ nursing program. The students paid $30,000 for a 12-month program. The substandard training they received included a pediatrics rotation in a daycare center and a psychiatric rotation that consisted of a visit to a museum of Scientology. Unsurprisingly, the students could not get jobs after graduation.

As with those students at Corinthian Colleges, one of the largest chains of for-profit colleges, Chan ended up deep in debt and with a useless degree. More than a dozen state attorneys general are investigating and prosecuting for-profit colleges for their abuses. That’s essential but still not enough. State and federal governments need to tighten oversight of these colleges and to prosecute for false advertising. When colleges say they are training students for specific jobs — such as police officer or nurse — they must be required to provide the coursework needed to qualify for those positions. Some requirement for reporting costs, graduation rates and job placement rates would also help prospective students evaluate their options.

The issue of student debt is not limited to for-profit colleges, of course. State budget cuts for higher education funding have left many public university students and their families with massive debt burdens. From 2007 to 2014, student loan debt doubled, with the total topping $1 trillion, according to U.S. News & World Report.

The prevalence of predatory for-profit colleges in the United States and their ability to secure government funding captures a fundamental problem with American higher education, especially in light of Germany’s new policy. If the American dream depends on education, more and more Americans are being priced out of the dream market, while more and more Europeans are able to pursue that dream.

If we believe in education’s opening doors to opportunities, we need to make public higher education affordable and accessible to all. That means reversing 25 years of declining state support for higher education and considering the German model of high quality higher education, available free of charge to all who can do the work. If the U.S. government is committed to financing the pursuit of college degrees, then it should also take the necessary steps to rein in their cost and ensure their value.