Stopping student loan predators
We’ve seen this movie before — an industry crops up, matching aggressive sales tactics with lofty promises to rope in a public hungry for a leg up. The sales promises are hollow, families are saddled with crushing debt and taxpayers take the hit.
This is the age-old ploy of predators who helped tank our housing market, leaving countless borrowers buried in debt and communities reeling. We wish we had stopped that financial shell game before it took hold.
But we have a chance to make sure we aren’t burned again — this time by the emerging for-profit schools targeting our most vulnerable students, honing in on gateway cities and adding to the growing burden of student debt.
Taking on these schools is a moral issue. Access to education is how we expand opportunity, but only if the promise is real. My student loans were a heavy burden, but I got an education that enabled me to pay them off and build a career. Unaffordable loans from predatory schools are leaving too many broke, deep in debt and without options.
Because students can take out federal loans for college, many for-profit education companies are focused more on enrolling students than on delivering an affordable, high-quality education. A US Senate committee reported that for-profit colleges took in $32 billion in taxpayer-backed loans and spent nearly 25 percent on marketing and recruiting. By comparison, nonprofit colleges spend less than 1 percent of revenues on those tools.
Too often, recruitment is the only thing these for-profit schools do well. Dropout rates often top 50 percent, leaving students with a pile of debt and nothing to show for it. Despite enrolling only 13 percent of borrowers, for-profit colleges are responsible for nearly half of all student loan defaults.
This is the definition of a public policy disaster.
Here,in Massachusetts, we have taken action. While I led the Attorney General’s Public Protection Bureau, we sued a for-profit school that aggressively recruited students with false promises of high earnings and misrepresented its courses and facilities. They eventually agreed to repay student borrowers $425,000.
California Attorney General Kamala Harris sued the for-profit operating the Everest Institute in Chelsea for using deceptive advertising to target vulnerable populations, including low-income, single mothers and returning combat veterans..
But that’s just a start. We must enact Attorney General Martha’s Coakley’s proposed regulations to explicitly prohibit egregious sales tactics and expand public awareness initiatives to help more people avoid predatory programs. I will act aggressively to take on recruiters who lie to prospective students when they think no one is watching.
I will also partner with legislators. Under state law, students are entitled to partial tuition refunds if they withdraw from trade schools. We should extend those protections to those scammed by for-profit schools. We should also amend the state’s education grant and loan programs to prohibit funds from being wasted at schools that have a track record of failing students.
We need to advocate for changes to the federal student loan programs that will better protect students and close down predatory schools that set up shop in our communities.
That will help people in Massachusetts in a meaningful way, people like Vanessa German, a Dorchester mother of three, who knows the risks all too well.
To build a career and support a newborn child, Vanessa enrolled in an evening hairdressing program in Malden. When the commute and hours became too difficult, the school forced her to drop out, only four training hours short of her license. A few years later, she tried to re-enroll but the school told her she would have to start from the beginning. She was already $12,000 in debt and the school wanted her to take out more loans to restart the program.
Instead of a leg up, Vanessa and her family fell further behind thanks to predators among us.
There’s too much at stake not to act. We must do everything we can to ensure Massachusetts remains a higher education leader in which every resident has the opportunity to succeed.
Maura Healey is a Democratic candidate for attorney general.