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Some Colleges Trick Students

Date: April 1, 2014      Publication: Bottom Line Personal      Source:  Maura Dundon, JD, Center for Responsible Lending      Print:

Beware of deceptive promises, high-­pressure sales tactics and expensive student loans if you or someone in your family is thinking of attending certain for-profit colleges. Overall, there are an estimated 3,000 for-profit colleges across the US—their convenient class hours and easy admissions policies make them attractive to working adults, laid-off workers who want to beef up their educations and young people who hope to get into vocational careers.

But some of these colleges charge about six times as much for tuition as comparable public colleges for a two-year degree and have very high dropout rates because of the expense and student dissatisfaction with the quality of programs. Half of the students enrolled at 30 of the largest for-profit schools left within four months without getting a degree or diploma.

The federal Consumer Financial Protection Bureau began an investigation last fall into alleged fraud at two leading for-profit college groups—Corinthian Colleges and ITT Educational Services—in response to hundreds of complaints. The bureau recently sued ITT Educational, ­accusing it of predatory lending. Meanwhile, attorneys general in 12 states are investigating Education Management Corporation. This doesn’t mean that all for-profit colleges have problems. But investigators warn about the ­possibility of…

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Predatory loans: Some for-profit colleges make it very easy to borrow tuition money, including no interest payments while students still are in school. But the interest rates and fees on some loans can total as much as 20%, and the terms often are unclear.

Promises of a better job after graduation: Some schools routinely inflate their job-placement rates and overstate relationships with big employers to encourage prospective students to enroll. Some students find that their degrees do not qualify them to work in the professions they were supposed to prepare them for. Oftentimes, a nearby community college may offer you the same or a better degree for a fraction of the cost.

Source: Maura Dundon, JD, senior policy counsel at the Center for Responsible Lending, Washington, DC. Formerly, she was an attorney in the enforcement division of the Consumer Financial Protection Bureau. ResponsibleLending.org