Report from Center for Responsible Lending exposes hardships faced by students of for-profit colleges that exploit a weak regulatory system
DURHAM, N.C. -- For-profit colleges in Florida prey on economically vulnerable students, enticing them to enroll in poor quality programs with promises of good-paying jobs upon completion, but little real opportunity for career advancement. A new report by Center for Responsible Lending (CRL), based on focus groups and surveys of former students, demonstrates that for-profit colleges target vulnerable communities through intense advertising and personalized recruiting, enticing them to borrow large amounts of money to attend. Students then face disappointing employment outcomes and subsequent lack of repayment progress toward loans, compounding high initial debt levels. Outcomes were especially bad for female, middle-aged, and African-American borrowers.
The report, Debt and Disillusionment: Stories of Former For-profit College Students as Shared in Florida Focus Groups, unveils the true nature of for-profit colleges through the stories of students who experienced it firsthand and are still struggling to make ends meet because of it. Data is primarily derived from a series of focus groups, totaling 75 individuals, who attended for-profit colleges within the last ten years.
"These stories from former students paint a picture of for-profit colleges that have little regard for providing quality education and little concern about the burden of debt they leave with their students, many of whom struggle to find an acceptable job in the field for which they have prepared,” said CRL Senior Researcher Robin Howarth, who co-authored the report. “These institutions are exploiting the ambitions of students, scamming them into unmanageable loans, and leaving them with nothing but inescapable debt. Their business model is a cynical exploitation of the hope that investing one’s money, sweat, and time in learning will allow one to achieve a better economic future."
Key findings of the report include the following:
- The focus group participants came from difficult circumstances which influenced the way they thought about higher education options. Despite the necessity to borrow large amounts of money to attend Florida for-profit colleges, participants were persuaded to enroll in response to intense advertising and personal recruiting, quick, frictionless enrollment, flexible scheduling, and the lack of entrance requirements.
- The focus group participants often found the educational experience at for-profit colleges to be superficial and frustrating. A number of participants dropped out when they determined that the amount of debt and time they were investing was “not worth it,” ran out of financial aid, experienced a life emergency, or discovered that promises of gainful employment upon graduation were unlikely to materialize.
- The impact of heavy student debt burdens was both psychological and material. Participants had not been able to pursue goals such as homeownership, saving for children’s education and/or their own retirement. Extreme stress and anxiety over debt repayment was common.
Florida is fertile ground for studying for-profit education given the industry’s outsized presence there, as well as the state’s weak regulatory environment. For-profit colleges have been shown to target their recruiting to people who qualify for substantial Title IV federal grant and loan aid. Though the report was conducted in one state, the findings have implications for other states.
Among the comments of participants, who all took out loans to finance their educations:
- I believed that advertising. And I was one of the victims. Bad choice.
- They bugged the crap out of me--so persistent that there is no way I wouldn’t have started.
- I feel like I was naïve but mostly I was misinformed -- being the first one that went to college and experiencing it.
- They just made it sound so easy and they just made it sound so tempting that you just couldn’t say no. The reality is, of course, I’ll be paying on these the rest of my life.
The report also comes after the high-profile resignation earlier this week of Seth Frotman, the Consumer Financial Protection Bureau’s student loan ombudsman. In his resignation letter, Frotman cited efforts by CFPB Acting Director Mick Mulvaney and the Trump administration to undermine enforcement actions and oversight of for-profit colleges, saying the agency has “turned its back on young people and their financial futures.”
There is a continuing crisis in for-profit education, especially for vulnerable populations. CRL recommends policymakers and regulators recognize the harms described by students who have taken out loans to enroll in for-profit colleges and institute greater oversight of for-profit colleges in Florida and around the country.
For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Ricardo Quinto at ricardo.quinto@responsiblelending.org.