Sen. Dick Durbin (D-IL)said in a Senate floor speechlast month that for-profit colleges, responsible for some of the worst abuses in the student loan industry, take so many government subsidies that they might as well be considered government employees:
The for-profit college industry is disgraceful.Remember three numbers: 12 percent of all the students after high school go to for-profit schools; 25 percent of all Federal aid to education goes to for-profit schools; and47 percent of all student loan defaults are of the students at for-profit schools....
We have created this circumstance that costs $32 billion a year, money that we send to these for-profit colleges.If they were a separate Federal agency, for-profit colleges would be the ninth largest Federal agency in Washington, DC.They receive subsidies from 85 to 95 percent of all of their expenses directly from the Federal Government.Calling their employees Federal employees is not a stretch.They are all paid for by the Federal Government as are their advertising and marketing expenses.
Durbin introduced the Fairness for Struggling Students Act, which would move the country back to pre-2005 standards and allow private student loans to be discharged in bankruptcy like any other loan.Federal student loans have been ineligible for bankruptcy discharge since the 1970s, but only since 2005 have private loans had the same statusand, Durbin said, private lenders and for-profit colleges are offering students the rawest deals.
"Filing for bankruptcy is never a walk in the park, and it should be the last resort for anyone, including student borrowers," Durbin said. "But many private student loans have outrageous terms forced on kidsor just barely beyond being kidsand their families."
He spoke of one student, a mother of three, who has $75,000 in for-profit college debt and is struggling to pay private loans that have an 11 percent interest rate (compared to her 4 percent federal loan interest rates). Another student's $80,000 in debtfrom a for-profit college she dropped out ofballooned to $103,000 after she couldn't find a job, and now she has no hope of borrowing further to get a car or go back to school."
"Charles Dickens would have a ball" with the current debtors' prison-like standards for private student loan bankruptcy protection said Durbin. Right now, aborrower has to show "certainty of hopelessness," or prove that the future is likely to be as bad as the present, to qualify for an "undue hardship" exception to discharge student loans. Since the borrower must prove a negative, her only "certainty" is the hopelessness of her case.
Eight U.S. Senators, including Durbin, recentlysigned a lettercalling for the U.S. Department of Education to investigate for-profit colleges that manipulate their default rates.
Pressure is mounting against for-profit colleges and out-of-control student debt, which has reached $1 trillion in the United States. The Consumer Financial Protection Bureau has just releasedproceduresfor examining student lenders, and is rolling outtools for students and parentsto become better informed about loan options.
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What do you think? Personally it seems like there's 0 positives in schools like ITT Tech, DeVry, and the University of Phoenix so I wouldn't be against the whole system being shut down from government subsidies.
Aljosa23
Government is a corporation. It is a business.
Business loves to allow other businesses to fail. The school system sells a product. The Product is the illusion of money, power, and fame. They take the child-rearing principle (education), and force mind control and a religion (why you should get a degree, by dogma), to fool people into a nasty ruse where they will be exploited.
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