Corinthian College: Preying on Students’ Dreams

Education is supposed to be a ticket to a better future. Every day, people see ads from for-profit colleges offering programs that promise to lead to a career as a dental assistant, respiratory therapist, auto mechanic, and more. Seeking a better life for themselves and their families, many people enroll in these schools – only to find out the graduation and job placement rates were greatly overstated – and now they are burdened with expensive loans.

Instead of building a career, many students are deeper in debt, and still without a job.

One of the strongest examples of these tactics is also one of the largest for-profit universities in the country, Corinthian Colleges, based in Orange County, California. After years of facing down lawsuits over the quality of its courses and inflated employment rates for recent graduates, Corinthian Colleges was shut down by the U.S. Department of Education at the end of June.

Many of the schools operated by Corinthian have familiar names: Bryman School, Everest, Heald College and many other throughout the country.

In addition to the lawsuits, Corinthian students also have one of the highest loan-default rates in the country. While Corinthian Is one of the most notorious, they are not unique in the for-profit college industry.

Students graduating from for-profit schools leave with more debt, yet make less money and are less likely to have a job than students at non-profit and public institutions. Most don’t even make it to graduation – the average time spent enrolled at a for-profit school is just 4 months.

Yet, 96 percent of for-profit college students take out loans to finance their education, compared to about half of those attending a public or non-profit college. Dropping out leaves many students even worse off than before – with no degree, but stuck with loans to pay off.

For-profit college students are only 13 percent of all students enrolled in higher education, however, they make up half of student loan defaults.

For-profit colleges also heavily recruit exactly the people who perhaps wouldn’t pursue higher education, particularly low-income, minority, and first-generation students. Internal documents from Corinthian Colleges described their target students as “isolated,” “impatient,” individuals with “low self-esteem,” who have “few people in their lives who care about them” and who are “stuck” and “unable to see and plan well for future.”

When enrolling, students are regularly misled by inaccurately high employment and graduation rates. For-profits also charge a lot more than similar public or community colleges for the same programs. This lets the college profit off both the loans the student takes out and the huge amounts of federal aid available for low-income students. Again, even though they only enroll 13 percent of students, they’re receiving 32 percent of federal Pell grants for low-income students.

Lawsuits accusing for-profit colleges of lies and fraud pop up over and over again, but almost every time the companies manage to settle out of court. This allows them to claim that legally, they haven’t been found in the wrong, and they can keep raking in money from students and taxpayers. Corinthian Colleges was sued in 2007 by the State of California, but settled out of court – and continued with the exact same illegal, misleading tactics for another seven years.

Students nationwide are struggling with the ever-increasing cost of college at public and private nonprofit schools. The financial aid that’s currently being funneled from the federal government to the pockets of CEOs and shareholders could instead be spent on supporting students in programs that provide a decent education.

The Obama administration is working to prevent colleges that aren’t producing good outcomes for their students from receiving federal aid money, something the for-profit college industry is fighting aggressively – lobbying against new, improved regulation.

Stronger regulations on which programs get federal aid money would be a better use of scarce financial aid dollars and would produce better outcomes for students and communities. Let’s hope stronger regulations go into effect soon – before more students get swindled.