The for-profit schools bubble

3 November, 2015 at 09:49 | Posted in Education & School | Leave a comment

debtFor-profit colleges have capitalized on our desire to make education more inclusive. Students at for-profit schools are able to borrow huge sums of money because the government does not take creditworthiness into account when making most student loans. The goal is noble: everyone should be able to go to college. The result, though, is that too many people end up with debts they cannot repay. Seen this way, the students at for-profit schools look a lot like the homeowners during the housing bubble. In both cases, powerful ideological forces pushed people to borrow … In both cases, credit was cheap and easy to come by. And in both cases the people pushing the loans (mortgage brokers and for-profit schools) didn’t have to worry about whether those loans were reasonable, since they got paid regardless …

If we really want more people to go to college we should put more money into community colleges and public universities, which have been starved of funding in recent years. We should also rethink our assumption that college is always the right answer, regardless of cost. Politicians love to invoke education as the solution to our economic ills. But they’re often papering over the fact that our economy just isn’t creating enough good jobs for ordinary Americans. The notion that college will transform your job prospects is, in many cases, an illusion, and for a while for-profit schools turned it into a very lucrative one.

James Surowiecki

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