For Profit College and Student Loan News

The end may be near for the organization that issues accreditations to for-profit universities. Department of Education staff members who have been investigating the Accrediting Council for Independent Colleges and Schools (ACICS) have recommended cutting ACICS' federal recognition. 

“The staff recommendation is to withdraw recognition, which would mean the agency could not remedy its compliance issues,” the staff report said, charging that the ACICS had ignored warning flags at Corinthian Colleges, allowing billions of dollars of federal aid to flow to the now-defunct schools.

The report follows calls for action from consumer advocates, educators, and state attorneys general, including California's Kamala Harris who earlier this month said the accrediting group's actions hurt thousands of students. 

"The predatory scheme devised by executives at Corinthian Colleges, Inc. was unconscionable. And despite enforcement actions by the California Department of Justice and the federal government against Corinthian, ACICS continued to accredit Corinthian, hurting thousands of students in the process,” Harris said. “Students relied on Corinthian’s accreditation status, believing they were obtaining a high quality-education with real job prospects."

The staff report found “extensive and pervasive deficiencies” at ACICS and recommended to the National Advisory Committee on Institutional Quality and Integrity (NACIQI) that it terminate the organization’s federal recognition.

But the wheels grind slowly in federal agencies, and final action is still likely to be at least 18 months away, a DOE official said. A federal advisory body will discuss the staff report next week and additional reviews will follow.

What happens to students?

ACICS currently accredits 243 institutions, most of them for-profit schools. If the Education Department finally denies recognition to ACICS, those schools will be unaccredited and ineligible for federal aid.

In a blog posting, Matt Lehrich, communications director at DOE, said students at ACICS-accredited schools shouldn't panic.

"The chain of events that plays out next will take – at minimum – more than 18 months. That means that many of the students who already have started at one of these schools will be able to complete their certificates or degrees before there is a chance of anything changing," Lehrich wrote.

"Generally speaking, if you’re near the end of your program or you’re preparing to transfer to another college or university, this news probably won’t interrupt your program."

Lehrich has other advice for students in his blog posting, which you can read here. 

California Attorney General Kamala Harris thinks the largest national accrediting agency for degree-granting institutions should lose its accreditation.

Harris has written the U.S. Department of Education, urging it to revoke federal recognition of the Accrediting Council for Independent Colleges and Schools (ACICS), which among its other accomplishments accedited the now-defunct Corinthian Colleges, Inc., which left tens of thousands of students with useless degrees and millions of dollars in debts.

“The predatory scheme devised by executives at Corinthian Colleges, Inc. was unconscionable. And despite enforcement actions by the California Department of Justice and the federal government against Corinthian, ACICS continued to accredit Corinthian, hurting thousands of students in the process,” Harris said. “Students relied on Corinthian’s accreditation status, believing they were obtaining a high quality-education with real job prospects."

ACICS boasts of accrediting more colleges than any other agency but a quick perusal of its roster finds that most of them are small vocational training institutions, offering certificates and associate degrees in such fields as dental assistance and office management. 

Harris joins 13 other state AGs who are opposing the renewal of ACICS as an accreditation agency. Harris and 10 other AGs are also calling for tougher standards for college recruiters on military bases.

Students choose a for-profit college for a lot of different reasons.

For-profit schools, like DeVry, University of Phoenix, and Strayer, were among the first to offer online courses, ideally suited to non-traditional students who wanted to pursue a degree while already in the workforce.

By and large, for-profit colleges have open enrollment, meaning almost anyone with a high school diploma who applies gets in. Traditional colleges over the last two decades have erected barriers, selecting only the students they want.

Finally, for-profit schools advertise, meaning more prospective students are aware of them and might be more likely to choose a for-profit school without looking into the alternatives.

Unfortuately, for-profit schools can be pretty expensive – and in the recent case of Corinthian College – accreditation has been an issue. Many students have left for-profit schools, with and without degrees, carrying a mountain of debt.

In recent years, for-profit schools have gotten some stiff competition from traditional colleges and universities, which are able to provide a quality, online education at much more affordable prices.

Most of them don't advertise, so here are five that deserve a closer look. If they are state supported schools, they usually charge more for out-of-state students. We selected schools that either don't charge extra, or the difference isn't that great.

New Mexico Highlands University

The school, with a campus in Las Vegas, New Mexico., was established in 1893. It offers degree programs in arts and sciences, business, education, and social work.

Tuition in its online programs costs $200 per credit hour for New Mexico residents and $314 for out of state students.

Murray State University

Murray State was founded in the early 20th century in Murray, Ky. It offers a large number of both graduate and undergraduate degree programs that are accessible online.

The in-state tuition rate is $317 a credit hour. Murray State has reciprocal arrangements with some other states in the region for reduced out of state tuition. For example, the cost is $383.50 for Alabama residents, $387 for Ohio residents, $335 for Tennessee residents, and $367 for residents of Missouri.

Columbia College

Columbia College is a private school, founded in 1851, with its campus in Columbia, Missouri. Since 2000, it has poured resources into its online degree programs and charges the same for in-state and out-of-state students – $275 per credit hour.

Bellevue University

Located in Bellevue, Nebraska, Bellevue University is another private school where the tuition is the same for everyone, regardless of where the student lives. It has ranked highly in the U.S. News annual college edition and offers 47 online undergraduate degree programs at a cost of $275 per credit hour.

Middle Georgia State University

Part of the University of Georgia system, Middle Georgia is located in Macon and offers a wide range of graduate and undergraduate programs online.

Students pursing an online degree pay a tuition of $169 per credit hour.

Since state supported colleges are usually cheaper for in-state residents, looks for an inexpensive education alternative where you live. Check out options in your state here.

Students at 91 former Corinthian College campuses in 24 states will have an clearer path to loan forgiveness, U.S. Education Secretary John B. King Jr. said today.

The action comes just one day after Corinthian was hit with a $1.1 billion judgment that may help provide additional relief to struggling ex-students.

The 91 campuses were identified as having the largest groups of borrowers eligible for loan relief by investigators from the Department of Education and state attorneys general.

The program is available to students who attended Everest and WyoTech colleges in these states: 

• California,
• Colorado,
• Florida,  
• Georgia, 
• Illinois,
• Indiana, 
• Maryland, 
• Michigan,
• Minnesota,
• Missouri, 
• Nevada,
• Ohio, 
• Oregon, 
• Pennsylvania, 
• Massachusetts,  
• New Jersey, 
• New York, 
• Texas,
• Utah, 
• Virginia, 
• Washington,
• West Virginia,  
• Wisconsin, and
• Wyoming.

If that includes you, you can apply for debt relief through a form posted here. The Department is reaching out to those students through postal mail, email, partner organizations and other means.

The DOE has approved loan discharges for more than 8,800 former Corinthian students nationwide, totaling more than $130 million.

"With a straw ..."

The DOE's efforts are not a raging success in the eyes of critics, however. One non-profit group, The Institute for College Access and Success (TICAS) said the debt relief program so far has been "like draining a swimming pool with a straw."

"Despite the Department’s outreach to date, few students are aware that debt relief is available.  Only a fraction of eligible Corinthian students have applied and less than three percent have been approved (with most approved because their school closed, not based on fraud), TICAS vice president Pauline Abernathy said in a statement.  

"It’s like draining a swimming pool with a straw -- even a streamlined application is an unnecessary barrier to the relief these students deserve because the Department has already determined that their school committed fraud," Abernathy said. "We urge the Department to provide automatic discharges to all groups of students covered by findings of fraud, rather than requiring them to submit individual applications."  

Placement rates

King made the announcement in Boston with Massachusetts Attorney General Maura Healey, who said her investigation found that Corinthian's two Everest Institute campuses in Massachusetts misrepresented their job placement rates.

"When Americans invest their time, money and effort to gain new skills, they have a right to expect they'll get an education that leads to a better life for them and their families. Corinthian was more worried about profits than about students' lives," King said.

Last summer, the DOE created a similar form for students at 12 Heald College campuses after fining the institution $30 million for misrepresenting job placement rates to current and prospective students. In November 2015, the department published additional findings of misrepresentation at 20 Everest and WyoTech campuses in California and Florida.

Students in other states may be eligible for debt relief as the investigations continue.

Republican presidential candidate Donald Trump may have won big on Super Tuesday primary night, but earlier in the day he lost in New York's Appellate Court.

The justices declined Trump's request to dismiss fraud charges brought by New York Attorney General Eric Schneiderman against Trump University.

In his complaint, Scheiderman maintains Trump and business partner Michael Sexton were operating an unlicensed educational institution since 2005.

“By letter dated May 27, 2005, the New York State Department of Education (SED) notified Donald Trump individually, Sexton, and Trump University that they were violating the New York Education Law by using the word "University" when it was not actually chartered as one,” the justices wrote in their decision. “Likewise, SED notified these respondents that Trump University was also violating the Education law because it lacked a license to offer student instruction or training in New York State. SED stated, however, that Trump University would not be subject to the license requirement if it had no physical presence in New York State, moved the business organization outside of New York, and ceased running live programs in the State. In June 2005, Sexton informed SED that Trump University would merge its operation into a new Delaware LLC, and would indeed cease holding live programming in New York State.”

Never happened

But the justices agreed with Schneiderman that never happened. They also dismissed Trump's claim that the statute of limitations had expired.

“We hold that the Attorney General is, in fact, authorized to bring a cause of action for fraud under Executive Law § 63(12),” the court ruled.

In a statement, Schneiderman said the court's ruling was a “clear victory” to hold Trump and Trump University accountable for defrauding students.

“The state Supreme Court had already granted our request for summary judgment determining that Trump and his University are liable for operating illegally in New York as an unlicensed educational institution,” Schneiderman said. “Today’s decision means our entire fraud case can move forward, and confirms that the case is subject to a six year statute of limitations.”

2013 lawsuit

Schneiderman sued Trump for $40 million in 2013, claiming Trump University deceived its students and failed to deliver the apprenticeships it promised. In addition to the attorney general's action, several students have also filed a class action suit against Trump University.

It has even become an issue in the presidential campaign, with Trump rival Sen. Marco Rubio (D-FL) raising it during a recent debate.

"There are people who borrowed $36,000 to go to Trump University, and they're suing now – $36,000 to go to a university that's a fake school," Rubio charged. "And you know what they got? They got to take a picture with a cardboard cutout of Donald Trump."

Meanwhile, Schneiderman says he's pleased to be moving ahead with the case.

“We look forward to demonstrating in a court of law that Donald Trump and his sham for-profit college defrauded more than 5,000 consumers out of millions of dollars,” he said.

The Republican presidential candidates hammered fellow candidate and front-runner Donald Trump last week over Trump University, a for-profit school he set up to provide real estate training.

"There are people who borrowed $36,000 to go to Trump University, and they're suing now — $36,000 to go to a university that's a fake school," said Sen. Marco Rubio (R-FL), during last week's debate. "And you know what they got? They got to take a picture with a cardboard cutout of Donald Trump."

Trump University is the defendant in a class action lawsuit, originally filed in 2010, that claims, among other things, that students were promised a one-year apprenticeship, but it ended after they paid for a three-day seminar. Attendees who were promised a personal photo with Trump received only the chance to take a photo with a cardboard cutout; many of the instructors had little or no academic qualifications.

The Republican presidential campaign has actually focused renewed attention on for-profit universities and their role in mounting student loan debt.

While Trump University was more of an industry-specific training institute rather than university, many students who have enrolled in for-profit colleges have lived to regret it, especially those who borrowed large sums to attend now-defunct Corinthian College.

California Attorney General Kamala Harris is calling on the U.S. Department of Education (ED) to do more to protect students defrauded by Corinthian Colleges and other for-profit schools.

New regulations

The ED recently held the second of three negotiated rulemaking sessions to determine how student borrowers can get relief from federal student loans when these loans were used at a school engaging in decietful and abusive policies. Harris' office was one of two representatives for state attorneys general taking part.

“Too many students defrauded by for-profit colleges remain buried under mountains of student debt,” Harris said in a release. “I call on the Department of Education to revise their proposed regulations to ensure meaningful debt relief is available to any student misled by a predatory college."

Harris's office worked with federal investigators when looking into Corinthian College practices. The investigation found job placement rates were widely misrepresented to enrolled and prospective Corinthian students.

As a result, thousands of students who attended Corinthian have asked the ED to discharge their federal loans because they were deceived by Corinthian’s inflated job placement rates.

Attention on other for-profit schools

Harris maintains that Corinthian was not the only for-profit school engaging in this kind of activity. She says other for-profit institutions have used similar dishonest tactics against their students, and it is expected that many more students will need to utilize this defense.

Harris says another problem lies in vague federal regulations that make it hard to determine exactly who is eligible to have their student loans discharged. She says she would like to see new regulations define the criteria more clearly.

She's calling for a number of changes in the new draft of ED rules, including a broadening of the categories of school misconduct that would give rise to a defense to repayment.

The problems students have had with some for-profit school are well documented. Remember Corinthian College?

You don't have to have a long memory. In September 2014 the U.S. government sued the for-profit college for what it called an illegal predatory lending scheme.

The Consumer Financial Protection Bureau (CFPB) charged that  Corinthian lured tens of thousands of students to take out private loans to cover expensive tuition costs by advertising bogus job prospects and career services. To make matters worse, CFPB said Corinthian then used illegal debt collection tactics to strong-arm students into paying back those loans while still in school.

Before it declared bankruptcy and closed less than a year later, thousands of students had borrowed huge sums to attend, with nothing to show for it.

Proactive move

Now, the Department of Education wants to make sure potential train wrecks like Corinthian cross its radar screen before consumers have been harmed. It has announced creation of a Student Aid Enforcement Unit to respond more quickly and efficiently at the first suggestions of trouble.

"When Americans invest their time, money and effort to gain new skills, they have a right to expect they'll actually get an education that leads to a better life for them and their families," Acting Secretary of Education John B. King Jr. said in a release. "When that doesn't happen we all pay the price. So let me be clear: schools looking to cheat students and taxpayers will be held accountable."

To head up the unit, Robert Kaye is coming over from the Federal Trade Commission (FTC), where he was a top enforcement attorney.

Four divisions

The new unit will have four divisions that will perform special roles. The Investigations Group will be the early warning system, on the lookout for potential misconduct or high-risk activity among higher education institutions so that it can protect federal funding.

The Borrower Defense Group will provide legal support, It will analyze claims and make injury determinations.

The Administrative Actions And Appeals Service Group will impose administrative actions, such as suspending an institution and levying a fine. It will also try to resolve appeals by program participants.

The Clery Group will make sure for-profit colleges comply with the Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act, requiring colleges and universities participating in federal financial aid programs to disclose campus crime statistics and security information.

DeVry University is the latest for-profit college to run afoul of regulators. The Federal Trade Commission has sued DeVry, alleging that its advertisements deceived consumers about the likelihood that students would find jobs in their fields of study and would earn more than those graduating with bachelor's degrees from other colleges or universities. DeVry said it will "vigorously fight" the complaint.

“Millions of Americans look to higher education for training that will lead to meaningful employment and good pay,” said FTC Chairwoman Edith Ramirez. “Educational institutions like DeVry owe prospective students the truth about their graduates’ success finding employment in their field of study and the income they can earn.” 

In its complaint, the FTC says DeVry claims that 90% of graduates landed jobs in their field within six months -- a claim the feds say is deceptive. The suit also alleges DeVry's claim that its graduates had 15% higher average incomes one year after graduation than the graduates of all other colleges or universities was deceptive.

Melanie of Suamico, Wisconsin, recently recounted her experience with DeVry in a ConsumerAffairs review. 

"When I graduated in 2010 with a computer bachelor's degree I was excited to get my job and start my career. Well I was fooled," she said. "I got no help from the school (even though I asked for help), I put in hundreds of resumes/apps on my own and got nothing. It is almost like the companies look at the degree that says DeVry on it and they run the opposite direction. I was thinking that I was doing something wrong, but the only thing I did wrong was trust that DeVry would help me get a job."

DeVry says it will "vigorously fight" the charges. "DeVry University measured the employment and earnings results of its graduates in a sound, rational and transparent basis," the company said in a prepared statement. 

"DeVry Group believes that the FTC’s complaint – filed 40 years after DeVry University began publishing accurate graduate employment statistics – is without a valid legal basis. In addition, the FTC’s complaint contains anecdotal examples that exaggerate the allegations but do not prove them," DeVry said. "DeVry University measures the employment and earnings results of its graduates on a sound, rational and transparent basis, and has published these results in a consistent manner over the years to provide students meaningful information." 

Hundreds of offers

The FTC's suit notes that a DeVry television ad showed people in business attire hanging hundreds of “offer letters” on a wall, with a voiceover that said all of the offer letters seen came from just the last year – followed by the 90% claim. The complaint alleges that DeVry counted numerous graduates as working “in their field” when they were not.

That might sound familiar to Gary of Wappingers Falls, N.Y., who said that despite getting his degree and going $62,000 in debt, he has been unable to find a job.

"When I joined the college they stated that they had a 92% placement for graduates within 6 months in their field of study," he said. "If I could trade my worthless degree for satisfaction of my student debts, I would do it in heartbeat."

"The college was no help in setting me up with any interviews, they only looked at my resume and made suggestions. I have been on my own since I graduated and have had no luck," Gary added. "I currently work as a courier to pay my bills, which I could have done without a college degree."

DOE action

In a related action, the U.S. Department of Education is also taking action against DeVry for its marketing practices.  It is providing notice to DeVry that it will be requiring the institution both to stop certain advertising regarding the post-graduation employment outcomes of its students and to take additional steps to ensure that DeVry can substantiate the truthfulness of its post-graduation employment outcomes.

“As required by the law and expected by the public, institutions need to be accurate in their marketing and recruiting to prospective students. And we confirm this truthfulness of advertisements through the backup information schools provide upon request,” said Under Secretary of Education Ted Mitchell.  “The Department and the FTC’s related announcements today are the result of much collaboration and cooperation. We are grateful to our partners at the FTC for their hard work and dedication on this matter.”

More former Corinthian College students may be eligible for debt relief following an investigation by the U.S. Department of Education and California Attorney General Kamala Harris.

The investigation concluded that Corinthian's Wyotech and Everest programs misrepresented their placement rates, leading prospective students to overestimate their chances of getting lucrative jobs, encouraging them to take on large student debts that many are now unable to repay.

The findings from this investigation apply to Everest and Wyotech locations in California, as well as Everest University online programs based in Florida, and add to the existing findings concerning programs at Heald College, the agencies said in a joint news release.

The findings apply to Corinthian campuses that served approximately 85,000 Wyotech and Everest students. Earlier this year, the Education Department created an expedited debt relief process for Heald students who attended programs with misstated placement rates. The new findings will be referred to the administrator of the debt relief program.

Former Corinthian students can learn more about debt relief here. 

"Corinthian preyed on vulnerable students who are now buried under mountains of student debt," said Attorney General Harris. "Today's joint investigation findings will expand the pool of Corinthian students eligible for streamlined student loan relief options, helping them rebuild their lives and pursue a brighter future. I thank the Department of Education for joining my office to keep Corinthian accountable for their actions and providing debt relief to students who were misled."

The Department of Justice announced today that they have finally reached a settlement with Education Management Corporation (EDMC) for charges of illegal recruiting, consumer fraud, and other violations. The for-profit education company has agreed to pay $95.5 million to settle these allegations.

The case against EDMC actually stretches back all the way to 2007 after two Education Management employees complained about the company's deceptive recruiting practices. One employee filed charges in federal court through use of the False Claims Act– a piece of legislation that allows a citizen to sue if they know that fraud has been committed against the government; in essence, the citizen would be suing in the government's name. By 2011, the Department of Justice, four states, and the second employee would join the case.

Unfair compensation and fraud

The primary charge that EDMC faced was their alleged practice of paying admissions personnel based on the number of students that they were able to enroll in the school, which violates the Higher Education Act's (HEA) Incentive Compensation Ban. Employees who had good enrollment numbers were able to reap bonuses like all-expense paid vacations with loved ones to destinations like Cancun, Puerto Vallarta, Mexico, and Las Vegas.

Additionally, the company faced numerous charges of consumer fraud involving deceptive and misleading recruiting practices. The company is charged with using “hyperaggressive boiler room tactics” to recruit students and collect tuition money. It is estimated that nearly $11 billion was collected by the company between July of 2003 and June of 2011 using these tactics.

“Companies cannot enrich their corporate coffers at the expense of students seeking a quality education, or on the backs of taxpayers who are funding our critical financial aid programs,” said U.S. Attorney David J. Hickton. “Today's global settlement sends an unmistakable message to all for-profit education companies: the United States will aggressively ferret out fraud and protect innocent students and taxpayer dollars from this kind of egregious abuse.”

Historic resolution

The $95.5 million settlement was reached after examining EDMC's ability to pay and financial condition, which has declined as of late. However, the New York Times reports that if the case had gone to trial then the company could have been faced with paying a billion-dollar verdict.

Attorneys involved with the case believe, however, that justice has been carried out against EDMC and that it sets a good example. “This historic resolution exemplifies the Justice Department's deep commitment to protecting precious public resources; to defending American consumers; and to standing up for those who are vulnerable to mistreatment, abuse, and exploitation,” said U.S. Attorney General Loretta E. Lynch.  

Four members of the U.S. Senate, all Democrats, are backing legislation that would further limit the amount of revenue for-profit schools can get from federal aid.

The lawmakers – Jack Reed of Rhode Island, Dick Durbin of Illinois, Richard Blumenthal of Connecticut, and Elizabeth Warren of Massachusetts, have introduced the Protecting Our Students and Taxpayers (POST) Act, that would prohibit for-profit colleges and universities from receiving more than 85% of their revenue from the federal government and change the calculation of federal revenue to include all federal funds.

Current law allows for-profit schools to receive up to 90% of revenue from federal programs, but the lawmakers say it contains a very large loophole, allowing these schools to receive a lot more.

Loophole

“Money from the new Post 9/11 GI Bill and from Department of Defense tuition assistance programs isn’t counted, which leaves hundreds of millions of taxpayers’ dollars virtually unregulated,” Durbin said. “Consequently, these schools aggressively target veterans and servicemembers who too often don’t receive the quality of education they deserve. We can’t let this invitation to exploit our veterans continue.”

At issue is what students pay to attend for-profit schools and what they get out of it. After 2010, the U.S. government put rules in place to hold colleges accountable for students who couldn't get jobs after graduation. The high level of student loan default rates was another concern.

In July, the Obama administration enacted rules to choke off the flow of federal dollars to schools whose graduates don't do well in the job market. It was intended to save taxpayer dollars and protect students from running up debt for a degree doing them little good.

Protecting veterans

Warren said POST builds on that effort, while extending needed protections for military veterans.

“Too many servicemembers and veterans have been targeted by predatory for-profit colleges, and our men and women in uniform deserve better,” said Warren. “The POST Act will tighten the rules and help protect veterans by closing the loophole that permits for-profit schools to prey on our servicemembers.”

Earlier this year for-profit Corinthian College closed its doors after the U.S. government sued it for predatory lending.

The four senators point out another for-profit school, ITT Tech, is under investigation by at least 18 state attorneys general and the U.S. Department of Justice and is being sued by the New Mexico Attorney General, the Consumer Financial Protection Bureau, and the Securities and Exchange Commission.

The lawmakers say for-profit institutions of higher education enroll about 10% of all college students, but take in 20% of the Department of Education’s federal student aid funds and account for 40% of student loan defaults.  

You read it everywhere: advice to prospective college students that they look first to public community colleges rather than for-profit schools, which can be five times as expensive.

Now a study by researchers at the University of Missouri finds that hiring managers show no preference for hiring people with for-profit college credentials compared to those holding comparable credentials from public community colleges.

"Tuition at for-profit colleges can be as much as five times higher than at two-year community colleges," said lead researcher Cory Koedel. "When people are weighing their higher-education options, tuition cost and the ability to gain employment after school should be considered heavily. This study shows that no significant difference exists with respect to generating employer interest between individuals with community college and for-profit degrees. For many people, community college may be the better option financially."

Random résumés

For their study, Koedel, Rajeev Darolia, an assistant professor in the MU Truman School of Public Affairs, and their co-authors, randomly generated thousands of résumés that included either a for-profit college credential, a two-year community college credential, or only a high school diploma. The researchers then sent the résumés to a number of job openings for open positions in fields including sales, customer service, information technology, medical assistance and office, and administrative assistance. T

They found that hiring managers called back to inquire about fake candidates at the same rate, regardless of whether the candidates held community college or for-profit credentials.

"It is clear that employers are not placing any kind of higher value on for-profit credentials relative to community college credentials," Koedel said. "While for-profit colleges may be a good solution for some people, they are expensive, and our study indicates that there are other, more cost-effective education options that are perceived similarly by employers."

This study was published in the Journal of Policy Analysis and Management.

The Consumer Financial Protection Bureau has won a $530 million default judgment against Corinthian Colleges, the defunct for-profit chain that has already declared bankruptcy and been liquidated.

“Today’s ruling marks the end of our litigation against a company that severely harmed tens of thousands of students, turning dreams of higher education into a nightmare,” said CFPB Director Richard Cordray. “We all have much more work to do before current and past students who were hurt by Corinthian’s illegal practices can be made whole. We remain deeply concerned about risks facing student borrowers in the for-profit space and will continue to be vigilant in rooting out harmful practices.”

A federal court entered the default judgment yesterday, resolving a lawsuit filed by the CFPB in September 2014.

The Bureau’s lawsuit alleged that Corinthian lured tens of thousands of students into taking out private loans to cover expensive tuition costs by advertising bogus job prospects and career services. Corinthian then used illegal debt collection tactics to strong-arm students into paying back those loans while still in school.

The court ordered that Corinthian was liable for more than $530 million and prohibited the company from engaging in future misconduct.

Company has been liquidated

Earlier this year, Corinthian Colleges filed for bankruptcy and was liquidated, making it unlikely the $530 million will ever be paid, although the CFPB said it will continue to pursue relief for consumers harmed by Corinthian’s unlawful conduct.

The CFPB said it "remains concerned about efforts to collect on loans made in association with Corinthian’s illegal conduct."   

In November 2014, the ECMC Group worked with the U.S. Department of Education to reach an agreement to acquire a substantial number of Everest and WyoTech campuses, which were owned by Corinthian. In February 2015, the CFPB announced that, through an action with ECMC, the Bureau secured hundreds of millions of dollars in forgiveness for borrowers who took out Corinthian Colleges’ high-cost private student loans.

The Department of Education is stepping up its scrutiny of ITT Educational Services, citing federal fraud allegations against two ITT executives and the company’s “failure of the general standards of financial responsibility.”

ITT had already been under heightened oversight, along with other for-profit schools that receive much of their revenue from federally backed student loans and the G.I. Bill.

The feds said they had found several discrepancies during the heightened scrutiny, including a failure to reconcile federal aid accounts promptly and conflicting information about Pell Grant awards.

“Taken together, these facts demonstrate a failure by ITT to meet its fiduciary obligations, to properly and timely reconcile Title IV program funds as per the regulations and Federal Student Aid guidance, and to meet the standards of administrative capability required of institutions participating in Title IV, Higher Education Act programs,” the department wrote in a letter to ITT.

Faces lawsuits

A company spokeswoman, Nicole Elam, said the company was in the process of straightening out the reporting and administration issues.

"While the additional requirements will result in an increased administrative burden, the company does not believe they will have a material negative impact on our financial results, or in any manner affect the timely award of financial aid to eligible students or the operation of our campuses," she said.

Among other things, ITT will be required to submit a monthly enrollment roster, as well as information about all federal aid funds it disbursed during the previous month.

ITT is facing several other legal challenges, including lawsuits filed by the Consumer Financial Protection Bureau and attorneys general in several states. The company enrolls about 50,000 studnets at its 135 locations.

Consumers hoping to advance in a career are often attracted by for-profit institutions that, even though they can be expensive, admit anyone who applies. But not all these school can deliver on promises.

In North Carolina, state Attorney General Roy Cooper has obtained a court order temporarily halting operations at a private, for-profit career school that Cooper maintains charged students hundreds of dollars for unlicensed, unaccredited medical courses and put them to work without proper training.

On Thursday, Wake County, North Carolina Superior Court Judge G. Bryan Collins, Jr., granted Cooper’s request to temporarily bar North Carolina Medical Institute and its owner, Sherita McQueen, from advertising, offering, or accepting payment for any educational products or services in the state.

Cooper is asking the court for a permanent ban on NC Medical Institute’s operation and refunds for students.

Keeping an eye on career schools

“Students seeking training to upgrade their job skills deserve to get what they pay for, and patients deserve care from properly trained employees,” Cooper said. “If you notice a career school taking advantage of students, my office wants to hear about it.”

Cooper claims that the school could endanger patients in his state by certifying some students as qualified nursing aides after completing course work, which Cooper claims is far less training than required by law.

The complaint alleges that McQueen used a former employee’s nursing license and Social Security number to enter 50 unqualified Nursing Aide II students into the State Board of Nursing’s electronic registry, permitting them to get jobs.

License yanked

Back in May the North Carolina State Board of Proprietary Schools and the North Carolina State Board of Nursing refused to renew NC Medical Institute’s license. It previously determined that the school advertised and enrolled students in unlicensed courses, employed unapproved teaching instructors, and presented misleading information to the State Board of Community Colleges.

Cooper said it didn't stop there. He says after losing required licenses, McQueen misled prospective students by telling them that the courses offered by her school were accredited. He said NC Medical Institute continued to charge fees as high as $800 per course for unlicensed medical training programs, including pharmacy technician, medical assistant, and first aid courses.

After completing the classes, students often found themselves unprepared or ineligible for jobs in their fields of study.

Illegal practices

Cooper further alleges NC Medical Institute engaged in illegal practices while licensed. According to an affidavit filed by a North Carolina Board of Nursing employee, the school continued to offer a Nursing Aide II program despite repeatedly failing to meet state requirements.

While this might seem scary and discouraging for someone who hopes to advance in the medical field, Cooper says it shouldn't. Consumers just have to be careful.

“Enrolling in a vocational program can lead to a brighter future, but make sure the school you select is legitimate before you pay any money to enroll,” he said.

He suggests checking out your local or regional community college, where he says students are much more likely to receive quality training at a fair price.

Three federal agencies have issued guidelines to student loan servicers to help students repay their loans and avoid default.

The guiding principals from the Departments of Education and Treasury and the Consumer Financial Protection Bureau (CFPB) are designed to make sure borrowers are protected and have the information they need, even if they are struggling under the burden of their debts. It also is meant to provide ways to quickly resolve errors and hold federally-contracted companies accountable.

The guidelines say servicer policies should be consistent, accurate, accountable, and transparent.

Student loan debt has become an issue as outstanding loans now approach $1.3 trillion, saddling many recent graduates – not to mention those who left school before getting a degree – with significant debt as they start careers.

Types of loans

There are four main types of post-secondary education loans under which borrowers have outstanding balances. Direct Loans are federal loans made directly to borrowers by the U.S. Department of Education through the William D. Ford Federal Direct Loan program.

Federal Family Education Loan Program (FFELP) loans were originated by private lenders and guaranteed by the federal government.

Federal Perkins Loans, which are co-funded by institutions of higher education and the federal government, are originated and administered by participating institutions.

Private student loans are made by depository and non-depository financial institutions, states, colleges, and other entities.

Alternatives to loans

Finding alternatives to student loans has become a priority as college costs continue to rise. As we previously reported, College Abacus is a free online tool allowing students and families to calculate the amount of aid they qualify for when applying at more than 5,000 colleges and universities.

Now it has launched a new site, Pell Abacus, which it says will simplify and streamline the college search process for low-income students who are likely eligible for federal Pell Grants.

“By making this process simple to navigate without tax forms and accessible on mobile phones, we’re removing some of the key barriers preventing low-income students from exploring their full range of college options,” said Abigail Seldin, co-founder of College Abacus and vice president of Innovation & Product Management at ECMC Group. “Our goal with Pell Abacus is to not only streamline the college search process for underserved students, but to empower them by providing meaningful context around the most important financial factors impacting college choice, from personalized net prices to school-specific loan repayment information.”

The new Pell Abacus desktop site provides school-specific data on different financial factors, such as average loan payments for Pell students, the percentage of students who receive Pell Grants and the average monthly income percentage spent on federal loan repayments after college.

Pell Grants are government stipends that allow students, based on need, to pay for college. Grants, unlike loans, do not have to be repaid, making it a great alternative to student loans.

In a previous interview with ConsumerAffairs, Seldin said the College Abacus tool helps students access grant money, reducing the need for borrowing. Check it out here.

Community colleges are almost all state-supported and have always cost significantly less than four-year colleges.

So it was something of a surprise a couple of weeks ago when the Brookings Institution lumped community colleges in with for-profit schools as institutions where student loan recipients were most likely to default on their loans.

Admittedly, the much larger risk is for students at expensive for-profit schools, but the report's authors note, with some concern, that community college students taking out loans – and then defaulting – is a relatively new development.

The Association of Community College Trustees (ACCT) has dug deeper into community college student borrowing and repayment behavior. It has compiled a report using data from all 16 community colleges in Iowa to examine who borrows and who defaults.

Persistence and completion

"Our institutions are more focused on persistence and completion now than ever before," said ACCT President and CEO Noah Brown. "This report emphasizes just how important those factors are to post-enrollment success."

In their report, the Brookings researchers appeared to suggest that students attending non-selective schools – for-profit and community colleges have open enrollment, accepting all who apply – were most at risk of defaulting on loans. The ACCT report suggests it might be more complicated than that.

The report found that students who borrow the least amount of money, not the most, are more at risk of default. Many defaulting students take no action on their loans, suggesting the complexity of the repayment system and lack of information may be a contributing factor.

"For borrowers with less than $5,000 in debt, there are almost as many borrowers in default as those who are actively repaying their loan debt," said Jee Hang Lee, ACCT's vice president for public policy and external relations. "The solutions that we have for struggling borrowers, like public service loan forgiveness and income-based repayment, are geared toward middle-income earners with high debts. We need a policy solution for the students who borrow a little but still struggle to make the minimum monthly payment."

Who borrows and who doesn't

The more successful community college students don't borrow money; students who do so are more likely to drop out. Those who default on their loans are even more likely to not finish school with a credential.

Finally, community colleges have no easy way to share data that could help institutions address student loan defaults and better manage them.

"As institutional policymakers, Iowa's Community College Trustees recognize the value of using data to drive our decision-making process," said Cheryl Langston, Des Moines Area Community College trustee and Iowa Association of Community College Trustees board chair. "This report demonstrates how community colleges can be more reflective and forward-looking by understanding where we are doing a good job and where we need to improve to help our students be as successful as possible."

The report includes policy reform recommendations for colleges, as well as for Congress to incorporate into the Higher Education Act's reauthorization.

Student loan debt is about $1.2 trillion and growing, with not everyone who took out students loans able to pay them back.

Student loan default rates doubled between 2000 and 2011, according to Brookings Institution researchers who analyzed U.S. Department of Education administrative data on federal student borrowing, linked to earnings records derived from tax records.

Their report traces most student loan defaults to students who attended for-profit colleges and, to a lesser extent, community colleges. A common thread, the researchers found, was non-traditional students – typically older than the average student – and those attending “non-selective” institutions – schools that accept anyone – were most likely to default.

Weak educational outcomes

“These non-traditional borrowers were drawn from lower income families, attended institutions with relatively weak educational outcomes, and experienced poor labor market outcomes after leaving school,” the authors write.

At the same time, the authors contend students attending traditional public or private non-profit colleges were much less likely to default and have done better in the job market after graduation.

The finding that a significant portion of student loan defaults occurs among students attending for-profit schools is not exactly a new charge. Federal data released last year showed nearly half of the 650,000 federal student loan defaults between 2011 and 2013 were by students at for-profit schools.

Taking issue

Still, some for-profit schools are finding flaws with the Brookings study's conclusions. Mark Brenner, an Apollo Education Group executive, whose subsidiaries include University of Phoenix, told Marketwatch the Brookings study was based on “limited data.”

The Brookings study appears to suggest students who are not qualified to attend college – they choose schools that have no admission requirements – are the ones who take on too much debt and default. The authors say a relatively new development is community college students are defaulting on student loans. In the past, the report says, few of these students took out loans to pay for college.

Accounting for 70% of defaults

“By 2011 borrowers at for-profit and two-year institutions represented almost half of student-loan borrowers leaving school and starting to repay loans, and accounted for 70% of student loan defaults,” the authors write. “In 2000, only one of the top 25 schools whose students owed the most federal debt was a for-profit institution, whereas in 2014, 13 were.”

According to the report, the borrowers from those 13 schools owed about $109 billion—almost 10% of all federal student loans. And once out of school, they faced more difficult employment prospects.

For example, the researchers say the median borrower from a for-profit institution who left school in 2011 and found a job in 2013 earned about $20,900 a year. At the same time, 21% were unemployed.

By comparison, community college borrowers earned $23,900 and only 17% were unemployed.  

In early June, a month after the Corinthian Colleges chain of for-profit schools ended years of legal battles (including charges of fraudulent lending, illegal debt-collection practices, lying about job prospects and educational quality, and worse) by closing its doors and filing for bankruptcy, the Department of Education announced that it would offer debt relief for Corinthian students.

The debt relief program was billed as part of an attempt to “ensure Americans are protected from unscrupulous colleges that deny students meaningful educational opportunities and leave taxpayers holding the bag.”

Under ordinary consumer-protection situations, such loan forgiveness would arguably be a no-brainer: if a company is shut down for fraudulent business practices, any outstanding customer debt based on such fraud would is often forgiven or reimbursement is paid to victims. 

But federally backed student loans (which, along with U.S. military veterans' educational benefits, provided the bulk of the school's profits) are different under the law: unlike most bad debts, they can't be discharged in bankruptcy. And from the money-lender's perspective, the loans are backed by the federal government – meaning, if a student can't or won't pay it back, the taxpayers are on the hook.

Relief plan condemned by critics

Hence the need for the Department of Education to announce a special debt relief program for the defrauded students of now-defunct schools.

Yet student advocates and other critics immediately condemned the DoE's plan as worthless if not worse: “a process that re-victimizes students as a solution to a problem they [the DoE] created,” as the Debt Collective put it at the time.

More specifically, the DoE plan required students to provide transcripts and other documentation which might be impossible to get (mainly because the school generating such documents is out of business and no longer exists).

Students applying for loan forgiveness also had to answer some rather sophisticated legal questions which few if any non-lawyers could manage, including “details about the conduct of the school that the borrower believes violated state law including, but not limited to: The state and applicable law or cause of action (if available)….”

But on Wednesday, the Department of Education said that starting next month, it will launch an “effort to better help defrauded students seeking debt relief,” and also “aim to create a system that makes sure that colleges–not taxpayers–are on the hook for wrongdoing.”

U.S. Education Secretary Arne Duncan was quoted as promising “a clearer, more comprehensive system to assist students who believe they were defrauded by their college.”

Little relief for the present

Unfortunately for students still struggling with the June debt-forgiveness regulations, the DoE press release lauding next month's planned effort at “better help” for “defrauded students” still ends with the following discouraging paragraph:

This regulatory process will not impact the ongoing debt relief efforts the Department outlined in June. Until these regulations are developed and put into effect, borrower defense claims will continue to be reviewed through existing processes and through those developed by the Special Master. Borrowers who believe they have valid claims for defenses to repayment can visit www.studentaid.ed.gov/Corinthian or call a special toll-free borrower defense hotline at (855) 279-6207 for more information.

So the new rules might not help any student victims of Corinthian's frauds, but they might, in the future, keep taxpayers off the hook the next time a school victimizes students in similar fashion.

Whatever the new improved rules are, DoE officials said they hope to have them in place by November 2016, and taking effect in July 2017. However, as the Washington Post noted, “Given the timeline, the rule could be subject to changes if a Republican takes the White House; the GOP has tried to block tougher regulations for for-profit colleges.”

For most college students, parents are a major partner. They help shape college choices, career paths, and are likely to help foot the education bill. So what parents have to say about the process matters.

A survey of parents by HSBC finds that parents are growing more pessimistic about higher education. Nearly three quarters of those surveyed – 71% – now believe higher education is unaffordable for the majority of Americans.

At the same time, almost two thirds – 60% – consider a college degree to be essential in enabling their children to achieve important lifetime goals.

No doubt skyrocketing tuition costs have fueled parental pessimism. The cost of a college education has risen many times faster than the rate of inflation over the last few decades.

Some critics of higher education have blamed the increased availability of student loans and financial aid, and a new report from the New York Federal Reserve Bank lends some ammunition to that argument.

Higher tuition and loan demand

“When students fund their education through loans, changes in student borrowing and tuition are interlinked,” the report concludes. “Higher tuition costs raise loan demand, but loan supply also affects equilibrium tuition costs—for example, by relaxing students’ funding constraints.”

The authors said they found colleges and universities more exposed to changes in the subsidized federal loan program increased their tuition disproportionately around these policy changes, with a sizable pass-through effect on tuition of about 65%.

“We also find that Pell Grant aid and the unsubsidized federal loan program have pass-through effects on tuition, although these are economically and statistically not as strong,” they wrote.

The analysis found that the subsidized loan effect on tuition is most pronounced for expensive, private institutions that “are somewhat, but not among the most, selective.”

Housing bubble parallels

The Fed report explores an interesting parallel between the rising cost of college tuition and the rapid increase in home prices during the housing bubble. It examines the argument that one big reason home prices escalated so quickly is because so many consumers had access to so much credit they were able to bid up prices beyond what was justified.

While noting there is little empirical evidence linking credit availability and rising tuition, the report notes that the two events occurred at about the same time.

“Yearly student loan originations grew from $53 billion to $120 billion between 2001 and 2012, with about 90% of originations in recent years occurring through federal student aid programs,” the authors write. “Against this backdrop of increased borrowing, average sticker tuition rose 46% in constant 2012 dollars between 2001 and 2012, from $6,950 to $10,200, resembling the twin house price and mortgage balance booms.”

Parents, meanwhile, are squeezed between daunting costs and the desire to see their children succeed. The HSBC survey suggests they will continue to go into debt to reach that goal. And the debt may spread across two generations.

Sixty-five percent of parents with children under the age of 5 expect that their children will personally contribute toward their own tuition, and 59% admit their child will need to take on debt in order to do that. Around 3 in 10 – 29% -- of parents surveyed whose children are yet to begin their college education anticipate that grandparents will also share the financial burden.  

Good news for former students of Corinthian Colleges, the now-defunct chain of for-profit schools that operated under the names Everest, WyoTech and Heald: as a result of court documents filed last Friday, the Department of Education will temporarily halt collection efforts against students in default, until at least November 6.

Corinthian declared bankruptcy in May after years of trouble with state and federal-level legal authorities. To offer a small sampling of those troubles: in Corinthian's last year of operation, the federal Consumer Financial Protection Bureau sued the company for predatory lending (ultimately resulting in a collective $480 million in debt relief for former students); the Department of Education levied tens of millions of dollars in fines against it after an investigation “confirmed cases” that the company misrepresented the schools' job placement rates to current and prospective students; and the attorneys general of multiple states went so far as to urge the feds to relieve all Corinthian student debt on the grounds that Corinthian misled students about pretty much everything: the quality of its educational programs, transferability of credits, likelihood of job placement afterwards, the availability of internships … pretty much everything a student needs to consider before choosing a school.

Federally financed scam

Under ordinary circumstances, suspending Corinthian-related student debt would be a no-brainer: the company was essentially running a scam, with students as the victims. But the federal government has so far been reluctant to offer a broad-sweeping debt amnesty, because that would leave the feds on the hook for the money: like most for-profit schools, Corinthian was almost entirely dependent on federally backed student aid (especially student loans that cannot be discharged in bankruptcy) for its operating costs and profit margins.

That's probably why, as the Huffington Post noted earlier this month, Education Secretary Arne Duncan is “'thrilled' to close Corinthian Colleges, not so ready to help its former students.”

Indeed, during Corinthian's final year of operation, even as various state and federal agencies suspended aid or levied fines against the company, the Department of Education bent over backwards to try keeping the company afloat. In June 2014, for example, when the DoE temporarily suspended all federal aid for Corinthian students, Corinthian initially protested that the action could put it out of business (possibly the only 100% truthful statement the company ever made about its operations). But Corinthian was able to hang on a few months longer, after reaching a “memorandum of understanding with the U.S. Department of Education that maintains uninterrupted daily operations at its schools.”

The federal government spent years financing a harmful scam, and thus far the victims of that scam are still left holding the bag. Who will pick it up after this November remains to be seen.

The Obama Administration today puts its foot down on the metaphorical hose through which federal funds flow to for-profit colleges, likely leading to another round of bankruptcies and campus closings.

Choking off the flow of federal dollars to schools whose graduates don't do well in the job market is intended to save taxpayers money and protect students from spending their time and money on degrees that do them little or no good -- and that often wind up costing much more than students expect.

"The student advisor said the degree I was interested in would be $16k total for tuition, with payments of $50.00. Upon graduation, the total for tuition turned out to be $34k with a combined payment of over $400.00 a month," a Payson, Utah, student said in a ConsumerAffairs review of Everest University last year. 

A growth industry

It was only a few years ago that for-profit schools were seen as a growth industry and were touted as more efficient and responsive than traditional nonprofit public and private colleges. But then a hard truth emerged: graduates of the for-profit schools were having trouble finding jobs.

Students found that many employers simply didn't equate a degree from a for-profit college with one from a public or nonprofit private school.

That was the situation Gina of Seattle encountered when she graduated from ITT: "ITT basically made many promises but never came true. I have a BA in criminal justice and can not find a job to save my life. None of my fellow students have either. It's been almost two years. My student loans are around $80,000," Gina said in a ConsumerAffairs review.

In October 2014, after issuing the new rules, the White House listed shortcomings of for-profit schools:  

• Students who attend a two-year for-profit institution pay four times as much as attending a community college.
• Eighty-eight percent of associate degree graduates from for-profit institutions had student debt, while only 40 percent of associate degree recipients from community colleges had any student debt.
• Students at for-profit institutions represent only about 11 percent of the total higher education population but receive 19 percent of all federal loans and make up 44 percent of all loan defaulters.

Gainful employment

The weapon being wielded by the Obama White House is the Education Department's "gainful employment" rule, which was upheld by a federal court last week. It requires colleges to track their students' success in finding jobs and shuts down funding for those with poor placement records.

The rule applies to nonprofit schools as well but in the vast majority of cases, graduates of traditional nonprofits have a much better record of finding jobs in the field for which they trained and also have a much better record of paying back their student loans. 

The department has estimated that the rule will result in the closure of 1,400 programs that enroll more than 840,000 students, nearly all at for-profit schools. 

Out of business

Many of the nation's larger for-profit chains have already severely cut back or gone out of business. Corinthian Colleges, which includes Everest College and several others, shut down in April. 

Besides the Education Department initiative, large for-profit schools like ITT are facing lawsuits by students as well as federal and state agencies. Just last month, Education Affiliates agreed to pay $13 million to resolve a Justice Department claim that it had submitted false claims to the Education Department for federal student aid.

In January, Kaplan Higher Education -- once owned by The Washington Post Company -- agreed to pay $1.3 million to settle a Justice Department suit that it employed unqualified instructors.

Most of the time it is the colleges with the highest student loan default rates – the Corinthian Colleges of the world – that get the attention.

So it is refreshing to learn that there are plenty of public and private schools graduating students out into the world who are able to pay back their student loans. BestColleges.com has released its 2015 ranking, finding Virginia's George Mason University has the best default rate of any public college and California's Claremont McKenna College the best record among private schools.

Among public colleges and universities, Virginia institutions rank 1 and 2 for the lowest student default rates. George Mason University, in Fairfax, Va., just outside the nation's capital, leads the nation with a default rate of only 1.8%. James Madison University, in Harrisonburg, Va., was close behind.

According to the Department of Education, the national average student loan default rate is 13.7%.

Able to get jobs

“It shows that our students get jobs and are able to pay back their loans, and that is the most significant part,” said Carol Brosseau, George Mason University’s senior associate director for student financial aid.

It helps that George Mason's in-state tuition is a bargain for a quality public university – just over $5,000 per semester.

About 58% of Mason students graduate with a loan debt that averages $26,710, Brosseau said. Generally, students have 10 years in which to pay back their loans.

“It's telling you students are graduating and finding jobs,” Brosseau said. “And that is what everyone hopes for.”

In addition to providing millions of dollars in funding every year, BestColleges.com says George Mason is focused on preparing students to be competitive for top jobs upon graduation. Innovative internship programs and continual career networking opportunities ensure students gain experience and build contacts throughout their education, giving them a number of options upon graduation.

Fewer students take out loans

On the private side, Claremont, Calif.'s Claremont McKenna has the lowest default rate, in part, perhaps, because fewer of its students take out loans. According to the ranking, only 16% of the students take out loans to pay for their education. Those who do, however, graduate with about $35,000 in debt.

Approximately half of the study body received scholarship and grant aid in 2014, averaging $35,693 per student.

Claremont, Calif. is also home to Pomona College, a private school that coincidentally places number 2 in the rankings. The university is known for providing excellent scholarship and grant opportunities. Only 15% of all students took out a loan to pay for their education, with the average amount $4,490 per year.

While annual tuition totals $45,500, in the 2013-14 academic year, the average financial aid reward was $41,213.

Meanwhile, here is a list of the colleges whose students have the toughest time paying back their student loans.

Make no mistake, student loan defaults are a serious problem, not just for the students who are drowning in debt but for the financial institutions holding the notes. According to the St. Louis Federal Reserve Bank, the implied delinquency rate for all student loan borrowers is over 27%.

With high school graduation season reaching its peak, millions of 18-year olds who plan to attend college in the fall have just been through the nerve-wracking process of college admissions.

A college degree has always been viewed as a ticket to the middle class, but in recent years that ticket has been harder to come by, even if you could afford it.

Sometime during the 1990s even state-supported colleges and universities got more choosy about the students they admitted.

Open enrollment, whereby any resident of the state who had received a high school diploma was automatically admitted, gave way to selective enrollment, long practiced at elite private schools. If you wanted to get a college degree you had to make it past the college admissions gatekeepers, who didn't just look at grades and SAT scores but delved into a host of personal attributes as well.

In a noteworthy piece in April 2000, The New York Times explored the admission process at one school, Wesleyan University, finding that the subjective criteria of a compelling personal saga could sway a committee of gatekeepers and often make the difference between making it to college or being shut out of the middle class.

Plenty of student loans available

Of course, most people aspiring to the middle class wanted to attend college. As it became more competitive to get in, colleges found they could raise tuition rates without diminishing the pool of students. After all, student aid was available, as were student loans.

While inflation in the general economy slowed to a crawl, the average cost of tuition at a four-year college has increased by 41% in the past 10 years, according to the College Board. It's up nearly 100% since 2000.

As a result millions of students who were smart, skilled and savvy enough to make it past the gatekeepers are contending with tens of thousands of dollars in student loan debt. Even if they have been lucky enough to get a good job after graduation, their monthly student loan payments sometimes make it feel like they haven't quite made it to the middle class.

So it may not be all that surprising that the latest Allstate/National Journal Heartland Monitor Poll finds many younger Americans no longer believe college provides the only route to success. Their definition of success has some things in common with their parents and some things that aren't.

Different paths

“Young people want the ‘American Dream’ of homeownership, career and financial security, though they’re working hard to achieve it on different paths compared to their parents and other generations,” said Troy Hawkes, Field Senior Vice President of Allstate.

For example, it's more important to young people to live in an area with a strong sense of community and volunteerism and more public services. And, they think it might be a better choice to wait for financial stability before getting married and having children.

That's because, according to the poll, 45% of them are still paying student loans. A separate survey by the National Foundation for Credit Counseling found that 53% of the college students it polled said concern about their student loan debt was causing the most stress in their lives. Stress over credit card bills was only 22%.

Opting out of college

While most young people still believe a college degree is important to success, a growing number are deciding to reach for success without it. In May the National Student Clearinghouse Research Center (NSCRC) reported college enrollments are declining because fewer Millennials are attending.

Among the interpretations of the NSCRS report is young adults in their mid 20s are choosing to go to work rather than attend college. The report does not make clear whether these young adults are leaving school to pursue the workplace or not attending college in the first place.

Yesterday the Department of Education (DoE) made the surprise announcement that it would offer “Debt relief for Corinthian Colleges students,” as part of an attempt “to ensure Americans are protected from unscrupulous colleges that deny students meaningful educational opportunities and leave taxpayers holding the bag.”

Yet critics call the DoE's plan “a process that re-victimizes students as a solution to a problem they [the DoE] created.”

The Corinthian Colleges debacle offers illustrative examples of almost every complaint made against the modern for-profit college industry: namely, exorbitantly high tuition rates not only leave students deeply in debt which cannot be discharged in bankruptcy, but the college degree or credits they earned in exchange for all that debt turn out to be worthless. Traditional four-year colleges and universities rarely if ever accept transfer credits from such schools, state professional certification boards won't accept them, and potential employers won't either.

Corinthian, which owned and operated schools under the brand names Everest, WyoTech and Heald, filed for bankruptcy last month after years of legal troubles.

But the true beginning of the end for Corinthian arguably came last June, when the Department of Education temporarily halted all federal student aid, including bankruptcy-proof federal student loans, to various Corinthian-owned schools. Though federal funding was re-instated a couple of days later, Corinthian had to agree to many strict conditions including a “'teach-out' of schools that are under-performing.” At the time, Corinthian was already under investigation in 20 different states, in addition to its troubles with the feds.

Selling campuses

In early July, Corinthian started selling off some of its campuses after it missed one of the deadlines the feds had established as part of its previous month's agreement with the company.

At the end of that month, Sen. Tom Harkin (D-Iowa) and the Senate Health, Education, Labor and Pensions Committee released a report showing that for-profit schools such as Corinthian were collecting a “disproportionate share of new Post-9/11 GI Bill benefits” paid out to military veterans.

In September, the Consumer Financial Protection Bureau sued Corinthian for what the CFPB called an illegal, predatory lending scheme. CFPB Director Richard Corday said “We believe Corinthian lured consumers into predatory loans by lying about their future job prospects, and then used illegal debt collection tactics to strong-arm students at school. We want to put an end to these predatory practices and get relief for the students who are bearing the weight of more than half a billion dollars in Corinthian’s private student loans.”

The lawsuit charged that Corinthian used “misleading claims” in order to convince students its schools were worth attending. Among other things, Corinthian allegedly paid employers to hire graduates for temporary jobs, which Corinthian then counted as as in-field work toward its job-placement statistics. Corinthian even allegedly created fake employers, then falsely claimed students worked for them. Meanwhile, Corinthian's “career counseling” services included urging students to check job postings on websites such as Craigslist.

In October, the state of Wisconsin made similar claims in a lawsuit it filed against Corinthian-owned Everest College in Milwaukee (which had shut down in August 2013).

Debt relief for students

In February, the DoE and CFPB announced $480 million in debt relief for Corinthian students who'd taken out high-cost, private “Genesis” loans. CFPB Director Corday said it would “provide substantial relief to current and past students who were harmed by Corinthian’s predatory lending scheme.” Affected students were told they could see their individual Genesis debt burdens be reduced by up to 40% – which was another way of saying the students were still on the hook for 60% of those predatory loans.

Then, in April, the attorneys general of nine states (Illinois, California, Connecticut, Kentucky, Massachusetts, New Mexico, New York, Oregon and Washington) published an open letter urging the DoE to immediately relieve the federal student-loan debt burdens of all Corinthian and Everest students. Illinois AG Lisa Madigan said that such students were “victims of the predatory practices of for-profit schools such as Corinthian, which was more concerned with their profits than they were about the quality of education they provided.”

A week later, Corinthian was fined $30 million and forbidden from enrolling any new students at certain of its campuses, for “misrepresenting” job placement rates for its graduates.

According to the DoE, Corinthian's deceptive practices included paying temporary employment agencies to hire graduates for on-campus jobs lasting as little as two days, so the company could then count those students as having found work in their field after graduation.

School's out

Near the end of that month, on Sunday, April 26, Corinthian abruptly announced that it would close all of its remaining campuses effective the next day. Then the company declared bankruptcy the following week.

And now, almost exactly 12 months after the Department of Education first halted federal funding to Corinthian, it announced on its official “HomeRoom” blog that it would offer debt relief to certain Corinthian students.

Some Corinthian schools closed down, while others were sold but remain open. We are establishing plans to ensure debt relief for:

• Students whose schools have closed down

• Students who believe they were victims of fraud, whether their school closed or not

….

If you are a Corinthian student seeking debt relief of either type, please visit the FSA website or call toll-free at (855) 279-6207 and a staff member will provide the information you need.

The DoE also put out an online “fact sheet” about “Protecting students from abusive career colleges.” Among other things, the fact sheet promises that the DoE is “Establishing a streamlined process” for Corinthian students seeking debt relief:

the Department will create a simple application for debt relief, which borrowers can complete online or by email or postal mail. Starting today, former Corinthian students can visit studentaid.gov/Corinthian to learn more, and in the coming weeks, the Department will have an online form available for these borrowers. In addition, students can call a special toll-free borrower defense hotline at (855) 279-6207 to ask about their options.

A long list

But just how streamlined is that process? The Student Aid page says that “In your Borrower Defense to Repayment submission materials, you should include at a minimum” a long, bullet-pointed list of information. The list starts out reasonably enough – you need “A statement that the borrower wishes to assert a borrower defense to repayment based on state law,” and of course you must include some personal identifying details – your full name, date of birth, current contact information and similar things.

Then it says you also must provide this:

• Documentation to confirm the borrower’s school, program of study, and dates of enrollment. Suggested items include transcripts and registration documents indicating your specific program of study and dates of enrollment.

• Any details about the conduct of the school that the borrower believes violated state law including, but not limited to:

  • The state and applicable law or cause of action (if available)

  • Specific acts (including failures to act) of alleged misconduct by the school

  • How the alleged misconduct affected the borrower’s decision to attend the school and take out a loan to pay to attend the school

  • The injury suffered by the borrower as a result of the school’s alleged misconduct

  • Any other supporting information that would help the Department of Education review the borrower’s claim

As Salon pointed out:

Even getting a transcript from Corinthian, especially if the particular campus went out of business, may be challenging. Additionally, the application demands highly specific legal formulations, and borrowers would have to make the right citations of state law and fulfill the proper definitions of injury. This is a job for a lawyer, not a struggling borrower, who may not even be aware of Corinthian’s behind-the-scenes machinations.

Last February, shortly after the CFPB announced $480 million in loan forgiveness for the holders of certain private (not federal) Corinthian-based student loans, a group of former a group of former Corinthian students associated with an offshoot of the Occupy movement known as the Debt Collective announced that they were staging a “debt strike” and refusing to repay their student loans in order to protest the government's legal and financial support of Corinthian.

At the time, the “Corinthian 15” (so called because they started with 15 members) posted an open letter to the Department of Education saying that:

Who are we? We are the first generation made poor by the business of education. …

We trusted that education would lead to a better life. And we trusted you to ensure that the education system in this country would do so. But Corinthian took advantage of our dreams and targeted us to make a profit. You let it happen, and now you cash in. … We are not alone in this fight. Corinthian’s predatory empire pushed hundreds of thousands into a debt trap. But even beyond for-profit schools, tens of millions of students are in more debt than they can ever repay. And you are the debt collector, with powers beyond a payday lender’s wildest dreams. …

And yesterday, in response to the DoE's debt-relief announcement, the Debt Collective responded by saying that the “Department of Education refuses to do its job, again”:

How many times do Corinthian students have to be lied to?

Just as Corinthian Colleges portrayed its programs as a path to a better life when they were in fact debt traps, the Department of Education is portraying a process that re-victimizes students as a solution to a problem they created.

If Education Secretary Arne Duncan was truly “committed to making sure students receive every penny of relief they are entitled to under law” he would sign the “Order for Discharge of Federal Student Loan Debts” the Debt Collective sent him last week, immediately and automatically discharging Corinthian students' debts. Students are entitled to receive full relief under law. The legal and most painless possible process for students is no process—they deserve an automatic discharge of their debts. … In place of this obvious option, the Department of Education's "solution" is a bureaucratically tortured process designed to provide relief only to those who hear about it and can figure out how to navigate unnecessary red tape.

The Debt Collective also argues that without DoE funding – primarily, the federal promotion and backing or bankruptcy-proof student loans intended to cover tuition costs – schools such as Corinthian wouldn't have stayed in business in the first place:

The Department of Education has been misusing taxpayer dollars for decades, funding up to 90% of Corinthian and other exploitative for-profit college chains. Hundreds of thousands of students were led into a debt trap funded by tax dollars. Automatic, class-wide discharges are not only just, they would also serve as a corrective for the Department's flagrant failures to allocate public funds wisely.

Credits wiped out

If you are a former Corinthian student who does have the necessary documentation and legal expertise to apply for the Department of Education's current debt relief program, bear in mind that doing so will completely wipe out any credits or degrees you might have collected from a Corinthian school. Or, as the DoE webpage puts it:

Please note that if you choose closed-school debt relief, you can’t transfer your credits to a comparable program at another institution. However, if you believe you have a claim against your school under state law, such as fraud, you may still pursue debt relief based on borrower defense to repayment, as described below – even if you transfer your credits to another school.

Quite frankly: if you're a former Corinthian student, you should not let fear of losing Corinthian-generated course credit deter you from applying for debt relief, because those credits are probably worthless anyway. The only other schools likely to accept Corinthian-generated transfer credits are other for-profit schools no better than Corinthian. In February 2013, for example, an Everest graduate sued his school, alleging that none of the credits he took at Everest were transferable to a state community college, and many consumers posting on ConsumerAffairs have complained of problems transferring their credits.

“I attended Everest here in Miami in 2010,” a consumer named Lucy said in a ConsumerAffairs posting from last summer. “At the time I had no high school diploma. I completed a test that qualified me for the pharmacy technician program. ... I passed with flying colors.”

But that hasn't done Lucy any good. “To make a long story short, I am $13,000 in debt and still no employment in my field of study,” she said. “We cannot transfer our education credits because it's not considered real.”

The education may not be real, but the crushing debt and financial ruin are.

It's bad enough that America's current and former college students are struggling under a collective $1.2 trillion in bankruptcy-proof student loan debt, without scam artists bearing bogus offers of debt relief enriching themselves by preying on students' sense of desperation.

Early in May, Illinois' Attorney General Lisa Madigan filed suit against five student-loan “debt settlement companies” which, she says, used false promises suggesting their debt burdens could be reduced or even forgiven entirely in order to defraud student-loan borrowers out of hundreds or even thousands of dollars in fees. Madigan also filed suit against two other such companies last July.

Yesterday, Madigan asked the U.S. Department of Education to “initiate a program to provide certified nonprofit credit counselors for the millions of student loan borrowers seeking help to repay their federal student loans.” She mentioned scammy debt-relief companies to explain why “more qualified sources for help are needed.”

Certification needed

In a letter to Education Secretary Arne Duncan, Madigan urged the DoE to certify nonprofit credit counselors who can help borrowers who need help understanding what repayment options they have, because “Student loan borrowers have nowhere to turn right now to access legitimate information and assistance about their repayment options,” so “It is critical that we provide these borrowers a lifeline before they make costly mistakes by turning to scam artists for help.”

In the meanwhile, borrowers must remain wary of scammy debt-relief services. Last December, when the feds shut down two other scammy student debt-relief companies, it reminded federal student loan borrowers that enrollment in alternative repayment programs, such as the Income-Based Repayment or Pay As You Earn program, is available at no cost.

Also, all debtors – not just those owing student loans – should avoid any company pressuring them to pay high upfront fees. In fact, avoid any debt-relief program requiring you to pay money before they actually do anything for you – especially if they ask you to sign a contract, or ask for your credit or debit-card number, or bank acocunt information.

Also, student loan borrowers should be cautious of any company asking for your Federal Student Aid PIN, because anyone who has your PIN has the ability to perform actions on your student loan. Honest companies will work with you to devise a plan without your PIN.

For-profit colleges lost a round in court this week as a federal judge dismissed an industry lawsuit challenging the U.S. Department of Education's "gainful employment" rule.

The rule, scheduled to go into effect in July, cuts off federal aid to schools whose students graduate with high debt loads and low earnings. The schools' lawsuit said the rule violated their right to due process.

U.S.  District Judge Lewis Kaplan of New York ruled that the Education Department had the legal power to create the controversial rule in the first place and that it followed proper procedures in developing its second iteration of the regulations. The first version of the rule was thrown out in 2012 in an earlier lawsuit.

Dorie Nolt, press secretary at the U.S. Department of Education, said the department was pleased with the ruling.

"Every student deserves to graduate from higher education with a degree or certificate that equips them for success. These regulations will hold career colleges accountable for the programs they offer and promote improvements that protect students, benefit consumers, and honor taxpayers’ investment,” Nolt said.

"Steadfast conviction"

The lawsuit was brought by the Association of Proprietary Colleges, which represents 20 for-profit colleges in New York.

The group's executive director, Donna Stelling-Gurnett, said she was disappointed with the ruling.

“While we agreed with the department’s goals for this rule from the outset, we remain steadfast in our conviction that this regulation does not achieve those goals,” Stelling-Gurnett said in a statement.

In dismissing the suit, Judge Kaplan said that for-profit colleges don’t have a “vested right" to participate in federal student aid programs and they therefore don't need to be afforded due process protections.

“While for-profit colleges have become heavily reliant on federal student aid, that reliance is of their own creation, not of necessity,” he wrote.

Kaplan had sharp words for the association's argument that the rule infringed upon the states' role in overseeing colleges.

“This argument is quite surprising, but not for its merit,” Kaplan wrote. “It is surprising because it is at best ill-conceived and at worst misleading.”

The Federal Trade Commission announced yesterday that for-profit Ashworth College “agreed to settle” charges that Ashworth misled potential students about the value of an Ashworth education.

Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, said that “When schools promise students they can transfer course credits or get a better job after completing their programs, they’d better be able to back up those claims. Ashworth College didn’t tell the truth when it made those promises to prospective students.”

Ashworth's settlement with the FTC includes an $11 million judgment — which is currently “suspended” due to Ashworth's “inability to pay.” In addition to not-paying this fine, Ashworth is also expected to not-make certain misleading claims to students. Or, as the FTC said:

The proposed stipulated court order prohibits Ashworth College from misrepresenting that:

• completing Ashworth’s program will qualify students to obtain vocational licenses without any additional training or experience;

• Ashworth’s programs provide all the training and credentials required to switch careers or obtain a job in a new field;

• there will be job security or steady employment for consumers completing its programs; and that

• course credits are generally recognized by, and accepted, by other postsecondary institutions.

For-profit schools

Ashworth is the latest in a series of for-profit schools to come under legal scrutiny for similar reasons. Corinthian Colleges, which operated schools under the Heald, Everest and WyoTech brands, had to cease operations and close its remaining schools late last month (and declared bankruptcy a week later), after years of legal troubles including multimillion-dollar fines, suspensions of federal student aid, federal lawsuits charging “predatory lending,” and more.

In mid-April, shortly before Corinthian closed its remaining schools and filed for bankruptcy, it was fined $30 million for misrepresenting its job placement rates to students.

ITT Educational Services also started coming under increased scrutiny this month. A couple weeks ago, Congresswoman Jackie Speier urged the Department of Education to investigate ITT for “deceptive and predatory lending practices, pushing students into high-interest loans they know cannot be repaid.”

A few days later, California suspended GI Bill benefits for ITT Technical Institute locations in the state.

Students at ITT and Corinthian schools both paid high tuition rates (or, more likely, went deep into bankruptcy-proof student loan debt) in order to get what turned out to be useless degrees: traditional four-year colleges or universities generally wouldn't accept course credits from these schools, and neither will state professional licensing boards.

No student loans

The FTC settlement with Ashworth suggests that Ashworth students have the same problem, but they do have one slight advantage (or one less disadvantage) than students of ITT, Everest and similar for-profit schools. The FTC says:

Tuition at Ashworth College ranges from hundreds to several thousand dollars. Ashworth College does not accept student loans, and students are required to pay tuition in full or make monthly payments. However, it does accept military benefits including GI Bill payments, and has directed some of its advertising to military servicemembers and their families.      

So Ashworth students may waste large amounts of money or squander their military tuition benefits on what turns out to be relatively worthless college-course credits — but at least they don't have bankruptcy-proof student-debt millstones weighing them down, too. By the sad standards of contemporary American for-profit higher-educational victims, that actually leaves Ashworth students ahead of the game.

Last week, California Congresswoman Jackie Speier urged the Department of Education (DoE) to investigate the for-profit college operator ITT Educational Services, Inc., which she said has allegedly “engaged in deceptive and predatory lending practices, pushing students into high-interest loans they know cannot be repaid, at vast taxpayer expense” at its ITT Technical Institute schools.

And this week, the California Department of Veterans Affairs (CalVet), which among other things oversees GI Bill tuition benefits for military veterans in the state, ordered 15 ITT locations to stop enrolling new or returning students who use the GI Bill for payment.

Military.com reports that “The suspension only stops future enrollments or reenrollments of Veterans, or their dependents, using the GI Bill,” but “does not affect current students.”

Financial statements

CalVet instituted the suspension because ITT apparently will not or can not produce audited financial statements, as required by both the Securities and Exchange Commission and the DoE.

Speier mentioned something similar in her complaints to the DoE last week, saying in an open letter to the Secretary of Education that “The Securities and Exchange Commission (SEC) filed charges on May 12, 2015 alleging that that [sic] the CEO and CFO of ITT Educational Services covered up ballooning loan obligations stemming from the company's …. predatory lending programs.”

But ITT responded to the SEC's charges by releasing a statement saying “We vehemently disagree with the SEC’s position and we are confident that the evidence does not support the SEC’s claims …. We are eager to have the court clear our reputation that has been unnecessarily endangered by the SEC’s action.”

Whatever the courts ultimately decide about ITT's financial activities, another problem shared by ITT students and graduates involves the school's lack of worthwhile accreditation. Speier said that even ITT grads who'd earned high grade-point averages discovered their degrees were worthless: no reputable four-year college or university would accept ITT transfer credits, and potential employers aren't impressed by ITT-generated credentials, either.

Grads' complaints

Last week, when we reported Speier's complaint about ITT, we also shared the stories of several ITT grads. One woman who studied electronics at an ITT school discovered just how little employers think of ITT: “I have gone on numerous interviews just to be laughed at and questioned about why ITT.”

Another man who had to start his four-year college degree from scratch after no school would accept his two-year ITT degree advised all potential students to stay away from ITT: “Since it is not an accredited school if you ever plan to further your education and want to transfer to a real college you are much better off going to a real college from the start.”

A two-year state community college will cost you much less than a for-profit “institute” such as ITT, and the credits you earn at an accredited state community college are far more likely to either transfer to other traditional four-year schools or be accepted by potential employers.

After the downfall of Corinthian Colleges, which declared bankruptcy earlier this month following years of legal troubles which included federal agencies ranging from the Department of Education (DoE) to the Consumer Financial Protection Bureau (CFPB), plus the attorneys general of several different states, all alleging that Corinthian-owned schools defrauded students in various ways, lawmakers and other public officials have turned a sharper eye to other for-profit schools dependent upon a steady stream of federally backed, bankruptcy-proof student loans to stay in business.

Today, Congresswoman Jackie Speier (D-California) released an open letter to Education Secretary Arne Duncan urging the DoE to “conduct an investigation of and exercise increased oversight over the for-profit college operator ITT Educational Services, Inc.,” which has allegedly “engaged in deceptive and predatory lending practices, pushing students into high-interest loans they know cannot be repaid, at vast taxpayer expense.”

Speier's letter, available in .pdf form here, includes a list of complaints which sound depressingly familiar to anyone who knows Corinthian's story.

Predatory lending

Last year, for example, the feds sued Corinthian for “predatory lending practices,” and Speier's letter mentions similar practices from ITT: “The Securities and Exchange Commission (SEC) filed charges on May 12, 2015 alleging that that [sic] the CEO and CFO of ITT Educational Services covered up balloning loan obligations stemming from the company's …. predatory lending programs.”

Last November, a former ITT student in Pennsylvania wrote us to say “I was one of those students who signed for a private loan in order to continue my education. Unaware of the lies and deceit that was going on within the company. The program of study was electronics.... I was assured that upon graduation I would have a career, not a job.”

But after graduating in 2011, she discovered her degree was useless: “I am a temporary employee. My credit is shot and I make a little above minimum wage. I have gone on numerous interviews just to be laughed at and questioned about why ITT. … I am over $50,000 in debt because I believed I was getting a good education that would lead to a good future.”

And remember: that debt, like almost all student-loan debt, can't even be discharged in bankruptcy. But a former student who goes over his head in debt to attend a traditional, accredited state college or university at least has an authentic college degree (or credits to count toward one) to show for that outrageous debt load. ITT students say they don't even get that.

Good grades but ...

Mike from Oregon told us in January: “I went to ITT and I finally graduated with really good grades, 3.8 … in 1994.” A few years later, Mike wanted to enroll in a regular four-year school to earn a bachelor's degree, but learned that no reputable school would “transfer any credits at all from ITT, so I had to start over from scratch …. since it is not an accredited school if you ever plan to further your education and want to transfer to a real college you are much better off going to a real college from the start.”

Still, Mike says, his degree from ITT isn't completely useless: “you can hang it on the wall to cover up a hole or you can use it to cover a stain.”

Jay in Massachusetts made a similar observation from a different perspective. He spent one academic year – September 2013 through the following June – teaching at an ITT “Electronic Technology School.”

"Rot-gut shameless"

I have been a PhD electrical engineer for 25 years, mostly in the defense sector. But have never worked for such a rot-gut shameless enterprise, not even close. You need to understand [the] whole enterprise, ITT I mean, is a colossal nationwide profiteering scam. There are so many problems with ITT, I hardly know where to begin …. Recruiters routinely tell students that ITT courses will transfer should a student decide to complete a conventional 4-year program at another school after, say, completing an associates degree program at ITT. This is false. Credits will transfer to another ITT school (or possibly to another for-profit school like ITT) - that much is true - but not to an accredited state university.

In her letter to Education Secretary Duncan, Rep. Speier alludes to such complaints, and previous problems with the now-defunct Conrinthian schools, when she says:

The Department of Education has conducted increased oversight and exercised enforcement options in the past, as it did with the Corinthian Colleges [but] those investigations have been plagued with delays. In fact, Corinthian Colleges, Inc. was investigated by the SEC in June 2013 – a full year before ED opened their own June 2014 investigation …. This delay harmed students who continued to take loans on a worthless education, and taxpayers who footed the bill. I ask that in this case you take action quickly and responsibly.

In recent years high school students and their parents have obsessed over the college admissions process.

Certain colleges have become like designer consumer products, a sign of status and announcing to the world that this young person is embarking on a meaningful and successful career. Of course, it doesn't always work out that way.

Some graduates of name-brand colleges flame out in their careers. Others fall into depression because they weren't accepted by the school of their choice.

In his book “Where You Go is Not Who You'll Be,” New York Times columnist Frank Bruni argues that the Ivy League has no monopoly on corner offices, governors' mansions, or the most prestigious academic and scientific grants.

His book is a recounting of the stories of highly successful people who didn't attend the most exclusive schools. In fact, he writes there are many great colleges and universities that aren't well known. You just have to be able to find them.

University Research & Review, which offers college placement advice, has issued a list of what it believes are the best colleges you've never heard of. Attending one of them, the company says, will offer a great education and set the stage for a successful career.

Here's their list:

Abraham Baldwin Agricultural College Located in rural Georgia this school, as the name implies, might be ideal for those pursuing a career in making things grow. The school offers a degree in, among other things, turfgrass management for those aspiring to a career in the golf course industry. They even have their own golf course where students practice what they learn.

Amridge University Flexible is one way to describe Amridge University. All of its courses are also offered online with live course lectures viewed in real time and optimized for mobile devices. The school's low tuition also makes it attractive.

Brandman University University Research & Review calls Brandman “one of the most progressive institutions in the country. It now embraces competency based education, meaning if you know the subject matter you are not held back by outdated seat time requirements. This could be a good choice for serious adult learners who want to get on with life and career.

Brescia University There are only about a thousand students at Kentucky's Brescia University, offering both classroom and online programs. Most of the school’s mostly female students are full-time and enroll in programs such as social work, teacher education, and business.

Kettering College This might be a good choice for someone planning on a career in health care. It wins high marks for a professional and committed faculty and a responsive administration.

Lincoln Memorial University Lincoln Memorial is also popular among those interested in health careers. Students can become a doctor of osteopathic medicine, or of veterinary medicine, or maybe earn one of several master’s degrees.

Special features

Park University, Patten University, Western Governors University and William Carey University all have attributes that set them apart. About 90% of Park's students are part-time and about half take their courses online.

Patten University tries to help students avoid taking out loans by developing an inexpensive monthly payment program where a student can take all the courses he or she can handle. All courses are available online.

Western Governors University is a pioneer in competency based education, meaning you can get a degree sooner than you might think. Its course offerings are also 100% online.

William Carey University has unique scholarship and assistance programs available for students. There are special assistance programs for low income families, and students with excellent academic records may qualify for full tuition and fees plus a room allowance.

If you're looking for a single recent anecdote illustrating almost everything dysfunctional about the modern American system of funding higher education, try this one: On Monday, one week after the long-embattled chain of for-profit schools abruptly closed all of its remaining campuses, Corinthian Colleges filed for bankruptcy.

However, Corinthian's former students lack the same opportunity to wipe out their bad debts and start over again at Net Worth Zero (plus an abysmal credit rating), because student-loan debt, for the most part, cannot be discharged in bankruptcy.

What led to Corinthian's downfall? Like most for-profit schools, it was almost entirely dependent on federally backed student aid (especially those bankruptcy-proof loans) to function. The beginning of the end for Corinthian arguably came last June, when the feds temporarily halted all financial aid to Corinthian schools.

Federal agencies ranging from the Department of Education (DoE) to the Consumer Financial Protection Bureau (CFPB), in addition to the attorneys general of several different states, have alleged that Corinthian-owned schools defrauded their students in multiple ways: inflating or lying about post-graduation job-placement rates, teaching courses whose credits were not accepted by reputable universities or state professional-licensing boards, even engaging in what the CFPB called “predatory lending scheme[s]” bad enough that in February, the DoE and CFPB announced $480 million in debt relief for certain Corinthian students.

Affected students could see their debt burdens reduced by up to 40% — which is another way of saying affected students are still on the hook for at least 60% of those “predatory” loans.

Debt strike

Meanwhile, a group of former Corinthian students went on “Debt Strike,” refusing to repay the federally backed loans they took out to pay for their Corinthian school attendance. The “Corinthian 15” (so called because they started out with 15 members) started their strike in February, by posting an open letter to the DoE saying, in part, that:

We wanted an education because we were driven to learn and to achieve a better life for ourselves and for our families.

We trusted that education would lead to a better life. And we trusted you to ensure that the education system in this country would do so. But Corinthian took advantage of our dreams and targeted us to make a profit. You let it happen, and now you cash in. … Corinthian’s predatory empire pushed hundreds of thousands into a debt trap. But even beyond for-profit schools, tens of millions of students are in more debt than they can ever repay. And you are the debt collector, with powers beyond a payday lender’s wildest dreams. …

“More debt than they can ever repay.” That's exactly the sort of person bankruptcy is supposed to help. So, of all possible subgroupings of Americans to be denied that second chance, why single out the indebted students, most of whom took on that debt when they were still teens or young twentysomethings?

$1.2 trillion

As of March, the total outstanding student loan debt in the U.S. surpassed $1.2 trillion. And of the former students who started repaying their federal student loans in 2011, 650,000 had defaulted by 2013. Average default rates were 19.1% for students at for-profit schools, and 7.2% at non-profit colleges.

College tuition rates have risen faster than inflation every year for at least a generation now. And the people – mostly young people – behind these depressing numbers can't even seek the protection of bankruptcy.

It wasn't always like that. Originally, student loan debt was pretty much like any other, where bankruptcy was concerned. But in 1976, Congress changed the bankruptcy code to bar the discharge of student loan debt within five years of graduation. In the 1990s, that limit was raised to seven years. Then, as Inside Higher Ed said, “the 2005 code revision made it all but impossible to have student loan debt canceled.”

I've heard arguments saying that's only fair, on the grounds “Bankruptcy shouldn't apply to college debt, because a college education can't be repossessed.” Yet that's true of many kinds of debt: you can't repossess medical procedures, vacations, restaurant dinners, gambling debts, property value lost when the housing bubble collapsed – but if you go over your head in debt to acquire such things, you can declare bankruptcy and get a financial second chance. Over-their-head former students cannot.

Reminder to legal adults who are still under 21 years old: the federal government doesn't think you're responsible enough to buy or drink a beer — yet you can sign on for enormous amounts of bankruptcy-proof college debt with that same government's blessing and active encouragement.

Corinthian Colleges filed for bankruptcy earlier this week, shortly after the long-embattled chain of for-profit schools abruptly closed all of its remaining campuses.

Like most for-profit colleges, Corinthian was largely dependent on federal student aid – primarily bankruptcy-proof education loans issued to students. Last June, the feds temporarily suspended funding for Corinthian-owned schools, after the Department of Education argued, among other things, that credits from Corinthian schools often proved useless to students, since those credits were not accepted by regionally accredited state schools, nor by various professional licensing boards.

These and similar problems explain why last October, the attorneys general of 14 different states announced their support for a proposed Congressional measure to increase regulations on the for-profit education industry. (Remember, too, that student loan debt is much worse than other forms, because it can't even be discharged in bankruptcy.)

More recently, the Obama administration tried setting new standards on for-profit schools, standards slated to come into effect this July.

Unsurprisingly, for-profit schools are generally opposed to the newer, stricter regulations. But they have a surprising ally. ProPublica's Alec MacGillis yesterday published the results of an in-depth investigation showing that traditional colleges and universities are also working against the new regulations.

For years, the higher education establishment has viewed the for-profit education business as both a rival and an unsavory relation — the cousin with the rap sheet who seeks a cut of the family inheritance. Yet in a striking but little-noticed shift, nearly all of the college establishment’s representatives in Washington are siding with for-profit colleges in opposing the government’s crackdown. … The emerging alliance points to a new calculation by the higher education lobby. By throwing in with the for-profits, traditional schools might be able to capitalize on Republican control of Congress to limit the government’s reach into their own campuses. Among other things, colleges and universities would like to block the proposed new federal ratings system designed to help families choose institutions based on how of their many students graduate and where they get jobs.

Inflated job placement rates

Corinthian and other for-profit schools have long been accused of inflated or outright fraudulent job-placement rates. For example: in mid-April, only a couple weeks before Corinthian's bankruptcy declaration this week, the Department of Education levied a $30 million fine against Corinthian, alleging among other things that Corinthian-owned Heald Colleges paid companies to hire graduates for temporary positions lasting as little as two days, performing such basic tasks as moving computers and organizing cables, then counted those graduates as “placed in field.”

Heald also counted obvious out-of-field jobs as in-field placements, including one graduate of an accounting program whose food-service job at Taco Bell was counted as “in-field” work.

But why would reputable, accredited traditional universities oppose regulations intended to crack down on such fraudulent behaviors? As ProPublica said:

the higher education lobby represents an industry as self-interested as any other—the two largest of the its many trade groups reported spending $500,000 on federal lobbying last year—and it spies an opportunity in the deregulatory instincts of the Republican majority.

The gambit underscores one of the under-appreciated truths about lobbying in Washington in an era of divided government: Special interests are often as interested in preserving a favorable status quo as they are in getting government to take an action to their benefit. To that end, gridlock can be a feature to be encouraged, not a bug.

At stake in this case is the roughly $150 billion that the federal government shovels annually into colleges and universities in the form of Pell grants and subsidized loans for students. Current and former higher education regulators say the federal government is obliged to assure that taxpayers are getting results for that spending.

Tuition rising

Are taxpayers getting their money's worth? Higher education costs – at traditional universities, not even counting the for-profit schools – have risen considerably faster than inflation every year for at least a generation now.

(Personal anecdote: I attended Cheap State U at in-state rates for four consecutive years in the 1990s, and my senior year tuition costs were significantly higher than freshman year's. Adjusted for inflation, I paid $1,760 per semester as a full-time freshman, compared to $2,661 per semester as a senior. For Fall 2015, the in-state tuition cost will be just under $6,270 per semester. Of course, those cited tuition costs do not include the cost of textbooks, housing, food, parking fees, lab fees, student fees, or any other costs related to college.)

So a high school senior today who enrolls at Cheap State U will pay, in inflation-adjusted dollars, at least three times more money than I did for the same degree. Which wouldn't necessarily be a problem if the job market had similarly expanded, so that today's newly minted college grads can reasonably expect salaries two or three times higher than what I made at the same entry-level gigs.

But that hasn't happened. Wages have been stagnating or even falling, even as the cost of educational credentials continues to rise. Students – and, ultimately, federal taxpayers – are spending more money on education than ever. Are they [we] getting results for all that spending?

Perhaps that's a question the “higher education lobby” would prefer nobody ask.

It's not enough that millions of Americans are struggling under $1.2 trillion in student loan debt. They often must must try to avoid getting taken by bogus offers of relief.

Any offer of relief can be very tempting for someone who has run out of options. Illinois Attorney General Lisa Madigan says this has drawn the attention of numerous scammers who make big promises in return for big fees, but deliver nothing but disappointment.

Madigan has filed suit against five companies she says charged student loan borrowers hundreds to thousands of dollars in upfront fees with false promises. She says the promises suggested that the debt load could be reduced, or forgiven entirely, under programs endorsed by President Obama’s administration.

The suits were filed against:

• Consumer Financial Resources LLC, of Texas, which operated as Student Loan Resolve
• Federal Student Loan Alliance LLC, based in California
• Interactiv Education LLC, based in Florida, that operated as Direct Student Aid
• Chicago-based Nationwide Student Aid
• Student Consulting Group Inc., based in Georgia, that solicited consumers as University of One and Help Assist Me Default Resolution Services

The approach

The lawsuits paint a picture of a highly deceptive approach. The state says the companies run heavy marketing campaigns, claiming expertise and offering loaded-down borrowers several options to ease their debt burden.

In reality, Madigan alleges, the companies she named in the suit try to persuade desperate people to pay as much as $1,250 upfront for services she describes as “bogus.” These often include enrolling in loan forgiveness programs for public service employees, including teachers, nurses, police officers, firefighters and employees of non-profit organizations.

In many cases, she says, the companies hold out the possibility of complete debt relief without even looking at borrowers’ individual situations, to determine whether they are eligible for the programs. Seldom, she says, is there any explanation of all the required steps borrowers must take to qualify for loan forgiveness.

Proof of the problem

“These scams are proof that the rate of student loan debt in this country has skyrocketed, and it has already destabilized the financial security of millions of people across the country,” Madigan said. “When people cannot make their loan payments, they don’t get to build the future that they dreamed about when they went to college. We cannot allow these scams to continue.”

This isn't the first time the Illinois Attorney General has taken on companies promising student loan debt relief. Last July she sued 2 other companies – First American Tax Defense LLC and Broadsword Student Advantage LLC, charging them with deceptive marketing practices and illegally charging consumers hundreds in upfront fees to reduce or eliminate their student loan debt burden.

The student loan debt settlement industry appears to be a new incarnation of the debt settlement industry that most recently targeted homeowners in distress. In 2011 six defendants agreed to settle Federal Trade Commission (FTC) charges that they participated in a fraudulent mortgage modification and foreclosure relief scheme.

Under that settlement five defendants were ordered to pay back money they collected and all 6 were permanently banned from selling any mortgage assistance or debt relief products.

Meanwhile, consumers looking for options when it comes to repaying student loan debt might want to start with the federal Consumer Financial Protection Bureau.

Corinthian Colleges, the long-embattled chain of for-profit (and not necessarily accredited) schools, announced on its website that it would close all of its remaining campuses effective today. Those campuses include “Everest and WyoTech campuses in California, Everest College Phoenix and Everest Online Tempe in Arizona, the Everest Institute in New York, and 150-year-old Heald College -- including its 10 locations in California, one in Hawaii and one in Oregon.”

Take note: although Corinthian does – or did – operate schools under the Everest name, not all Everest schools were run by Corinthian, so not all of them will be closing. For example: when ConsumerAffairs called the Everest College campus in Woodbridge, Virginia, this morning, we were told that it was not shutting down since Corinthian did not own it.

The CCI website says, “The company is working with other schools to provide continuing educational opportunities for its approximately 16,000 students. Corinthian said those efforts depend to a great degree on cooperation with partnering institutions and regulatory authorities.”

Translation: Those efforts depend to a great degree on whether any reputable, regionally accredited educational institutions will accept transfer credits from Corinthian courses -- and Everest schools, Corinthian-owned or otherwise, have a poor track record in that regard.

California Attorney General Kamala D. Harris said Corinthian "continued to deceive its students to the end."

"Closure of these campuses should help students get out from under the mountains of debt Corinthian imposed upon them through its lies," Harris said. "Federal and state regulators rightly acted to prevent taxpayer dollars from flowing to Corinthian, which preyed on the educational dreams of vulnerable people such as low-income individuals, single mothers and veterans by misleading students and investors about job placement rates and course offerings."

Multiple troubles

In February 2013, for example, an Everest graduate sued the school, alleging that none of the credits he took at Everest were transferable to a state community college. Many consumers posting on ConsumerAffairs have complained of problems transferring their credits.

“I attended Everest here in Miami in 2010,” former student Lucy said in a ConsumerAffairs posting last summer. “At the time I had no high school diploma. I completed a test that qualified me for the pharmacy technician program. ... I passed with flying colors.”

But that hasn't done Lucy much good. “To make a long story short, I am $13,000 in debt and still no employment in my field of study,” she said. “We cannot transfer our education credits because it's not considered real.”

Last June, the Department of Education temporarily halted all federal student aid to Corinthian-owned schools. In September, the feds sued Corinthian on charges of predatory lending practices toward its students. (Remember, too, that student loan debt is far worse than other kinds, because student loans can't even be discharged in bankruptcy.)

Hefty fine levied

Less than two weeks ago, the Department of Education levied a $30 million fine against Corinthian, and ordered its Heald College schools to stop enrolling new students, after an investigation “confirmed cases” that the company misrepresented the schools' job placement rates to current and prospective students of Corinthian-owned Heald Colleges.

For example: the DoE's investigation found that Heald paid companies to hire graduates for temporary positions lasting as little as two days, performing such basic tasks as moving computers and organizing cables, then counted those graduates as “placed in field.” (In many instances, those temp jobs were actually on Heald campuses.) Heald also counted obvious out-of-field jobs as in-field placements, including one graduate of an accounting program whose food-service gig at Taco Bell was counted as “in-field” work.

Despite all of this, the closing announcement on the Corinthian Colleges website says that, “The Company said that its historic graduation rate and job placement rates compared favorably with community colleges,” and quoted Corinthian's CEO, Jack Massimino, as saying “We believe that we have attempted to do everything within our power to provide a quality education and an opportunity for a better future for our students.”

The Department of Education has levied a $30 million fine against Corinthian Colleges, Inc. after an investigation “confirmed cases” that the company misrepresented the schools' job placement rates to current and prospective students of Corinthian-owned Heald Colleges.

The DoE agreement also forbids Heald from enrolling any more students, and requires the school to help current students either complete their education or continue it elsewhere.

According to the DoE, Corinthian's deceptive practices include paying temporary employment agencies to hire graduates for on-campus jobs lasting as little as two days, so that Heald could then count those students as having found work in their field after graduation.

Nothing new

Such allegations against the company are nothing new. The DoE's fine is merely the latest in a series of legal actions taken against the embattled chain of for-profit colleges.

Last September, when the Consumer Financial Protection Bureau sued Corinthian for predatory lending, the charges included allegations that the company would pay temp agencies to hire Corinthian grads to inflate the schools' placement rates, and also that the company promised good “career” options to graduates of Corinthian-owned Everest, WyoTech or Heald schools, yet Corinthian counted as a “career” any job lasting only one day, so long as there was the possibility of a second day of work.

In February, Corinthian students who'd taken out “Genesis” private loans got a collective $480 million in debt relief, resulting in debt reductions of up to 40 percent.

The schools' reputation among some groups is so unsavory that earlier this month, the attorneys general of nine states urged the federal government to forgive the federal debt burdens incurred by students holding the overpriced and worthless degrees.

And this week, when the Department of Education announced the $30 million fine against Corinthian, Education Secretary Arne Duncan said in a statement that “This should be a wake-up call for consumers across the country about the abuses that can exist within the for-profit college sector. We will continue to hold the career college industry accountable and demand reform for the good of students and taxpayers. And we will need Congress to join us in that effort.”

"Violent students' and taxpayers' trust"

The DoE's investigation found that Corinthian had badly mislead potential and current students of Heald Colleges, to the point where the students might not have enrolled in that school at all, had they known the truth.

U.S. Undersecretary of Education Ted Mitchell said in a statement, “Instead of providing clear and accurate information to help students choose which college to attend, Corinthian violated students' and taxpayers' trust. Their substantial misrepresentations evidence a blatant disregard not just for professional standards, but for students' futures.”

Among other things, the Department's investigation found that Heald paid companies to hire graduates for temporary positions lasting as little as two days, performing such basic tasks as moving computers and organizing cables, then counted those graduates as “placed in field.” Heald also counted obvious out-of-field jobs as in-field placements, including one graduate of an accounting program whose food-service job at Taco Bell was counted as “in-field” work.

In addition, the DoE said, “Heald College failed to disclose that it counted as 'placed' those graduates whose employment began prior to graduation, and in some cases even prior to the graduate's attendance at Heald.”

Like that Accounting graduate working at Taco Bell: she graduated from Heald in 2011 but had started at Taco Bell five years earlier, in June 2006.

A Corinthian spokesperson said in a statement that the Department of Education's conclusions were “highly questionable” and “unfounded,” and that “These unfounded, punitive actions do nothing to advance quality education … but would certainly shatter the dreams and aspirations of Heald students and the careers of its employees.” The spokesperson also said that Corinthian plans to appeal.

Illinois Attorney General Lisa Madigan and eight other state AGs today urged the federal government to immediately relieve the federal debt burden of thousands of students who attended Corinthian and Everest Colleges, the for-profit schools that closed most of their campuses last year.

In a letter to the U.S. Department of Education, Madigan said the agency has legal authority to discharge the federal loans of students who have been harmed by for-profit schools like Corinthian.

“We must protect the victims of the predatory practices of for-profit schools such as Corinthian, which was more concerned with their profits than they were about the quality of education they provided,” Madigan said.

The letter, which was also joined by the attorneys general of California, Connecticut, Kentucky, Massachusetts, New Mexico, New York, Oregon and Washington, notes that the Higher Education Act, Department regulations and federal student loan documents all make it clear that students can assert legal claims against schools as a defense to repayment of their loans.

A number of state and federal lawsuits allege that Corinthian misrepresented to students:

• the urgency of enrollment to secure a spot in a program;
• the school’s historical success placing students in jobs in the students’ field of study;
• the earnings of graduates;
• the availability of advertised programs;
• the employment assistance the school provides graduates;
• the school’s role in its private loan program;
• the nature, character and quality of educational programs;
• the school’s purported affiliation with the United States Military;
• the transferability of credits;
• the availability of externships; and
• the nature and availability of financial aid.

“These cases against Corinthian have unmasked a school that relentlessly pursued potential students — including veterans, single parents, and first-time higher education seekers — promising jobs and high earnings, and preying on their hopes in an effort to secure federal funds,” the letter states.

The attorneys general note that the legal enforcement actions against Corinthian will not be enough to provide relief to Corinthian’s victims. The school has indicated it plans to file for bankruptcy, and therefore will likely try to limit relief available to students burdened with thousands of dollars in debt and many without a degree to show for their outstanding loan balance.

Clarify the grounds

In addition to calling for the cancellation of Corinthian loans, the letter urges the department to clarify the grounds needed for students to obtain a discharge of their loans and to specify a process by which students can raise these issues with their loan servicers in order to obtain relief.

The letter also suggests that DOE develop a process by which the findings in a state attorney general’s investigation could be utilized as a defense to repayment for all affected students.

An estimated 40 million Americans have an outstanding student loan, up from 29 million in 2008. Borrowers carry an average balance of $29,000 in student loan debt. Nationwide, student loan debt now stands at $1.2 trillion, representing an increase of more than 150 percent since 2005.

The U.S. Senate Health, Education, Labor and Pensions Committee reported that, during the 2009-2010 school year, for-profit colleges took in $32 billion in taxpayer-backed student aid and spent nearly 25 percent of their revenue on marketing and recruiting, exceeding what was spent on student instruction.

Washington state is suing a company that promises to "adjust" student debt. Attorney General Bob Ferguson filed a lawsuit Monday charging StudentLoanProcessing.US (SLP) and its president James Krause with violating Washington’s Debt Adjusting Act and Consumer Protection Act, including charging illegal fees for debt adjusting and failing to inform customers of important rights as is legally required.

The same services SLP offers are available — for free — through the U.S. Dept. of Education (DOE), Ferguson said.

“My office will aggressively crack down on those who prey on student loan borrowers — many of whom are already overburdened — for profit,” Ferguson said. “This firm charged exorbitant and illegal fees for services that student loan borrowers can obtain for free.”

Many student loan debt adjustment firms have sprung up as a result of the $1.2 trillion debt burden carried by nearly 40 million American borrowers. Most offer to help students fill out and submit paperwork to DOE to consolidate their federal student loans.

Since July 2011, SLP has marketed and advertised for-cost services to assist student loan borrowers applying for DOE federal student loan repayment programs, including the Income-Based Repayment Program, and Direct Consolidation Loans.

$250 upfront

SLP charged each consumer an upfront enrollment fee of $250, or one percent of their outstanding loan balance, whichever was greater. A vast majority of consumers paid more than the $250 enrollment fee, even as high as $2,000. Washington’s Debt Adjustment Act places a strict limit of $25 on initial fees, meaning even SLP’s minimum fee was ten times the legal limit, the Attorney General’s Office alleges.

The Debt Adjustment Act also dictates that a debt adjuster’s fee may not exceed 15 percent of each payment, which SLP’s monthly fee of $39 did for most Washington consumers.

Ferguson also alleges SLP failed to include language in its contracts informing consumers of their three-day “right to cancel” period, a further violation of the Debt Adjustment Act. 

A total of 88 Washington consumers, with an average student loan debt of approximately $58,000, used SLP’s services. SLP has received roughly $132,000 in fees from these consumers.

What to do

For most federal borrowers, the consolidation process is fairly straightforward:  The borrower fills out a two-page application, verifies his or her employment and income, and submits the package to the DOE.  This service is done through the U.S. Department of Education for free and typically takes four to six weeks. 

Once almost exclusively a feature of for-profit colleges, online degree programs have since flourished at non-profit private and public universities. As a result, a college education has recently become more flexible and more affordable.

More flexible in that a college student can work full or part time while completing their degree from the comfort of their living room, doing the course work at any hour of the day or night.

Affordable, in that the competition between colleges and universities for online students has kept tuition hikes in check.

Ranking online schools

So which online college is best? There are any number of ratings services but BestCollegeReviews.com has just reviewed 400 online colleges and picked its top 25.

It used three criteria to measure the colleges and universities – criteria that consumers might also use in selecting a school.

First, the reviewers looked at affordability, measuring the average cost of attending one semester, taking 15 credit hours.

Second, they assessed flexibility, counting the number of bachelor's degree-granting programs students may enter. A secondary consideration – the flexibility with which students may obtain a degree.

Finally, the reviewers measured academic rigor and support, looking at the strength and reputation of the online program’s parent institution as well as the range of support services for online college students.

$2,500 per semester

When all was said in done, Northern Arizona University topped the list. It won praise for its 45 bachelor’s level degrees that can be completed entirely online.

It was also one of the most affordable schools on the list with an estimated per-semester cost of only $2,500. Students may take an unlimited number of courses online for a six month period. There are no lab or course fees, and all materials required by the courses are available online.

Arizona State University was second on the list. It's far from the least expensive school, but won praise for its 47 bachelor’s degree programs that are fully online. There are 80-plus programs when specializations and non-bachelor’s level programs are included.

Value for the money

Degree offerings are comprehensive, ranging from art, business, communications, culture, education, engineering, health, language, to STEM. There are 6 start dates available per year, allowing students to start on their degree when it works best for them. The $7672 per semester tuition is considered a good value for the education and flexibility it provides.

Granite State College places third on the list, with 29 fully online bachelor’s level degrees that may be completed at full-time, part-time, or accelerated rates. Program offerings are comprehensive, ranging from digital and social media, to nursing, to education. Its tuition is the 10th most affordable, coming in at $4,675 per semester.

Rounding out the top 10 are:

4. University of Central Florida

5. State University of New York

6. Oregon State University

7. American Public University System

8. Ft. Hayes State University

9. Pennsylvania State World Campus

10. Grand Canyon University

Last summer the federal government started cracking down on Corinthian College, the for-profit chain behind Everest Institute, WyoTech and Heald schools. Corinthian was already under investigation in 20 different states by last June, when the Department of Education temporarily suspended all federal financial aid to Corinthian schools.

In July, Corinthian missed a deadline to reach an agreement with the federal government, and started selling off some of its campuses. In September, the feds sued Corinthian for predatory lending practices against its students, and only a couple of weeks ago, the Department of Education and Consumer Financial Protection Bureau jointly announced that certain Corinthian students would be forgiven a collective $480 million worth of private, high-cost “Genesis” loans.

Despite all of this, many former Corinthian students still find themselves saddled with enormous debts for worthless degrees — in many instances, their Everest or Corinthian credits won't transfer to other schools, and employers are rarely impressed by Corinthian-generated credentials.

Also, student-loan debt is worse than most other forms of debt because it is bankruptcy-proof, to ensure that teenagers and young 20-somethings who go over their heads in debt attending the wrong school face much harsher consequences than, say, middle-aged adults who go over their heads in debt trying to profitably “flip” a house, charging too many luxe vacations on their credit cards, or gambling all their money away at the legal casino nearest them – those poor financial choices can be forgiven in bankruptcy, but student debts cannot.

Student strike

Last week, 15 former Corinthian students associated with an offshoot of the Occupy movement known as the Debt Collective announced that they were staging a “debt strike” and refusing to repay their student loans in order to protest the government's legal and financial support of the company.

On the Debt Collective's “Student Strike” page, the “Corinthian 15” posted an open letter to the Department of Education saying that:

Who are we? We are the first generation made poor by the business of education.

We are people living paycheck to paycheck, single mothers, and young people just starting out. We wanted an education because we were driven to learn and to achieve a better life for ourselves and for our families.

We trusted that education would lead to a better life. And we trusted you to ensure that the education system in this country would do so. But Corinthian took advantage of our dreams and targeted us to make a profit. You let it happen, and now you cash in. … We are not alone in this fight. Corinthian’s predatory empire pushed hundreds of thousands into a debt trap. But even beyond for-profit schools, tens of millions of students are in more debt than they can ever repay. And you are the debt collector, with powers beyond a payday lender’s wildest dreams. …

Legitimate grounds

The Corinthian 15 might have legitimate legal grounds to demand the discharge of their loans. Even some U.S. senators think so.

Last December, six senators led by Elizabeth Warren (D-Mass.) wrote to Education Secretary Arne Duncan, urging that the Department of Education “immediately discharge” the federal debt obligations of former Corinthian students.

The letter pointed out that such cancellations are allowed according to the DoE's own rules: when students sign the documents to take out a federal student loan, the fine print says that “In some cases, you may assert, as a defense against collection of your loan, that the school did something wrong or failed to do something that it should have done.”

Warren's complete letter to Duncan is available in .pdf form here.

The New Yorker spoke to Mallory Heiney, one of the Corinthian 15 who attended a Michigan branch of Everest Institute in hope of becoming a nurse. But, she said, her instructors stopped showing up for classes due to Corinthian's financial troubles.

Inside Higher Ed spoke to another member of the Corinthian 15, Makenzie Vasquez, who said she dropped out six months into an eight-month program because she could not afford payments on the private loan offered by Corinthian, and now owes more than $30,000 in debt.

The federal government does offer certain income-based repayment programs for low-income students burdened by excessive student loan debt. Vasquez says she knows about such programs but says that, as a matter of principle, she does not want to repay the loans: “I didn’t get anything for this money, so I don’t see why I should have to give them anything …. I was conned going into this school. They sold me a dream and I got a nightmare.”

Educators generally advise consumers thinking of enrolling at a for-profit school to consider their local community college instead. Almost all community colleges will allow you to take on a part-time rather than full-time courseload, if necessary, so you can still work while attending school, and even pay your tuition and other costs as you go, rather than take on a student-loan debt that can't even be discharged in bankruptcy.

Today, the U.S. Department of Education and the Consumer Financial Protection Bureau (CFPB) announced $480 million in debt forgiveness, for current and former Corinthian College, Everest College and WyoTech students who took out private, high-cost “Genesis” loans.

As part of this agreement, the ECMC Group, which owns several Corinthian campuses, agreed to forgo operating any private student loan program for seven years, and also agreed to abide by certain consumer protections. Student borrowers affected by the forgiveness plan should see their debt burden decrease by 40%, according to the CFPB.

CFPB's director, Richard Cordray, said the agreement “will provide substantial relief to current and past students who were harmed by Corinthian’s predatory lending scheme …. These consumers were lured into high-cost loans destined to default, and then targeted with aggressive debt collection tactics. We will be vigilant to ensure that consumers receive this important relief and that others are protected in the for-profit college industry.”

Here's how those loans worked, according to the CFPB's Feb. 3 press release:

In September 2014, the CFPB sued Corinthian Colleges, Inc. for luring tens of thousands of students to take out private loans, known as “Genesis loans,” to cover expensive tuition costs by advertising bogus job prospects and career services. The lawsuit also alleges that Corinthian used illegal debt collection tactics to strong-arm students into paying back those loans while still in school. Under the Genesis loan program, nearly all student borrowers were required to make monthly loan payments while attending school. More than 60 percent of Corinthian school students defaulted on these high-cost loans within three years. Even for borrowers who did not default, interest rates were more than twice as expensive compared to interest rates on federal loans. The CFPB’s litigation is ongoing.

Two months later, in November, ECMC bought several Corinthian properties. Under ordinary circumstances, buying a company means you also buy responsibility for any lawsuits or other legal matters against it. However, ECMC made an agreement with the DOE and CFPB to release itself from “potential liability for Corinthian's alleged illegal activity,” as the CFPB put it.

Hence the $480 million debt relief program, which also requires ECMC to agree to: stop offering private student loans for a period of seven years; stop lawsuit threats and improper debt collection practices related to those debts; remove negative information from borrowers' credit reports; and agree to follow various consumer protection rules.

This agreement with ECMC applies only to ECMC; it does not apply to Corinthian Colleges, and does not shield Corinthian from possible legal liability.

What to do

If you are a current or former Corinthian student, how can you determine if this debt forgiveness program applies to you? The Consumer Financial Protection Bureau released a five-page bulletin, available here in .pdf form, answering that question and a few more:

What do I need to do to sign up for this relief? How do I know if I am eligible?

Nothing. Your loan servicer (the company that collects payments from you) will notify you if you benefit from today’s agreement, as well as any remaining balance you may owe.

You should be sure your servicer has your most recent contact information.

This debt forgiveness plan is unlikely to wipe out your debt in its entirety, though page 3 of the bulletin does say this:

How much debt relief will I receive?

The total amount of relief for borrowers with eligible loans is approximately $480 million. These borrowers will immediately see the amount they owe reduced by 40%.

Remember that this forgiveness applies only to private “Genesis” student loans, not to any federal student loans or other private loans which Corinthian, Everest or WyoTech students might owe.

For-profit colleges were the first to really jump on the Internet and start offering courses to students all over the country.

There had been “distance learning” programs in the past but companies like the University of Phoenix built a business model around it.

University of Phoenix was founded in 1976, long before the Internet came along. But it was always aimed at students who already had jobs and needed to work school in around their careers.

It's now owned by Apollo Group, a publicly traded company, and has more than 200,000 students, down from a reported 600,000 in 2010. These days, traditional public and private non-profit colleges have gotten into the online education game, giving University of Phoenix and other for-profit colleges some pretty stiff competition.

We reported last year on five traditional colleges that have made a name for themselves offering quality education at competitive tuition rates. It turns out there are a lot more.

Nonprofit options

Nonprofit Colleges Online, a website edited by Brett Gershon and Liz Robertson, singles out colleges and universities it says “put students before profits and education before the bottom line.”

The site recently recently singled out what it considers the top online graduate degree programs offered by non-profit colleges and universities.

Earning the top spot for its online MBA program is Amberton University of Garland, Texas. The cost of the 2-year program is $8,712 for out-of-state students.

Columbia College of Missouri was second and Mississippi State University was third. Both have 2-year tuition costs that come in below $13,000.

Valuable means to an end

"MBA programs are considered a valuable means to an end, intended to help employees advance their careers and contribute significantly to their respective workplaces,” Robertson said. “The networking students do in MBA programs is invaluable to their professional lives; friendships made in a competitive graduate school will likely serve as beneficial professional relationships throughout one's career. With so many accelerated programs available to the non-traditional, modern student - including online, distance programs - and the increasingly relevant and growing global economy, there has never been a more convenient, opportune time to apply for admission to an MBA program.”

And it goes without saying, earning such a degree for under $15,000 in many cases, doesn't saddle the degree recipient with crushing student loan debt.

Bachelor's degrees, which take at least four years to complete, cost more. The good news is Nonprofit Colleges Online can help here too.

Non-profit bachelor's degrees

When it recently rated undergraduate programs it singled out Eastern Oregon University as the best value for a bachelor's degree in business administration. The estimated tuition cost for the degree is $18,700.

Stephen F. Austin State University was second at $19,816 and Fort Hayes State University was third at $23,126.

For students planning to complete their degree online, non-profit colleges likely offer significantly lower costs than most for-profit institutions.

The savings may be even greater if an in-state non-profit school offers online degree programs, since in-state tuition is much less than for out-of-state students.

The lesson is pretty clear. When shopping for an online education, it pays to look beyond for-profit schools and consider the well-established and reputable non-profit schools offering online degree programs.

President Obama has proposed taking state and local initiatives providing free community college for 2 years and making them a national program.

The proposal, unveiled in a speech in Knoxville, Tenn., last week, has a $60 billion price tag. And in his speech Obama made clear he views this as much as an economic initiative as an educational one.

“For millions of Americans, community colleges are essential pathways to the middle class because they’re local, they’re flexible," Obama said. “Whether you’re the first in your family to go to college, or coming back to school after many years away, community colleges find a place for you. And you can get a great education.”

Under the “America's College Promise” proposal, students would have 2 years of community college tuition paid, if they maintain a 2.5 grade point average. Participating community colleges would have to meet academic standards.

Reducing student debt

But the proposal is aimed at more than just educating more people. It's also aimed at reducing mounting student loan debt levels. It does nothing for the people already paying on the more than $1 trillion in loans now, but could prevent crippling debt burdens for future students.

“Think about it,” Obama said. “Students who started at community colleges during those two years, and then go on to a four-year institution, they essentially get the first half of their bachelor’s degree for free. People who enroll for skills training will graduate already ready to work, and they won’t have a pile of student debt. Two years of college will become as free and universal as high school is today.”

It sounds good, but does it have a prayer of being approved by the new Republican Congress, that has not exactly seen eye-to-eye with the White House on much of anything?

Bipartisan pitch

Obama is trying to make it a bipartisan issue, one that both parties can support. He made his speech in Tennessee because that state already has such a program, signed into law by a Republican governor. In the first year, Tennessee's program has drawn 58,000 applicants – 90% of the state's high school graduates.

The White House estimates that nationwide, some 9 million students would take advantage of the program. The U.S. government would pick up 75% of the tuition cost while participating states would pay for the rest.

The concept, at least, has some Republican support. Michigan's Republican governor has expressed interest in the idea but Sen. Lamar Alexander (R-TN), who attended the President's Knoxville speech, while liking the idea, thought it should remain a state program.

Changes for education

Either way, if some form of free community college becomes widespread, it could be a major game-changer in education. Perhaps the biggest impact would fall on for-profit colleges, among the most expensive. Could any compelling case be made for spending $40,000 to obtain an associates degree at a for-profit school when the same degree could be gotten for free at a community college?

There could also be some unintended consequences outside the for-profit college sphere. How many underclassmen would non-profit 4-year colleges lose to community colleges? Would they respond by increasing tuition at a faster rate? Would they accept more of the applicants they now turn down?

And what about the community colleges themselves? Can they handle the expected increase in enrollment?

All questions that will be sorted out in the months ahead, no doubt. But the proposal is one that has a good chance of being debated on its merits and not buried in partisan bickering.

The Consumer Financial Protection Bureau (CFPB) has taken action against two student “debt relief” scams that illegally tricked borrowers into paying upfront fees for federal loan benefits.

The CFPB, in a joint filing with Florida’s Attorney General, shut down College Education Services and separately filed a lawsuit against Student Loan Processing.US for illegally marketing student debt relief services.

The Bureau is issuing a consumer advisory warning student loan borrowers to be wary of paying high fees for free federal loan benefits.

“Student loans are already a significant debt for many Americans. College Education Services and Student Loan Processing.US added to that hardship by taking advantage of troubled borrowers and failing to describe their services honestly,” said CFPB Director Richard Cordray. “When scam artists prey on student loan borrowers, we will take action to halt their illegal activity.”

The U.S. Department of Education offers numerous plans to borrowers with federal student loans to make payments more affordable. These include options that let borrowers set their monthly payment based on their income. Monthly payments under these plans can be as low as zero dollars per month for unemployed or very low-wage borrowers.

The Department of Education does not charge any fees to apply for or enroll in these plans, for which many student loan borrowers qualify.

College Education Services

College Education Services, its owner, Marcia Elena Vargas, and advisor and employee, Frank Liz, marketed and advertised debt relief services to student loan borrowers with loans in default. Based in Tampa, Florida, the company advertised through Internet ads and operated websites including CollegeDefaultedStudentLoan.com and HelpStudentLoanDefault.com. The company reaped millions of dollars in advance fees from thousands of consumers before it ceased operations around February 2013.

Student Loan Processing.US

Student Loan Processing.US, a fictitious business name of Irvine Web Works, Inc., is headquartered in Laguna Nigel, California, with an office in Dallas, Texas.

The CFPB alleges that since at least July 2011, the company and its owner, James Krause, has been marketing and advertising services to advise and assist borrowers applying for Department of Education federal student loan repayment programs. The company operates websites under the names StudentLoanProcessing.us, StudentLoanProcessing.org, and slpus.org. 

Consumers warned 

As student loan borrowers run into roadblocks while trying to get help from their loan servicers, such as lost paperwork or payment processing problems, they may grow discouraged with their prospects of an alternative payment plan.

In its consumer advisory, the CFPB warns students to avoid paying for plans that they can easily get for free. The services offered by third-party debt relief providers are not a substitute for high-quality student loan servicing and may cost borrowers thousands of dollars and drive them further into debt.

The CFPB’s consumer advisory points out that enrollment in alternative repayment programs, like the Income-Based Repayment program or the Pay As You Earn program, is available at no cost to federal student loan borrowers. Companies offering special services do not have the ability to negotiate with creditors in order to obtain a “special deal” under the federal student loan programs. The advisory also provides warning signs that a company offering student loan debt relief may be a scam. These signs include:

· Pressure to pay high upfront fees: Consumers should avoid companies that require payment before they actually do anything, especially if they try to get a credit card number, bank account information, or require that consumers sign a contract.

· Requests for a Federal Student Aid PIN: Consumers should be cautious of companies that ask for their Federal Student Aid PIN. This unique ID is the equivalent of a consumer’s signature and giving it away is giving a company the power to perform actions on the consumer’s student loan. Honest companies will work with consumers to come up with a plan without the PIN.

Public policy makers, from President Obama to education leaders, have stressed the value of a community college education.

Students can earn a 2-year degree or complete the first 2 years or work on a bachelor's degree for a significantly lower cost than a public or private 4-year institution.

But what about value? Getting a job after graduation is what it's all about. How valuable is the education you get at a community college?

The answer is, it depends.

Major study

Researchers in Washington state have completed a major study of students who enrolled in either certificate or degree programs at the 34 community colleges in the state in the early 2000s. Next, it followed their career progress over the next 7 years.

First, the good news. The study found that students who enrolled in a 2-year degree program got their moneys worth and more.

But those who enrolled in short-term certificate programs – usually less than a year – got little value when they returned to the labor market.

The findings are significant because lately, short-term certificate programs have been rapidly growing. They're popular with students because they don't take long to complete. Colleges like them because they're a growing revenue source.

The researchers say between 2000 and 2010, the number of students receiving short-term certificates grew by 151% nationally. In that time they went from being 16% of credentials issued by community colleges to 24%.

The extra time will pay off

But the researchers say if you are thinking about investing a year in a certificate program, it will likely be more advantageous to invest an extra year to get a 2-year degree.

“While we find that earning associate degrees or long-term certificates is associated with increased wages, an increased likelihood of being employed, and increased hours worked, we find minimal or no positive effects for short-term certificates,” the authors write.

Madeline Trimble of the Community College Research Center says the bulk of the evidence suggests that short-term certificates lead to lower returns, on average, than longer-term credentials.

“Even in those states where their returns are positive, the average increase in earnings is unlikely to be greater than $300 per quarter,” she said.

Study co-author Mina Dadgar discusses key findings in the video below.

Time to take another look

Dadgar and Trimble are calling for a critical examination of short-term certificates. They say states should be concerned with the recent dramatic increases in short-term certificates and whether that is money well-spent.

They say students considering a degree program at a community college should know that getting a long-term certificate like an associate's degree was linked with a 11% increase in the chances of getting a job for women and an 8% increase for men.

Community colleges are a proven way to get started on a college education without running up huge levels of debt. In 2010-11, average tuition and fees for a full-time student enrolled in a public two-year college were $2,713, compared to $7,605 at public four-year institutions and significantly higher levels at private for-profit and nonprofit institutions, according to the College Board.

The government has adopteda final rule to protect students who graduate from for-profit career training schools.

Called the “gainful employment” rule, the regulation will monitor how graduates of these institutions fare in the job market. If not enough graduates land jobs in their field, the institution could lose access to federal student aid.

A nice first step, say some critics, but it doesn't go far enough. Maura Dundon, senior policy counsel at the Center for Responsible Lending (CRL), says the final rule only monitors what happens to graduates. Thousands more, she says, enroll, take out huge loans, but never finish. Yet they still have to pay back the loans.

First step

“The Department of Education’s final gainful employment rule aims to prevent programs with extremely poor outcomes from receiving federal student aid dollars,” Dundon said. “This rule is a step towards protecting vulnerable students from unmanageable debt burdens, but more remains to be done.”

Dundon says the final rule falls short when it fails to address the outcomes of students who withdraw without getting a degree or certificate. She says the rule also fails to consider student loan default rates.

“Although default and the inability to graduate are the most serious risks faced by for-profit college students, the final rule dropped a provision that would have considered default rates of all program attendees,” she said.

'Caving to pressure'

In an interview with U.S. News, Rory O'Sullivan, lead student advocate on the Education Department's gainful employment rule-making panel, said the Obama administration "caved to industry pressure" by cutting a proposed measure that would have tracked students who drop out of career programs after loading up on student loans.

That's a big deal, Dundon says. While she is pleased the final rule keeps the proposed debt-to-earnings metric as a way to measure whether students have actually found gainful employment, the rule leaves out many people who need help the most.

“Since a majority of for-profit college students are unable to complete their degree, the decision to eliminate consideration of default rates has seriously weakened the rule,” Dundon said.

Industry response

Despite complaints that the final rule has been watered down, the for-profit colleges aren't very happy about the rule either. The Association of Private Sector Colleges and Universities blasted the rule as an attempt to slam the door to higher education for millions.

“The gainful employment regulation is nothing more than a bad-faith attempt to cut off access to education for millions of students who have been historically underserved by higher education,” said association CEO Steve Gunderson. “Regulations created and issued based on bias against certain institutions have no place in our country. Furthermore, the debt-to-earnings metric is arbitrary and capricious.”

Gunderson charges the DOE is favoring public colleges and universities that he says have lower graduation rates and higher default rates, despite receiving government operating subsidies.

But DOE maintains that many students at career colleges — including thousands of veterans — pay too much money but don’t get the education they paid for.

“Instead, students in many of these programs are provided with poor quality training, often for low-wage jobs or in occupations where there are simply no job opportunities,” DOE said in a release. “They frequently find themselves with large amounts of debt and, too often, end up in default. In many cases, students are drawn into these programs with confusing or misleading information. The situation for students at for-profit institutions is particularly troubling.”

To support that contention DOE says students who attend a 2-year for-profit institution pay 4 times as much as those attending a community college. It says 88% of associate degree graduates from for-profit institutions had student debt, while only 40% of associate degree recipients from community colleges had any student debt.

Wisconsin is the latest to sue for-profit Corinthian Colleges, Inc., charging that it used misleading and deceptive trade practices to attract students to its Everest College in Milwaukee.

“Our office will prosecute post-secondary schools that use deceptive recruiting tactics to increase enrollments, leaving vulnerable, unemployed graduates with excessive federal student loan debt, underwritten by the taxpayer,” said Wisconsin Attorney General J.B. Van Hollen.

Van Hollen said Corinthian made false representations about critical facts such as the school’s job placement rates for its graduates and the availability of externships the school offered.

The Consumer Financial Protection Bureau (CFPB) sued Corinthian last month for what it called an illegal predatory lending scheme.

The CFPB alleges that Corinthian lured tens of thousands of students to take out private loans to cover expensive tuition costs by advertising bogus job prospects and career services. Corinthian then used illegal debt collection tactics to strong-arm students into paying back those loans while still in school, the agency said.

The Wisconsin complaint alleges that Corinthian fraudulently inflated its graduation rates by including in its placement numbers unemployed graduates and graduates employed outside of their field of study. It also charges that Corinthian’s recruiters represented to prospective students a 80-90% national job placement, when in fact its job placement rates were far lower, dipping as low as 5% at the Milwaukee campus.

The complaint also alleges that Corinthian recruited new students regardless of their qualifications, including many who were unlikely to complete or benefit from Corinthian’s accelerated allied health programs. For example, Corinthian’s admission representatives enrolled students who struggled with basic reading comprehension into accelerated allied health programs, which required quick mastery of complex medical terms, Van Hollen's suit charges.

The school allegedly also enrolled students in health career programs, even though such students would be virtually unemployable due to their criminal backgrounds.

The complaint also alleges that Corinthian’s recruitment tactics created a false sense of urgency to pressure prospective students to enroll immediately. Corinthian sent mailings to prospective students stating they had “priority status” and that it was “Urgent” that they “call in the next seven days.”

There was no urgency or priority. In fact, any prospective student who walked in the door at Everest College Milwaukee would be eligible for enrollment within the next month, provided they had a high school diploma or a General Education Diploma (GED), the state charges, saying that Corinthian’s misrepresentations induced many Milwaukee-area students to spend (or most commonly borrow) up to $20,000 for a course of study.

The Milwaukee school closed its doors in August of 2013 and the school provided some refunds to students who did not graduate. The complaint seeks restitution to affected students and graduates, as well as forfeitures and fees.

There really isn't a “low cost” college education. Getting an undergraduate degree takes time and money, and in recent years, it has taken increasing amounts of the latter.

Student loan debt is now over $1 trillion and rising. With growing awareness of the problems taking on too much debt early in life can cause, many students are searching for less-expensive ways to get an education.

Fortunately there are more than there used to be, thanks to online education. Taking courses online was a practice pioneered by for-profit colleges. It was convenient but expensive.

Because for-profit schools were heavy advertisers and aggressive recruiters, many students selected these schools without doing much shopping for a cheaper alternative. Maybe there weren't that many alternatives in the past, but there are now.

State-supported schools

By far the cheapest college alternative are state universities that have embraced online education, in an effort to compete with for-profit schools. But since state supported schools offer lower tuition rates only to people who live in the state, you need to live in the right state to take advantage of these bargains.

For example, the University of Florida's online tuition for Florida residents is just $129 per credit hour. Assuming it takes 120 credits to obtain a bachelor's degree, the cost would be $15,480, a relative educational bargain.

But it you don't live in Florida the rate is $500 per credit hour, making the same education cost $60,000. If you aren't a resident of Florida, your first step should be to check all the state-supported colleges where you live to find out if they offer similar low rates for in-state students.

Private, non-profit schools

If you are unable to find a state university in your state that offers low-cost online courses, there are a few private, non-profit schools that have affordable programs, no matter where you live. Many of these schools started out as what were once termed “correspondence” schools, before the Internet came along.

Bellevue University is a private, non-profit university in Nebraska, founded in 1966. It focused on adult education from the outset and continues to do so today.

For the current academic year, Bellevue's posted tuition rate for its online courses is $250 per credit hour. That puts the cost of a 4-year degree at around $30,000.

Another private non-profit school catering to adult students is California Southern, founded in 1978. Its tuition rate for online courses is also $250 per credit hour.

Southern New Hampshire University is a private, non-profit college that in recent years has wholeheartedly embraced online education. Its tuition rate is $320 per credit hour but is reduced to $225 for active duty military and their spouses.

Arizona State University is a public college that has a single online course rate, regardless of whether you live in Arizona. Its tuition for online courses is $480 to $543 per credit hour.

Other considerations

Not all schools offer all courses and programs online, so before deciding on a particular school you should check out what is offered. Another important consideration is the school's accreditation. After all, if you are going to the expense of obtaining a degree, you want to make sure it actually means something.

If a school is accredited, it means an independent agency vetted by the Department of Education has reviewed the school's programs and faculty to make sure they meet and exceed standards of excellence.

Regional accreditation is the best. The Department of Education currently recognizes 6 regional agencies within the U.S.

Another way to judge a school is by its completion rate – the percentage of students who start their education and end up with a degree. The higher the the graduation rate the more you can assume the school supports its students, guiding them to completion of their chosen degree program.

Saying that some for-profit schools are just in it for the money, a group of 14 state attorneys general are supporting a Congressional measure that would tighten regulation of the for-profit college industry.

“There are some schools within the for-profit college industry that are more interested in getting their hands on federal student loan dollars than in educating students,” Kentucky Attorney General Jack Conway said in a letter to the bill's sponsors.

“The unfair and unethical business tactics of those schools are leaving too many students drowning in debt with worthless degrees, while taxpayers are left footing the bill for debts that are never repaid," Conway said. "The for-profit college industry lacks real oversight and accountability at the federal level, and this legislation will help prevent future abuses of the student loan system and keep for-profit schools honest.”

The measure was introduced by U.S. Senators Dick Durbin (D-IL) and Tom Harkin (D-IA) and U.S. Representative Elijah Cummings (D-MD). It would tighten coordination among the nine different federal agencies that now have a hand in overseeing for-profit schools. 

Additionally, the bill would require the interagency committee to hold quarterly meetings as a group and annual meetings with state attorneys general to coordinate federal and state activities related to for-profit school oversight.

Warning list

The legislation would also charge the committee with publishing a “For-Profit College Warning List” for parents and students, which would identify schools that have engaged in illegal practices or where there is evidence of widespread abuse.

“This bill will provide the federal government with a mechanism by which to hold for-profit colleges more accountable for accepting billions of dollars in taxpayer money and will not conflict with, nor pre-empt the important work of the States in enforcing state law,” the letter states. “Further, this bill will help prevent Title IV funds from continuing to line the pockets of some for-profit colleges that offer deficient educations in a deceptive manner.”

Conway leads a national bipartisan working group of 37 state attorneys general who are reviewing the questionable practices of some for-profit colleges. In Kentucky, Conway has filed suit against four proprietary colleges for allegedly misleading students about job placement rates.

In addition to Conway, attorneys general from Arkansas, Connecticut, Illinois, Iowa, Maine, Maryland, Mississippi, Missouri, Nevada, New Mexico, Oregon, Pennsylvania and Tennessee signed the letter supporting passage of the legislation.

The Consumer Financial Protection Bureau (CFPB) is suing for-profit Corinthian Colleges, Inc. for what it calls an illegal predatory lending scheme.

The CFPB alleges that Corinthian lured tens of thousands of students to take out private loans to cover expensive tuition costs by advertising bogus job prospects and career services. Corinthian then used illegal debt collection tactics to strong-arm students into paying back those loans while still in school.

The Bureau is seeking to halt these practices and is asking the court to grant relief to the students who collectively have taken out more than $500 million in private student loans.

Corinthian is one of the largest for-profit college chains in the country. It has more than 100 school campuses across the country, operating schools under the names Everest, Heald, and WyoTech. As of last March, the company had approximately 74,000 students.

In June, the U.S. Department of Education delayed Corinthian’s access to federal student aid dollars because of reports of malfeasance. Since then, Corinthian has been scaling down its operations as part of an agreement with the Department of Education. However, Corinthian continues to enroll new students.

Lured by lies

The lawsuit charges that Corinthian schools used misleading claims to lure students, including:

· Sham job placement rates: The CFPB alleges that Corinthian’s school representatives led students to think that when they graduated they were likely to land good jobs and sufficient salaries to repay their private student loans. But the CFPB believes that Corinthian inflated the job placement rates at its schools. Based on its investigation, the CFPB alleges that this included creating fictitious employers and reporting students as being placed at those fake employers.

· One-day long “career”: According to the CFPB’s investigation, Corinthian schools told students they would have promising career options with an Everest, Heald, or WyoTech degree. But Corinthian counted a “career” as a job that merely lasted one day, with the promise of a second day.

· Pay for placement: The CFPB also alleges that the Corinthian schools further inflated advertised job placement rates by paying employers to temporarily hire graduates. The schools did not inform students about these payments or that these jobs were temporary.

· Craigslist career counseling: According to the CFPB’s investigation, the Corinthian schools promised students extensive and lasting career services that were not delivered. Students often had trouble contacting anyone in the career services office or getting any meaningful support. The limited career services included distributing generally available job postings from websites like Craigslist.

Predatory Loans

Tuition and fees for some Corinthian programs were more than five times the cost of similar programs at public colleges. In 2013, the Corinthian tuition and fees for an associate’s degree was $33,000 to $43,000. The tuition and fees for a bachelor’s degree at Corinthian cost $60,000 to $75,000.

The CFPB charges that Corinthian colleges deliberately inflated tuition prices to be higher than federal loan limits so that most students were forced to rely on additional sources of funding. The Corinthian schools then relied on deceptive statements regarding its education program to induce students into taking out its high-cost private student loans, known as “Genesis loans.”

Help for students

The CFPB is publishing a special notice for current and former Corinthian students to help them navigate their options in this time of uncertainty, including information on loan discharge options.

The CFPB estimates that there is approximately $1.2 trillion in outstanding student loan debt, with more than 7 million Americans in default on more than $100 billion in balances. Students and their families can find help on how to tackle their student debt on the CFPB's website.

For a generation the cost of a college education has been rising much faster than the rate of inflation.

As a result, student loan balances are getting bigger and bigger, to the point that the total amount owed on student loans in the U.S. is well over $1 trillion. The search is on for a solution to out of control spending on higher education.

One possible solution might be speed. Instead of spending 4 or 5 years earning a bachelor's degree, running up thousands of dollars in debt each year, what if you could get that degree in a shorter period of time – maybe 18 months?

Sounds too good to be true, and you know what they say about things that sound like that. But a lot of serious people are giving this idea serious consideration.

In a speech on education President Obama said some colleges are already embracing new ways to provide education for less money.

Presidential example

“Southern New Hampshire University gives course credit based on how well the students master the material, not just on how many hours they spend in the classroom,” Obama said. “If you're learning the material faster you can finish faster, which means you pay less.”

Since Obama's speech a number of schools have begun offering accelerated undergraduate and graduate degree programs that can be taken online. And more of a student's previous work may count toward the degree.

In these accelerated program, schools are being more liberal about accepting credit from another school or educational program. That, in itself, can get them closer to their degree in a shorter period of time.

Credit where credit is due

Accelerate Degree, a Charlottesville, Va.-based organization, says if students bring something to the table before applying to a program – whether it be previous credit, work experience, or another way to receive transfer credit – they will likely find that any level degree can be completed in as little as one year.

While it may be difficult to finish a bachelor's degree in one year, there are a number of graduate degrees that may be obtained in that time.

Fast Track Program

Northeastern University, in Boston, calls it the “Fast Track Program.” It offers accelerated learning in select programs, allowing students to transfer credits and complete their undergraduate degree in 18 months.

Bellevue University, a private non-profit college in Nebraska, offers an accelerated bachelor's degree to students who have an associate's degree or close to 60 college credit hours. The school says students can complete their degrees in as little as 16 months.

“If you have fewer than 60 credits, we have many ways to earn credit beyond the classroom, including credit for training on the job or in the military,” the school advises.

Not right for everyone

An accelerated degree program is obviously aimed at adults who have completed some college but are now in the working world. In their present form these programs may be less suitable for incoming freshmen with no credits.

Beyond that, these programs might not work for everyone. It will take someone with a lot of discipline and willingness to put in the intense work to reach their goals.

That isn't exactly a description of today's college student. A 2011 survey found that most students at traditional colleges are taking longer to graduate – only 40% were completing the work within the traditional 4 years.

When you read about the collapse of Corinthian Colleges and other for-profit educational institutions, you might wonder how they managed to stay in business for so long anyway.

According to a July 30 report released by Sen. Tom Harkin (D-Iowa) and the Senate Health, Education, Labor and Pensions Committee, the answer appears to be, “Because the federal government keeps them in business, especially with its Post-9/11 GI Bill program for military veterans.”

Harkin's 22-page report kicks off with this executive summary:

Almost three years ago the HELP Committee determined that eight of the top 10 recipients of veterans’ educational benefits under the Post-9/11 GI Bill benefits were large, publicly traded companies that operate for-profit colleges. ... Taxpayers continue to spend twice as much on average to send a veteran to a for-profit college although HELP Committee analysis shows that up to 66% of the overall students who enrolled at these for-profit colleges in 2008-09 withdrew without a degree or diploma. Additionally, some companies operating for-profit colleges appear to be increasingly dependent on Post-9/11 GI Bill funds to comply with federal requirements intended to ensure that these companies do not become overly reliant on federal education resources.

What does “overly reliant on federal education resources” mean in this context? Harkin's report mentions the “90/10” rule: a for-profit college can have no more than 90% of its funding come from federal student aid.

However, the report also says, “federal military educational benefits including Post-9/11 GI Bill benefits are not counted as federal financial aid and in fact are counted on the '10' side of the revenue calculation.” That's one reason private for-profit schools work so hard to target veterans: such students bring with them all the benefits of federal dollars and none of the accounting downsides.

Winding down

The report also mentioned that “amongst the top recipients” of this federal aid was Corinthian Colleges – the same Corinthian which, as of last June, was under investigation by 20 different states, in addition to the federal Securities and Exchange Commission, Consumer Financial Protection Bureau and Justice Department – eventualy leading to the Department of Education temporarily suspending all federal student aid to the schools. In early July, Corinthian announced its plan to sell off 85 of its campuses and wind down operations at 12 more.

But surely, Corinthian is the only distasteful entry on the top-ten list, right?

Not according to the report: “In all, seven of the eight companies are currently under investigation by state attorneys general or federal agencies for deceptive and misleading recruiting or other possible violations of federal law.”

Those “eight companies” refer to the private, for-profit educational institutions on the top-federal-aid list. Of the ten schools listed among the recipients of this federal aid, the University of Maryland was the only public college, and Embry-Riddle Aeronautical University the only private non-profit school.

It's not that Harkin and the HELP committee have any objections to paying for veterans' educational benefits; the problem is that the feds are spending more money on veterans' educations than ever before and getting less in exchange:

a disproportionate share of new Post-9/11 GI Bill benefits were flowing to for-profit colleges owned by large, publicly-traded corporations. This issue was of particular concern because, despite questionable outcomes for students attending these colleges, it was costing taxpayers more than twice as much to send a veteran to a for-profit college than it cost to send the same veteran to a public college.

At the same time, veteran enrollment in public colleges declined in favor of enrollment at for-profit schools.

Quite dismal

Though the federal government currently does not keep track of how well GI Bill veterans perform in school, Harkin's report suggests those statistics are quite dismal: “overall student outcomes provided by the companies to the HELP Committee for students enrolling between 2008 and 2009 give ample reason for concern. At the for-profit colleges currently receiving the most benefits, up to 66% of students withdrew without a degree or diploma.”

The report's conclusion prescribed some possible remedies for this problem:

It is critical that the federal government establish and make public how servicemembers and veterans are faring throughout the higher education system. Further, it is essential that statutory provisions like [the] 90/10 rule be strengthened to better protect our veterans and servicemembers and properly account for all the federal dollars these schools are receiving from taxpayers and that additional steps be taken to address aggressive marketing.

Meanwhile, if you are a current or future military veteran planning to use your GI Bill benefits to go to school, you're probably better off avoiding private for-profit schools in favor of private non-profits, community colleges or even good old State U.

After the stock market closed Monday Apollo Education Group, Inc., which operates University of Phoenix (UP), disclosed that its course offerings will be reviewed by a federal agency.

The company's stock dropped 5% in after-hours trading.

The company's Form 8-K filing with the Securities and Exchange Commission said that it has been informed by the U.S. Department of Education that the government plans to conduct an ordinary course program review of University of Phoenix's administration of federal student financial aid (Title IV) programs in which the UP participates.

The review, which is scheduled to begin August 4, 2014, will focus on federal financial aid years 2012-2013 and 2013-2014, as well as compliance with other policies and regulations.

Typically, neither the government entity conducting the review nor the entity being reviewed comments or elaborates on the process. Apollo Education Group was required to issue the 8-K in order to notify shareholders of a “major event” concerning the company.

UP is one of the largest and best known of the for-profit colleges, which have been a focus of recent concern over rising student loan balances and default rates. It, like many colleges, derives a lot of its income from students who have tapped into Title IV federal aid.

Title IV

According to the Department of Education, Title IV programs are the major source of federal student aid. They include Federal Family Education Loans, direct loans and Federal Perkins Loans.

Title IV aid also comes in the form of grants, including the Federal Pell Grant, Academic Competitiveness Grant, National SMART Grant and Federal Supplemental Education Opportunity Grant.

Default rates

The Department of Education has found that for-profit colleges continue to have the highest average 2 and 3-year cohort default rates (CDR) at 13.6% and 21.8%, respectively. By comparison, public institutions were at 9.6% for the 2-year rate and 13% for the 3-year rate. Private non-profit institutions had the lowest rates at 5.2% for the 2-year rate and 8.2% for the 3-year rate.

The 2-year CDR increased in 2013 over 2012’s 2-year rates for both the public and for-profit sectors, rising from 8.3% to 9.6% for public institutions, and from 12.9% to 13.6% for for-profit institutions. CDRs held steady for private non-profit institutions at 5.2%.

According to the Center for Responsible Lending, for-profit colleges absorb around 25% of the more than $32 billion in federal student aid. In addition to Title IV aid, military veterans may take advantage of education loans that do not fall under Title IV.

DoD education aid

Back in 2012 Holly Petraeus of the Consumer Financial Protection Bureau raised warnings about the amount of DoD education aid going to for-profit institutions.

“On my trips to military communities, I’ve heard stories that raise concerns about the practices of some for-profit colleges,” Petraeus said in a speech. “Marketing is aggressive and relentless; servicemembers are urged to take out private student loans rather than seeking out quality programs whose costs would be covered in full by their military benefits; and poor service and treatment is common at some institutions once service members are enrolled.”

Petraeus said between 2006 and 2010, combined VA and DoD education benefits received by just 20 for-profit education companies increased from $66.6 million in 2006 to an estimated $521.2 million in 2010, a 683% increase.    

If you're looking to buy a for-profit college, Corinthian Colleges has announced plans to sell off 85 of its campuses in the next few months.

Corinthian, which runs schools under the names Everest College, Everest Institute, WyoTech and Heald, first faced the possibility of shutdown in late June, when the U.S. Department of Education halted federal student aid to all Corinthian students.

Corinthian was already under investigation by 20 different states, in addition to the federal Securities and Exchange Commission, Consumer Financial Protection Bureau and Justice Department.

On July 2, Corinthian announced that it had missed the latest deadline to reach an agreement with the government, but the next day, on July 3 (coincidentally or not, just before the start of the three-day holiday weekend) Corinthian announced in a press release its plan to “put 85 of its U.S. schools up for sale, and 'teach out' (gradually wind down) operations at 12 other schools.”

The dozen schools involved in the teach-out also must agree to stop enrolling new students.

Repayment issues

Under current law, most federally backed student loans must be repaid regardless of the loan recipient's financial circumstances — even bankruptcy won't discharge or reduce federal student loans. But student loan debts are discharged in full if the school shuts down and the student in question does not continue his or her education — and since the loans are federally guaranteed, that means the federal government is required to pay back the loans — up to $1.2 billion, for all outstanding Corinthian-based student debts.

However, as of press time, it is not known whether this loan forgiveness will apply to Corinthian students or not. It does appear that the government and DoE are trying to avoid this, by convincing other colleges to accept Corinthian credits, and then convince the students to continue what they started at Corinthian; if that happens, the students rather than the feds would remain responsible for those loans.

Tuition at Corinthian (and thus the debt loads students take on to pay for it) tends to be much higher than a non-profit schools.

At Everest schools in California, for example, completing the two-year criminal justice program would cost $40,000 for fees and tuition, plus $4,783 for books and supplies. In comparison: as of 2013, the average annual tuition rate for state residents attending two-year California community colleges was $1,174.

Casual observers of the meltdown engulfing the for-profit Corinthian Colleges, which owns and operates 107 schools under the names Everest Institute, Everest College, Heald and WyoTech, might wonder: why is it taking so long?

From the Department of Education's perspective, after all, shutting down an underperforming or non-performing school is quite easy: simply stop backing federal student loans to students enrolled at that school, and the main source of funding vanishes overnight, right.

Turns out it's not that simple. On Thursday, July 2, when Corinthian announced it had missed the latest deadline to reach an agreement with the government, the result was — nothing much, except that Corinthian and the government are still working toward reaching some agreement.

Bloomberg News reported the missed deadline in a policy piece explaining why “It's hard to shut down a poorly performing for-profit college.”

The reason can be summarized in one word: money. Specifically those federal-backed student loans, one of the very few types of loans which are, under ordinary circumstances, nearly impossible to discharge regardless of your financial circumstances: even declaring bankruptcy won't free you from your student loan obligations (why the government thinks an 18-year-old student should be more responsible for bad debt than, say, a middle-aged credit card holder who charged too many luxe vacations, is a different issue).

But you, the student, are free from your federal student loan obligations if the school you attended shuts down. In that case, the federal government is on the hook for those loans, not you.

Inside Higher Education noted that there's currently $1.2 billion in outstanding federal loans to Corinthian College students, (or, as the Consumerist blog said, “The government has 1.2 billion reasons to keep Corinthian Colleges afloat”).

Granted, even if/when Corinthian does shut down, that doesn't necessarily mean every Corinthian-based student loan becomes the feds' responsibility. Some of the Corinthian students might be able to have their Corinthian credits accepted by other schools and then continue their schooling, in which case they would still be expected to repay all of their student loans including those taken to pay for Corinthian.

How much longer will Corinthian Colleges stay in business? The for-profit company, which runs Everest Institute and Everest College, is currently under investigation at the federal level by the Securities and Exchange Commission, the Consumer Financial Protection Bureau and the Justice Department, in addition to at least 20 different states.

Corinthian is currently breaking apart – selling some of its campuses, and shutting down others – yet the school's imminent demise apparently hasn't stopped it from trying to lure in new students.

Last Friday, California's attorney general Kamala Harris kicked off the weekend by filing additional charges against Corinthian, claiming that it violated California laws against false advertising and unfair competition, by not telling prospective students about the school's uncertain future.

“It is unacceptable yet not surprising that Corinthian Colleges continues to illegally target vulnerable Californians — including low income individuals, single mothers and veterans returning from combat — by lying about its dire finances and failing to tell prospective students that the schools to which they apply will all be sold or closed," Harris said in a press release. "My office is seeking expedited action to force Corinthian Colleges to put the interests of its students above its rapidly shrinking profits.”

Biggest collapse

But were Harris' actions actually necessary? A July 1 report in Bloomberg Newssuggests the answer is “yes.” Bloomberg – which called the shutdown “the biggest collapse the U.S. for-profit education industry has ever seen” – said that the school is still enrolling new students, who are being kept in the dark about the school's future:

Jessica Arellano, 30, a medical assistant student at Corinthian’s Everest College in West Los Angeles, said on Friday [June 27] that she wasn’t aware of the company’s situation and that she received a confusing e-mail last week assuring her that classes and student aid would continue as usual.

Few if any course credits earned at Everest or other Corinthian schools will be accepted by accredited universities, or by states demanding certain educational qualifications for professional licenses.

Even worse, any student loans taken to pay for an Everest “education” are legally identical to loans taken out for legitimate schools: they cannot generally be discharged in bankruptcy, no matter how worthless the degree. If a school goes out of business, however, federal student loans can sometimes be canceled.

Any student or would-be student hoping to enroll in college knows the dangers of taking on excessive levels of student loan debt to pay for it. But another form of risk is far less well-known: the danger of spending large amounts of time and money getting a degree that proves entirely worthless, because the school is not accredited.

Accreditation is basically a form of quality control assuring that the school meets certain educational standards. If you're hoping to qualify for a professional license, employment with a government agency, or even having your credits transfer to another institution of higher learning, a degree from a non-accredited school is usually worthless.

For example: last week, six graduates of Mount Marty College, a private school in South Dakota, filed suit after the school's nursing program failed to gain accreditation. The graduates had hoped to work as nurse practitioners, but their unaccredited degrees don't qualify them for licenses.

Meanwhile, in North Carolina, students at the Apex School of Theology filed suit claiming that the school and its founder/president deceived them about the school's accreditation status, threatening their ability to become licensed counselors.

A lawsuit filed in Wake County charged that the school and its CEO, Joseph E. Perkins, concealed, suppressed and withheld information about the school's lack of acceditation, Courthouse News Sevice reported.

Not that Apex is completely unaccredited; the suit claims that its “only accreditation is the purported 'national' accreditation awarded it by an entity that calls itself the 'Transnational Association of Christian Colleges and Schools' (TRACS).”

Neither North Carolina nor any other state recognizes TRACS accreditation for professional-licensing purposes, the lawsuit claims.

Public schools too

Though accreditation problems are more common in private or for-profit schools, public schools attached to state university systems are not immune from the problem.

Last week, Alabama State University was put on warning for failing to comply with six different standards required by the Southern Association of Colleges and Schools; if things don't improve by the end of the six-month warning period, the university might lose its accreditation. As the Montgomery Advertiser noted, “Loss of accreditation is a near death sentence for a public university since most federal funding and student aid is tied directly to accreditation.”

If you're looking to attend an American college or university, remember to avoid any school which is non-accredited, or boasts having accreditation from a “national” organization; what you want is a school accredited by one of the regional accrediting agencies recognized by the U.S. Department of Education.

If you watch TV, especially in the wee small hours of the night when advertising rates are dirt-cheap, you've probably seen those cajoling commercials urging under-educated and therefore under-employed viewers to improve their lives by enrolling at the for-profit Everest College or Everest Institute: “You want the skills that pay the bills.”

Indeed you do, but Everest may not be the best place to get them, especially in light of the school's recent troubles with the federal government. The U.S. Education Department last week halted federal student aid to some colleges operated by Everest and its corporate parent, Corinthian Colleges, Inc.

In an SEC filing, Corinthian said the action could put it out of business. 

But Corinthian said today that it had "reached a memorandum of understanding with the U.S. Department of Education that maintains uninterrupted daily operations at its schools" pending completion of a more detailed plan, which the company said might involve the sale of some of its schools.

Corinthian said it would "continue to seek new owners for most of its campuses" and "proceed in an orderly fashion with the 'teach-out' of schools that are under-performing" or that have been kicked out of the federal student aid program.

"During the teach-out process, no new students will be enrolled at the affected schools, but all current students will be able to complete their instructional programs or transfer to another institution," Corinthian said.

Adequate protection?

Whether that's adequate protection for students remains to be seen.

“It’s time to make the protection of Everest College students our highest priority. Corinthian should immediately stop enrolling students to prevent more students from being loaded with debt if the company fails because of fraudulent disclosures to the federal government,” said U.S. Sen. Dick Durbin (D-Ill.), upon learning last week that several Chicago-area Everest campuses were in danger of shutting down.

Durbin also called on accrediting agencies to take a closer look at for-profit schools.

"For years I have been calling public attention to the growing scandal in the for-profit college industry. Their “accrediting commissions” are nothing more than in-house lap dogs; their tuitions are sky high; their diplomas are often worthless and they account for an incredible 46% of all student loan defaults, despite enrolling only 10% of the nation’s students," Durbin said, “The Corinthian canary has a bad cough and it’s time to start protecting unsuspecting students from the tragic consequences of a potential failure of this enterprise.”

Illinois Attorney General Lisa Madigan said she was "encouraged" by the federal action.  

“My office has been investigating for-profit colleges for several years having received hundreds of complaints about questionable marketing and lending practices, including dubious claims of job placement rates and accreditation status,” said Madigan said.

Credits transferable?

"I attended Everest here in Miami in 2010," a consumer named Lucy said in a ConsumerAffairs posting a few days ago. "At the time I had no high school diploma. I completed a test that qualified me for the pharmacy technician program. ... I passed with flying colors."

But that hasn't done Lucy much good. "To make a long story short, I am $13,000 in debt and still no employment in my field of study," she said. "We cannot transfer our education credits because it's not considered real."

The schools have also faced charges of lax academic standards.

Earlier this month, the Republic Report said that a former librarian from an Everest College campus in California resigned from her job after the school granted admission to a 37-year-old man who can only read at a third-grade level:

The man, who shakes, speaks haltingly, and may suffer from a developmental disability, told the librarian he expected to be a police officer after completing the program. But the librarian, Laurie McConnell, is certain he can never obtain such a job.

McConnell, who had been devoting much of her time at work to helping the student with his reading assignments, wrote to the campus’s president on May 21 that the student would be “impossible to place in the field” and had “no idea of the ramifications of signing the enrollment agreement” at Everest. But the president, Richard Mallow, did not give her a response. McConnell quit on May 27, four days after she first contacted me to say that the student was “being defrauded” by Everest. “He breaks my heart,” she told me, “and I feel completely helpless.”

The student was enrolled in Everest's two-year criminal justice program, which would cost $40,000 for fees and tuition, plus $4,783 for books and supplies. By way of comparison: as of 2013, the average annual tuition rate for state residents attending two-year California community colleges was $1,174.

Educators generally advise consumers thinking of enrolling at a for-profit school to consider their local community college instead. Almost all community colleges will allow you to take on a part-time rather than full-time courseload, if necessary, so you can still work while attending school, and even pay your tuition and other costs as you go, rather than take on a student-loan debt that can't even be discharged in bankruptcy.

The graduation season is wrapping up with the high school class of 2014 getting ready to head to college in the fall. Meanwhile, the class of 2015 is getting serious about picking a college – or rather, being picked.

Besides the very real concern of paying for an increasingly expensive education, prospective students must worry about being accepted at the school of their choice. It wasn't always so.

In the 1960s and 1970s there was a move toward what was called “open admissions.” It was a policy found mostly at state-supported colleges and universities and said if you had a high school diploma or GED, you were in.

Perhaps in a case of “ivy-envy,” most state-supported schools now set minimum academic standards that must be met, as well as activities and character traits that go into considering whether a student will be allowed to spend thousands of dollars to attend.

Nerve racking

That can make the next few months a nerve-racking time for students waiting to hear where they will be in the fall of 2015. It can be especially tough for a student who only began to hit her academic stride late in her high school career.

A spotty high school transcript will likely mean rejection letter after rejection letter. Unless, of course, the student chooses to attend a college with an open admissions policy.

Nearly all community colleges have such a policy. If you have a high school diploma or equivalent, they generally will give you a chance. But some four-year colleges still have open admissions policies too.

“There are some advantages to considering admission at an open-enrollment school,” write the editors at College Parent Central. “For some students who had difficulty in high school and do not have the grades appropriate for a more selective admission, an open-enrollment institution is an opportunity to prove that they can successfully undertake college-level work.”

Advantages

In fact, for some students stressed out from the admissions pressures at other schools, applying to an open-enrollment college provides a much-needed safety valve. And there are other potential benefits.

The application process is usually a lot more streamlined and, best of all, the tuition is likely to be less. And while colleges often tout their selective admissions process as promoting diversity, students at open-enrollment schools may in fact be exposed to a wider range of students than those who attend a college with a narrower academic niche.

The New York Timesreported in 2012 on changes to the student body after City University of New York dropped its open admissions policy in 2001. Average SAT scores are up but African-American and Hispanic representation among the freshman class has declined.

You still have to apply to get into an open-enrollment college since there might not be enough slots available. And even though you aren't required to submit SAT or ACT test scores, most schools will require you to take a series of placement tests to measure your competency.

But once in, you can't relax. To stay in you have to maintain good academic progress and keep your grades in good standing.

Be selective

Remember, even though these schools are not selective, you should be. Included among open-enrollment schools are for-profit colleges. They tend to be the most expensive and in most cases, their value may be suspect.

CollegeCalc is a website that can help you find an open-enrollment school. Most likely you'll want to look for one in your home state to take advantage of in-state tuition.

California, for example, has 133 open-enrollment colleges – the bulk of them 2-year community colleges. However, some 2-year schools offer limited bachelor's degrees. Colorado Mountain College, for example, is a 2-year institution that currently offers two bachelor's degree programs.

It may be totally unrelated but it seems college costs really began to escalate when state universities dropped their long-standing open admissions policies and began competing for the “best” students.

To compete, they built plus residence halls, elaborate dining facilities and hired the best professors. All of that cost money.

At the risk of severely dating myself I will mention that in the early 1970s my in-state tuition at a state university with open admissions was $147 a semester. Considering the rate of inflation, that translates into into $860 in today's dollars.

But $860 a semester today would be an unheard-of bargain at any college or university. The current in-state tuition at my alma mater is not $860, but $5,280 per semester.

President Obama has signed an executive order that could provide some relief for young consumers struggling under heavy federal student loan debt.

Obama's order, signed today, directs the Secretary of Education to draw up new regulations that would allow an additional nearly 5 million federal direct student loan borrowers the opportunity to cap their student loan payments at 10% of their income.

It won't affect students with private loans.

The Presidential action also outlines a series of new executive actions aimed at supporting federal student loan borrowers, especially vulnerable borrowers who may be at greater risk of defaulting on their loans.

The White House says before contacting their loan servicer to discuss repayment plans, borrowers can use this Repayment Estimator to get an early look at which plans they may be eligible for and see estimates of monthly and overall payments.

Proposed legislation

There is growing concern about the toll rising student loan debt is taking on the economy. Last month Sen. Elizabeth Warren (D-MA) introduced legislation to allow those with all types of outstanding student loan debt to refinance at the lower interest rates currently offered to new borrowers.

Student loan debt is the second highest form of consumer debt, now at a staggering $1.2 trillion, and Warren says it is weighing on the economy - stopping young people and families from buying homes, buying cars and starting businesses.

In addition to trying to alleviate the student loan debt burden, government and public policy organizations are focusing on the reasons behind the huge growth in debt. The Center for Responsible Lending (CRL) says it has found multiple reasons, including a big increase in the number of people going to college and the fact that tuitions are rising.

Role of for-profit colleges

But it also points to the role of for-profit colleges, which depend in large part on students getting access to federal loans and grants. CRL says for-profit schools collected $32 billion in federal loans and Pell grants from 2009 to 2010. It says for-profit colleges absorb around 25% of federal student aid.

“Nearly half of borrowers who default on federal student loans in the first few years of repayment attended for-profit colleges, even though these institutions only enroll 12% of all students,” CRL says on its website. “Many for-profit colleges are also known to engage in deceptive tactics to enroll students.”

Lawsuits

A suit filed in 2011 accuses Education Management Corporation, which operates a number of Art Institutes in the U.S. and is 41% owned by the investment bank Goldman Sachs, of fraudulently collecting $11 billion in federal aid.

The suit, filed by the U.S. Justice Department and several states, is similar to ones filed by whistle blowers formerly employed at various Art Institutes. Among the whistle blower claims – that school officials consistently paid recruiters by how many students they enrolled, in violation of federal law.

No resolution yet

At last report the litigation is pending. Education Management was back in court last year in an attempt to dismiss a suit by Jason Sobek, a former associate director of admissions who claims the company made false claims about its eligibility to receive federal aid. The motion to dismiss the suit was denied.

Education Management isn't the only for-profit education company having to defend itself in court. In February the Consumer Financial Protection Bureau (CFPB) sued ITT Educational Services, Inc., accusing it of predatory student lending.

The CFPB claims that ITT exploited its students and encouraged them to take out high-cost private student loans with a high probability of ending in default. The CFPB is seeking restitution for victims, a civil fine, and an injunction against the company.  

The Consumer Financial Protection Bureau (CFPB) today sued ITT Educational Services, Inc., accusing the for-profit college chain of predatory student lending.

The CFPB alleges that ITT exploited its students and pushed them into high-cost private student loans that were very likely to end in default. The CFPB is seeking restitution for victims, a civil fine, and an injunction against the company.

“ITT marketed itself as improving consumers’ lives but it was really just improving its bottom line,” said CFPB Director Richard Corday. “We believe ITT used high-pressure tactics to push many consumers into expensive loans destined to default. Today’s action should serve as a warning to the for-profit college industry that we will be vigilant about protecting students against predatory lending tactics.”

 The CFPB said that, like the mortgage market in the lead-up to the financial crisis, the for-profit college industry may be experiencing misaligned incentives. These colleges benefit when students take out large amounts of loans, regardless of the students’ long-term success.

That may describe the situation Aaron of Orange Park, Fla., faces. He wrote to ConsumerAffairs earlier this month said that, although he attended ITT Tech for two years, he did not learn anything. 

"The way it was set up, if you go to school you will pass," he said. "I wish to God I never went there, but now I'm $43,000 in debt."

Mark of Cincinnati described a similar experience, He also said he completed an Associate degree in two years but after being unable to find a steady job in his chosen field, he now works in a window factory.

"I'm paying on a degree I have never used. I'm paying for technology I learned all those years ago that is now obsolete and I wouldn't stand a chance of getting a job in this field now. I feel I was lied to and cheated," Mark said. "Three of the loans I am paying on are College Advantage loans. These loans are not eligible for any income based repayment and I am paying almost $360 on these loans now. My government loans would be $280. If the government loans were not on deferment, I would be in the hole over $600 every month."

Coaxing students into debt

The CFPB said it is concerned that some of these corporations may be employing practices to coax consumers into taking out more federal and private student loans. Today’s announcement is the Bureau’s first public enforcement action against a company in the for-profit college industry.

Most of ITT’s students borrow large sums to pay the high tuition costs and the majority of this money is borrowed from federal student loan programs, CFPB said, adding that private student loans also provide critical revenue for ITT. Because most ITT students’ federal aid does not cover the full cost of an ITT program, most students -- like Mark of Cincinnati -- face a “tuition gap” requiring them to find other sources of funding.

The CFPB’s lawsuit alleges that ITT encouraged new students to enroll at ITT by providing them funding for this tuition gap with a zero-interest loan called “Temporary Credit.” This loan typically had to be paid in full at the end of the student’s first academic year. But ITT knew from the outset that many students would not be able to repay their Temporary Credit balances or fund their next year’s tuition gap, the lawsuit alleges.

What to do 

Consumer advocates recommended that students seeking training in technical fields attend a local community college. The tuition is a fraction of that charged by for-profit colleges and the curriculum is often more relevant and up-to-date.

To assist student loan borrowers who may be in delinquency or default, the CFPB recently launched an updated version of the Repay Student Debt interactive tool.

CFPB also takes complaints about student loans. To submit a complaint, consumers can:

• Go online at www.consumerfinance.gov/complaint
• Call the toll-free phone number at 1-855-411-CFPB (2372) or TTY/TDD phone number at 1-855-729-CFPB (2372)
• Fax the CFPB at 1-855-237-2392
• Mail a letter to: Consumer Financial Protection Bureau, P.O. Box 4503, Iowa City, Iowa 52244

Students who seek degrees at for-profit colleges are more likely to enroll without shopping price and course offerings at other for-profit and non-profit institutions. That's one of the principal findings of a new study by Public Agenda, a non-profit group that studies complex and divisive issues.

The survey found that only four in ten undergraduate students at for-profit colleges said they seriously considered other schools before enrolling at their current institutions. An intriguing question, which the survey does not specifically address, is why.

The survey does, however, reveal that a large number of students at for-profit schools don't really understand what a for-profit school is, or how it is different from a public, non-profit school. The pollsters found most are unsure whether their schools are for-profit or not.

Advertising is effective

When you ask students what led them to consider a particular for-profit school, you learn – especially from the adult students – that they are more likely than others to say they learned about colleges from advertisements. State-supported non-profit colleges rarely advertise while for-profits advertise a lot.

The Consumer Financial Protection Bureau (CFPB) has taken a keen interest in the marketing of for-profit schools, whose tuitions are much higher than most non-profits but whose students often take on loans and seek government grants to pay for their education.

In a New York Times op-ed in 2011, CFPB's Holly Petraeus accused some non-profit schools of focusing on members of the armed services and veterans with “aggressive and misleading marketing,” then failing to provide the academic support that was promised.

“Vast sums are involved.” she wrote. “Between 2006 and 2010, the money received in military education benefits by just 20 for-profit companies soared to an estimated $521.2 million from $66.6 million.

Alumni not dissatisfied

The Public Agenda survey shows students and graduates from for-profit schools are not completely dissatisfied. Their main complaint is the high cost of their education and their sizable student loan balance.

What they like about their for-profit schools – particularly adult students who have jobs – is that these schools tend to offer online classes, accelerated degrees, personal guidance from career counselors, financial aid advisers and tutors, and credit for practical, work-related experience.

Carolin Hagelskamp, director of research at Public Agenda and lead author of the report, says for-profit school graduates who have jobs are much more likely than unemployed alumni to say the experience was worth it.

"It is certainly the case in this study that many graduates from for-profit schools put some blame on their schools for not adequately preparing them for the job market," she said.

What employers think

Another important question is how employers view applicants with degrees from for-profit schools. According to the survey, about half the surveyed employers don't perceive any difference between a degree from a for-profit school and one from a state university.

However, the other half who do see a big difference. Among this group those who see a difference view public schools as superior on a number of counts. In focus groups conducted along with the survey research, employers tended to favor traditional institutions, with many saying that they'd prefer to hire a candidate from a reputable state school versus a for-profit college.

For-profit schools have their supporters. They point out that these schools have been a source of innovation in higher education, being an early leader in the expansion of online education. The for-profit sector has also increased access to higher education for older students with substantial family responsibilities.

Non-profits catching up

The fact is, non-profit schools are quickly catching up, as evidenced by the recent emergence of Southern New Hampshire University – a private, non-profit university – becoming a leader in online education and advertising heavily.

For the survey's authors, the question gets back to why students aren't considering a wider range of schools?

“More needs to be done to help future students understand the value of comparing different schools,” the authors write. “Prospective students want and need better opportunities, online and in person, to engage with and evaluate quality indicators and other information about colleges and programs, including information on how different schools are governed and funded.”

For-profit colleges that advertise heavily and conduct most of their course offerings online have been the center of growing concern about student loan debt.

According to recent regulatory filings, some of these for-profit institutions are coming under closer scrutiny by the Consumer Financial Protection Bureau (CFPB) and various state attorneys general. In a December filing with the Securities and Exchange Commission, ITT Educational Services Inc., disclosed that the CFPB is investigating whether lenders making student loans “are engaging in unlawful acts or practices relating to the advertising, marketing, or origination of private student loans.”

These mostly online institutions have grown in popularity as people try to improve their marketable skills in a tough economy. While traditional colleges tend to be highly selective in admissions, requiring minimum GPAs and test scores, most online institutions have an open admissions policy. Students, most of whom take out loans, spend thousands of dollars more in tuition than they would at a state university or community college in their home state.

Standing out

But it is worth noting not all institutions offering online degrees fall into this category. One, in fact, stands out.

Southern New Hampshire University is conducting a national TV advertising campaign promoting its online undergraduate and graduate degree programs. Unlike ITT, University of Phoenix, DeVry and other for-profit colleges, SNHU is a non-profit,  private, university near Manchester, N.H.

It offers more than 80 online, accredited undergraduate majors in business and liberal arts, as well as graduate degree programs. Never heard of it? That's probably because before 2003, it was a sleepy little college on a 300-acre campus.

That year Paul LeBlanc took over as president and, with an entrepreneur's vision, transformed the university's small online degree program. In less than a decade it made Fast Company's list of the World's 50 Most Innovative Companies, taking its place with such names as Google, Apple and Facebook. 

What it costs

Because it is non-profit its tuition costs are much less than what you'd pay at a for-profit school. For online degrees and certificates, it costs $960 per course, or $320 per credit hour, making it less than in-state tuition at many state-supported universities.

The college was founded in 1932 as an accounting school and today is much like any other small college. Its on-campus enrollment is around 3,000, it competes in Division II men's and women's athletic programs – its men's soccer team won its second straight national title last month – and it has the full complement of fraternities and sororities. Its innovative approach earned a shout-out from President Obama last August as the president, in the video below, made a speech promoting higher education reform.

Today SNHU's online degree programs serve more than 11,000 students – much larger than the on-campus population. Its Center for Online and Continuing Education is the largest online degree provider in New England and, according to Fast Company, brings in more than $74 million a year.

But unlike for-profit colleges, that money is plowed back into SNHU's operations, helping to subsidize the main campus. As a result, when other colleges or universities have to raise tuition or make cuts, SNHU can keep adding course offerings while keeping tuition costs stable.

Other options

Other traditional colleges have begun increasing their online offerings as well, perhaps viewing it as a way to get a handle on rising education costs. The University of Maryland University College – part of the University System of Maryland system since 1947 – has become a virtual university meeting the needs of adult students at public college costs. It boasts an online enrollment of 95,000.

Central Michigan University's Global Campus is another growing public school presence now competing with for-profit universities. It offers graduate and undergraduate degree programs with undergraduate tuition of $370 per credit hour.

If you're looking for a degree or just a few hours of college credit, don't overlook these institutions and others like them. Chances are, you'll get a lot more for your money than you would at a for-profit college.

California Attorney General Kamala D. Harris is suing Corinthian Colleges, Inc. (CCI) and its subsidiaries, charging false and predatory advertising, intentional misrepresentations to students, securities fraud and unlawful use of military seals in advertisements.

The complaint alleges that CCI and the subsidiaries that operate Everest, Heald and WyoTech colleges intentionally targeted low-income, vulnerable Californians through deceptive and false advertisements and aggressive marketing campaigns that misrepresented job placement rates and school programs.

CCI deployed these advertisements through persistent Internet, telemarketing and television ad campaigns, according to the suit. The complaint further alleges that Corinthian executives knowingly misrepresented job placement rates to investors and accrediting agencies, which harmed students, investors and taxpayers.

“The predatory scheme devised by executives at Corinthian Colleges, Inc. is unconscionable. Designed to rake in profits and mislead investors, they targeted some of our state’s most particularly vulnerable people -- including low income, single mothers and veterans returning from combat,” Harris said.

Targeting the vulnerable

According to the complaint, CCI’s predatory marketing efforts specifically target vulnerable, low-income job seekers and single parents who have annual incomes near the federal poverty line. In internal company documents obtained by the Department of Justice, CCI describes its target demographic 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.”

The complaint maintains that CCI advertised job placement rates as high as 100% for specific programs when, in some cases, there is no evidence that a single student obtained a job during the specified time frame. The complaint further alleges that CCI runs millions of online and mobile ads offering ultrasound, x-ray, radiology, and dialysis technician programs at their California campuses -- when, in fact, CCI does not offer those programs. CCI’s call center agents are disciplined if they tell callers that CCI does not offer these programs, the complaint maintains.

Additionally, according to the complaint, CCI includes official Army, Navy, Air Force, Marine Corps, and Coast Guard seals in mailings and on web sites without authorization and in violation of California law.

Exaggerated job placement claims

The complaint contends that CCI committed securities fraud by reporting a nationwide job placement rate of 68.1% in presentations to investors, when senior executives knew this percentage was false. The complaint describes internal audits emailed to CCI executives that show job placement data error rates between 53% and 70%.

The complaint references an email from a CCI executive which explains that in 2011, two Everest College campuses (Hayward and San Francisco) paid a temporary employment agency “to place students to meet the accreditation deadline and minimum placement %.” The complaint also states that CCI double-counted job placements and failed to maintain required records of reported job placements.

Myneisha of Southfield, Mich., who enrolled in an Everest Institute Pharmacy Technician program, has a score to settle on that matter. "They say they help you with job placement," she writes in a ConsumerAffairs post, "when in actuality all they do is give you a list of places that are hiring and tell you to apply. It has now been 5 years, and I am back in school enrolled in a pharmacy technician program. Now, I am stuck with a nice bundle of student loans, and I work for a financial institute."

According to a recent CCI securities filing, the average tuition for an associate’s degree is $40,000 and the average tuition for an online CCI associate’s degree is $34,000. The average tuition for CCI’s non-degree healthcare programs is $17,000.

CCI is based in Santa Ana and currently operates 24 Everest, Heald and WyoTech campuses in California, 111 total campuses in North America and three online programs. Out of the 81,000 students who attend CCI colleges, approximately 27,000 (33%) are in California.

An effort by ConsumerAffairs to reach CCI for comment was unsuccessful.

A little more than a week after the state of New York sued Donald Trump for $40 million, claiming his Trump University doesn't give students much benefit, the feds are taking a harder look at all for-profit career education institutions.

The U.S. Department of Education has released draft regulations that would hold these institutions – mostly providing technical training – accountable for how their students fare in the real world, after graduation. Specifically, the regulations would measure graduate earnings and compare them to the debt the students ran up while getting the training.

Programs that repeatedly produce graduates with a lot of debt and little in the way of employment prospects would be cut off from the lucrative federal aid spigot. And therein lies the government's leverage.

Federal aid

Federal loans and aid provide students with the means to go to college and pay ever-increasing tuition – whether it is a state-supported institution or one of the many for-profit institutions. With access to this wealth of federal aid, for-profit schools of all types tend to be profitable indeed.

But losing access to that stream of taxpayer money would hit for-profit schools hard. In fact, if could deal a fatal blow.

While the department’s Gainful Employment rule would apply to career education programs at all kinds of institutions, its impact might be felt most strongly at for-profit colleges. The Center for Responsible Lending (CRL) cites a Government Accountability Office (GAO) report that it said found for-profit college attendees had higher levels of debt, were less likely to pass licensure tests needed for employment, and were less likely to be employed than those who attended public or private, non-profit schools.

CRL says the report showed nearly half of borrowers who default on federal student loans in the first few years of repayment had attended for-profit colleges, even though for-profits only enroll 12% of all students.

How the rule would work

The rule would work like this: A career education program would be considered failing if its graduates had debt exceeding 12% of their annual earnings and 30% of their discretionary earnings. Discretionary income is anything above 150% of the poverty line and covers non-necessities – things like money for entertainment or vacations. CRL, an activist group that advocates more consumer-friendly lending practices – says the new rules are a good first step.

“Ensuring that a borrower has the ability to repay a loan -- including a student loan -- is a tenet of good lending practices,” CRL said in a statement. “Federal banking regulators have recently promoted similar standards for mortgage lending and small-dollar loans.”

That said, CRL said it thinks the rules could be tougher in two key areas. First, it would include all attendees — not just graduates — when determining eligibility for Federal financial aid. After all, a lot of students start these programs, run up student loan tabs, then don't graduate. They still have to pay back those loans and should be part of the accountability formula, CRL says.

Meeting license requirements

Second, CRL says it would like to see greater emphasis on ensuring that programs meet licensure or other requirements for securing employment. Many jobs require that prospective employees obtain some sort of licensing or graduate from an accredited program.

This isn't the first time that the Department of Education has attempted to increase accountability requirements for for-profit institutions. When it proposed similar tougher rules in 2011, the trade group representing for-profit colleges sued. A federal judge sided with the colleges, ruling that one of the Education Department's rules was arbitrary.

The Department of Education's revised rules eliminates that provision, causing optimism among backers of the tougher rule that these revised regulations might pass muster. Meanwhile, work has resumed this week on the second round of negotiations over the proposed rule.  

New York's attorney general had no more than arrived at a $10 million settlement with one for-profit school than he was onto the next one, suing Donald Trump for $40 million, claiming his "Trump University" deceived its students and failed to deliver the apprenticeships it promised.

Trump said the suit was politically motivated but in a CNN live television exclusive, Schneiderman shot down Trump's “wild accusations” in an interview with Anchor Chris Cuomo on “New Day.” Schneiderman denied he spoke to President Obama on Thursday about the lawsuit or Donald Trump and believes this case is “pretty straightforward.”

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In the earlier case, Attorney General Eric T. Schneiderman reached a $10.25 million settlement with Career Education Corporation (“CEC”), a for-profit education company that operates seven career-focused schools in New York.

“Students pay thousands of dollars to for-profit colleges because they rightly believe education is the ticket to success in their careers. That’s why it’s so unfortunate that this company exploited students’ aspirations and published misleading information,” Schneiderman. “Students deserve – and the law requires – accurate data when schools publish it for prospective students.”

"Mostly useless"

As for Trump, Schneiderman said that students pay up to $35,000 for courses that they think will enable them to get rich in real estate by sitting through what the suit argues are "expensive and mostly useless seminars."

Schneiderman said students are promised they will get apprenticeships with accomplished entrepreneurs and get to meet Trump. Neither happens, the suit charges.

"Trump University engaged in deception at every stage of consumers' advancement through costly programs and caused real financial harm," Schneiderman said. "Trump University, with Donald Trump's knowledge and participation, relied on Trump's name recognition and celebrity status to take advantage of consumers who believed in the Trump brand."

The state Education Department several years ago ordered Trump to stop calling the seminar a "university," noting it didn't have a license and didn't meet the requirements of a university. The name was changed to "Trump Entrepreneur Institute" in 2011.

Trump said the suit was politically motivated.

But Scheiderman's lawsuit catalogs complaints that date back to 2005 and involve consumers who paid as much as $35,000 to sit at Trump's right hand, hoping to learn how to pull off profitable real estate deals.

CEC job placement rates

CEC is headquartered in Illinois and operates seven career-focused schools in New York: Sanford-Brown Institute campuses in Garden City, Melville, White Plains and New York City; and Briarcliffe campuses in Bethpage, Patchogue, and New York City.

CEC also operates several on-line schools, including American InterContinental University and Colorado Technical University. CEC currently enrolls 75,000 students worldwide.

Private, for-profit schools have been criticized in recent years for taking students' money and giving them a degree that has little or no value. But you can't say that about the University of Northern Virginia.

It took students' money and enabled them to get a visa that allowed them to stay in the U.S. while they got a degree in some high-tech field that would perhaps make it possible for them to get a job with the federal government or, you know, as an Edward Snowden-style federal contractor, which is what most people in Northern Virginia seem to be.

The school, home of the Fighting Commuters, had a lot of spirit but, according to state education officials, not much else. It only had four classrooms on the ground floor of an obscure office building but it managed to crank out 198 degrees over the last 15 years.

Things began to unravel when state education officials started taking a closer look at UNVA. You had to look closely, after all, since there wasn't much there, according to published reports. It failed four state inspections and lost its accreditation several years ago.

Last week, the State Council of Higher Education ordered the school to close and advised students to check with the Department of Homeland Security, which is likely to have some bad news about their visas.

Northern Virginia has a number of obscure for-profit universities that critics say make it easy for foreign nationals to get education visas and then either stay in the country illegally or pursue legal residency after getting an information technology job with a government agency or contractor.

With the end of July fast approaching, there's only a little time left before college freshmen start heading off to campus.

So right now a lot of students are walking the aisles of department stores and gathering all they'll need to face their first semester away from home. And many times, Mom and Dad will be footing the bill.

Whether they spend money on knickknacks for their child's dorm room, on footlockers to pack a lot of stuff or a bunch of new clothes, parents will definitely shell out some major bucks for the college experience. And that's before the student sets foot on campus.

How much?

But what will the costs be after that?

According to EasyFianance.com, the average yearly cost for a public four-year college in the United States is $25,892, if the student is from out of state. A private four-year school runs about $31,915 a year.

If you choose to go in-state, a public four-year school will cost $17,227 on average and a public two-year in state school will run $9,541 -- but only if you choose to live off-campus.

Just the start

But tuition is just one of the expenses that parents and students will face.

Yearly health costs for one student will run $2,200. Books will cost $1,137. A computer will run about $1,000. Clothing and other items from the book store will cost $826 and having a social life will set each student back about $520 a year.

Got a car? Add about $500 each year. And attending sporting events will cost about $230, so there will be costs coming for parents and students from all directions.

Show me the money

Research shows there are currently 19.7 million students in the United States attending college -- 11.2 million women and 8.5 million men. And most of them will have to find ways to come up with the money they'll need.

Student borrowing is the most popular way of paying tuition; the average amount a student will borrow is $5,692 a year. Separately, parents will borrow about $3,396 a year and through savings and their personal income, parents will contribute an additional $2,261 yearly.

A good number of students will use their own income to help pay for school; the average amount they'll pay is $8,752 a year. Some will get help from their relatives ($2,314 a year). Others will use grants and scholarships ($1,682 a year) to get the money they need.

So from various sources, a lot of students will be able to gather the funds to pay for school, but for most folks, that's where the financial fun just begins.

Student debt

During the course of four years, many students will think about the debt they'll eventually have to pay off, but they'll probably put those thoughts on mental back burners. 

But somewhere between the graduation ceremony ending and the real world beginning, paying off that debt will be moved to the front burner. Researchers say the average amount of debt a student graduates with is about $25,250 -- an increas of 50% over the past 10 years.

Moreover, 45% of students fail to graduate but are still left with huge loans to pay back.

Out of all students who attended a 4-year school in 2010, two-thirds were left with a student debt, and since 1999 student debt has gone up by 511%.

Paying off debt

Just how are graduates paying off their debt? A lot of them are moving back home to make payments easier.

Statistics show that 85% of college grads move back in with their parents, becoming boomerang kids; in 2010 the unemployment rate for new college graduates was 9.1%.

However, many people will say the high cost of college is worth it, as statistics show that college graduates will earn about 85% more than high school graduates. But some  will have it better than others.

Currently, the college majors with the highest unemployment rate are, clinical psychology, fine arts, U.S. history, library science, military technologies, educational psychology, architecture, industrial and organizational psychology, linguistics and comparative literature.

As far as master's degrees are concerned, geology, nursing, public health, business administration, biology, medicine, physical therapy, economics and civil engineering are some of the highest-paying majors.

Lowering costs

Lt. Gov. Joe Garcia of Colorado says it'll take the efforts of Washington and local communities to get schools to lower tuition.

"One thing we need to do is avoid placing blame and figure out how to find a solution, because it's in our shared interest to do so" said Garcia in a published interview. "We do have to control costs and provide more state resources to the schools so they don't have to raise tuition, and we have to pressure schools to be innovative, to look for ways to provide education at a lower cost to students while not compromising their quality."

In addition, Garcia says we'll all have to view higher education differently from here on in, and solve the problem of high tuition costs together, not individually.

"We have to convince voters that it's an investment that's worth making, and I don't think most voters are buying that just yet," he said. "They view Higher Ed as an individual responsibility; they don't see the collective community benefit that we all get when and individual receives and education."

Getting a college education is an expensive undertaking, but where you go to school makes a big difference in the bill. A state college is more affordable than a private school, in most cases.

And for-profit colleges, which are run as businesses and whose classes tend to be conducted mostly online, can be quite expensive. The Department of Education last month issued a new set of regulations that bring new pressure on the for-profit college industry in an effort to prevent students from being left with crushing debt and slim job prospects.

Karee, of New York, says she entered the University of Phoenix's accounting program with the understanding the tuition would be $24,000. Not bad for a four-year degree. Unfortunately, she misunderstood.

'Biggest surprise of my life'

“After two years, I got the biggest surprise of my life,” she wrote in a ConsumerAffairs post. “That $24,000 was for a two-year degree, an associate degree! I discussed this with the school when I realized I was completely misled, and was advised that that is how it was done. I had to complete a two-year degree before I went on to my BS. So instead of paying for one degree, I ended paying for two useless pieces of paper.”

A surprisingly large number of students in for-profit colleges pursue two-year associate degrees. Surprising, because almost every area of the country has access to a state-supported community college, where the cost of an associate degree is roughly half what for-profit schools charge.

Cree, a single mom from Lafayette, La., writes that she wishes she had gone to a community college instead of University of Phoenix.

“Once you put "University of Phoenix" anywhere on your resume, it is not even looked at,” she writes. “I now find myself back at the brick and mortar school where I started.”

A few credits short

Don, of Cypress, Calif., enrolled at Devryand said he almost earned his degree but has used up his financial aid, leaving him a few credits short. It turns out he owes a lot of money.

“I am a father, husband, and with a new baby on the way,” Don writes. “I have to pay $57,000 back to Sallie Mae with no degree? Is that right? “I'm paying $600 a month with nothing to show for it.”

Lori, of Colver, Pa., writes that she too ran short of aid money before earning a Devry degree.

“My entire degree as a part-time, online student was to cost $58,000.” she writes. As of July, Devry had billed me over $73,000. That is with 28 credits still remaining and eight transferred credits.”

The new regulations governing for-profit colleges are not as tough as some critics of the industry had hoped. They give these companies another three years to meet new standards before facing a stiff penalty – losing access to federal student loan dollars.

Higher default rates

Pressure for the tighter restrictions built over the last two years amid growing evidence that students at for-profit colleges default on their federal loans at a much higher rate than students at public and private colleges.

Federal officials say the purpose of the regulations is to set a standard for judging an institution of higher learning. Under the new rules, they will be required to show that their students are able to leave with the ability and skills to get a job that will allow them to manage their debt.

Sen. Dick Durbin (D-IL) has criticized what he calls the harmful recruiting tactics of some for-profit colleges and said that federal aid through the Defense Department’s voluntary military education programs – Tuition Assistance for servicemembers and MyCAA for their spouses – should be focused on educating, rather than marketing.

At a Senate hearing last month, Durbin called on the Defense Department to strengthen oversight of federal funds and increase the quality of education within the program. He pointed out that while for-profit schools enrolled only 12% of all college students, they receive 25% of the Department of Education’s federal student aid funds and account for 47% of student loan defaults.

Former Education Secretary William Bennett has never shied away from controversy and has now waded into the debate over the cost of higher education with a new book with the provocative title, "Is College Worth It?" 

In it, Bennett argues that only 150 out of 3,500 U.S. colleges and universities provide an education that is worth the investment it requires. He points out that nearly half of those who start a four-year education drop out.

Among 2011 graduates, he says half are unemployed or significantly underemployed. If you aren't attending a handful of colleges, including California's Harvey Mudd College, MIT, the California Institute of Technology, Stanford, Harvard or Princeton, it's not worth the money, he argues.

Another view

Blogger Zac Bissonette, writing at Yahoo Finance, argues that Bennett is wrong – that most of the time getting a college education will pay off. He agrees that college may not be right for students who didn't perform well in high school. However, he says college is worth it if you opt for a lower-cost in-state public college, minimize debt, study hard and make connections. 

At ConsumerAffairs we have heard from a number of students who don't think college was worth the cost. By and large, these students have attended one of the growing number of for-profit colleges.

“I had attended the University of Phoenix and graduated only to learn that I had over $7,000 in student loans - half what the school advisor had explained to me,” Bob, of Portland, Ore., posted at ConsumerAffairs.

Gail, of Mason City, Iowa, writes that she incurred more student debt to attend Kaplan University than she can pay back.

“The student loans were consolidated and I was on the income-based plan,” she reports. “Now I need to contact legal aid to get help, because they put me on a standard plan. I was never given any help in finding a job, so I'm working for two temp services.”

Can't make the payments

Sarah, of New Oxford, Pa., writes that her husband is unable to make his student loan payments to Sallie Mae.

“They will allow him to defer the loan for $150 for three months, but the $150 does not go towards paying off his loan,” Sarah wrote in a ConsumerAffairs post. “We have told them we could squeeze $300, but they will not lower to that amount, and will not accept partial payments."

Lori, of Colver, Pa., attended DeVry University, another for-profit school catering to mostly adult students, and writes that she spent a lot of money without getting a degree.

“This past July I was informed that I no longer had enough in loans to finish my degree,” she write. “My entire degree as a part-time online student was to cost $58,000 and as of July DeVry had billed me over $73,000. That is with 28 credits still remaining and 8 transferred credits.”

Public colleges cost much less

The cost of a for-profit school is similar to that of an established private, non-profit institution and almost everyone who attends one pays for it with student loans. State-supported schools – particularly community colleges -- cost much less and can often be paid for by working a part-time job.

Even so, getting a degree won't guarantee a job, at least not right away. A new study by the consulting firm McKinsey & Co., along with the online student hub Chegg, finds that many young people coming out of college are overqualified for today's job market, yet are completely unprepared for its challenges.

More than half the graduates in the survey said they would do things differently if they had it to do over again.

College graduates don't have long to celebrate before their student loans come due, and a report released today warns that it's not just the graduates whose economic progress is being held back. The broader economy could be affected as well, the Consumer Financial Protection Bureau (CFPB) found.

“College can open up many opportunities, and we do not want that college degree to become more of a burden than a blessing for those saddled with unmanageable debt in a tough employment market,” said CFPB Director Richard Cordray. “Today’s report warns of the potential domino effects on the economy of high student debt. It also identifies policy and market-based solutions based on the public’s comments that would help borrowers manage their private student loan burden.” 

The report summarizes more than 28,000 comments received over the last few months. Many of those who commented were concerned about the potential domino effect of student loan debt on the economy.

Several comments described how monthly student loan payments can deplete consumers’ personal savings, may crowd out other types of consumer spending, and may shape the choices young graduates make about their careers and the communities in which they live. 

Sectors affected

Other comments centered around specific economic sectors, including: 

• Housing: The current generation of first-time homebuyers is inhibited by a heavy student debt burden that may hurt their ability to qualify for a mortgage or to save for a down payment.

• Small Business Development: Student debt may limit consumers’ ability to access small business credit and to save capital. 

• Retirement Savings: Those with student debt may be unable to save for retirement or may have to rely on their parents, who are nearing retirement, to help pay their debt. 

• Rural Communities: Rural areas in particular struggle to attract and retain young professionals. Car ownership may be a prerequisite for employment and rental housing may be scarce. For cash-strapped student borrowers, the need to buy a car or a house may deter them from moving to a rural area.

Proposed solutions

The report also outlines a number of proposed solutions, including:

• “Refi relief” for borrowers who pay on time:  Comments from market participants, policy experts, and individual borrowers suggest that refinance options on private student loans could offer relief for responsible borrowers. If borrowers were eligible to refinance their debt at lower interest rates, they could potentially save thousands of dollars in the process.

• A “road to recovery” for borrowers in distress: Other comments suggest that a “road to recovery” could be a solution for struggling borrowers trapped in the terms of their private student loans. This could be a  negotiable, transparent, step-by-step process where monthly payments are lowered to match a reasonable debt-to-income ratio. 

• A “credit clean slate” for borrowers in default:  A number of comments propose that a “credit clean slate” option would be appropriate for borrowers who need a way to repair their credit and get out of default. 

When parents and their children start shopping for colleges, a lot of factors come into play in making the final choice. One of those factors is – or should be – the cost of a four-year education.

On the typical college's website you'll find a current estimate for tuition and fees for a semester or year, plus estimated costs of room and board and books. But that's just the sticker price. The actual cost may be higher or lower.

The choice of a school doesn't always come down to cost but increasingly it does. So being able to find the real cost of college can help you make the right decision.

Online tool

One tool that can help is the U.S. Department of Education's College Scorecard, a calculator that lets you determine the cost of attending some 600 institutions of higher learning in the U.S.

It works by adding up the tuition and fees the school charges, then subtracting the average aid a student receives. However, it also assumes the average student will have to take out loans, so the payments on those loans are also figured into the mix.

The actual cost can be very different from the sticker price. The University of Wisconsin (UW) at Madison is a prime example.

UW's website lists in-state tuition at $10,609. When you add in books, room and board and miscellaneous other costs, it adds up to $24,204 – as expensive as some private universities. But, it turns out, the actual cost is much lower, at least according to the Scorecard.

Takes financial aid into account

When you enter UW into the calculator, you find the net cost is just under $15,000. The net price is what undergraduate students pay after grants and scholarships – financial aid you don’t have to pay back -- are subtracted from the institution’s cost of attendance.

The tool also reveals that UW students borrow, on average, $19,897 to pay for a four-year education. The federal loan payment over 10 years for this amount is approximately $228.98 per month. That has to be figured into the real cost of an education.

The scorecard provides other information that might be useful when picking a college. Again, in UW's case, it shows an 82% graduation rate and a 1.4% student loan default rate, well below the national average.

If students do not apply for or receive grants or aid, and are forced to take out larger loans, the real, or net, cost of attending college and receiving an undergraduate degree can be much higher than the Scorecard price.

Growing awareness of costs

"Now more than ever, it's crucial that parents and students are aware of the total cost of a degree," said Chuck Cohn, CEO of Varsity Tutors, a private academic tutoring and test prep company. " As the cost of tuition continues to rise, students need to be vigilant about planning ahead and finding the best options for funding their education, not only to attend college in the first place, but also to graduate with an amount of debt they can manage."

College debt is a growing concern. In the U.S., there is now a larger balance of student loan debt than credit card debt. In 2012 students ended their education owing an average $27,000. Some had degrees, some didn't. Not surprisingly, 67% of students who graduated in 2009 are still paying on their student loans.

The College Scorecard hasn't been in operation all that long and some early critics have said it lacks specifics to help parents and students gauge the real costs of college, which more often than not involve student loans. While it might not provide the complete picture, it does underscore the need for students of limited means to obtain scholarships and grants to pay the rising costs of education, or otherwise be saddled with significant debt.  

By the time a child reaches the sophomore year of high school, going to college jumps from a future goal to something kids really have to start preparing for, whether it’s taking the PSATs, sporadically visiting schools to get a feel of where they'll want to go or deciding what they'd like to study once their freshman year at college begins.

And for many families, finances will be a real issue and may determine which school a kid can attend, whether they’ll have to work and how much money they will need to borrow.

Once senior year of high school hits, all kinds of decisions need to be made and by the time the January rolls around, kids should be getting out the last of their college and financial aid applications and parents--especially those who may be cash-strapped--need to get the last of their financial ducks in a row, which will oftentimes include a big fat loan.

Understanding college loans can get a little confusing, in terms of knowing which loan is right for you, what the monthly payments will look like, and what the penalty fees will be if you’re late or miss a payment. We’ve pulled a couple of places you can visit, because many families will need all the help they can get to both pay for college and fully understand how those payments are applied.

First, The U.S. Department of Education has added two new features to its StudentLoans.gov site.

One feature is a Repayment Estimator and the other a Complete Counseling page, which are both pretty self-explanatory and both can assist families, whether it's a family sending their child to college for the first time or one that's paying back a loan after their child graduates. 

Less intimidated

The Department of Education says the new additions to the StudentLoans.gov site are supposed to help families feel less intimated about the process of borrowing and repaying a college loan.

“With college graduation around the corner, thousands of students will soon start to repay their loans and we want to help them select the repayment plan that makes sense for them,” said U.S. Secretary of Education Arne Duncan.

“These tools give students the information they need to understand how to better manage their student loan obligations. Our goal is to make the entire challenge of college costs much less daunting, and these tools are additional steps in that direction.”

To access the sites' new features, current users will need to log in with their PIN numbers and new users can apply for a PIN here.

An abacus

Collegebacus.com is another site that helps families understand college costs and financial aid packages.

The site is free and perhaps best of all, the creators say they’ll never sell your financial information to other parties for future solicitations or charge for use of the site.

“There are many hidden costs in the college process; our goal is to help users identify and hopefully avoid these costs. We do not wish to add to them. We will never sell the financial information of our users. Our site earns revenue by connecting prospective students with colleges, not through the sale of financial information to third parties,” the company says on its website.

Here’s how the site works:

It gathers net-price calculators from about 2,500 colleges and universities across the U.S., as legislation recently forced schools that receive federal funding to add net-price calculators on its websites, so families can better determine how much each school costs and how big of a dent their financial aid packages will put in the tuition.

These calculators are usually able to break down each cost, especially those hidden fees that often aren’t mentioned in the school’s advertised tuition prices, so instead of families having to go to each individual college site, Collegebacus.com provides one-stop-shopping, or one-stop-calculating if you will.

The creators of the site say the calculations it provides will be the same as the ones provided by the net-price calculators on the college websites.

Out of whack

That's all fine but the concept of going into extreme debt to get an education seems totally out of whack, and some politicians agree.

Minnesota Gov. Mark Dayton and Sen. Al Franken recently attended a panel discussion on the campus of St. Paul College, in Minnesota and said that poor families digging themselves into an even bigger financial hole to pay for their child’s education is vastly different from how they were able to secure a college education.

“When I was an aide to then-Sen. Walter Mondale in 1975-1976, education was one of my areas of responsibility, said Dayton.

“And back then federal student financial aid was one-third grants, one-third loans and one-third college work study. Now it’s 2% college work-study, 18% grants for the poorest student and 80% loans; which means for most students and their families it’s loans, loans and more loans.

Fine talk. Now what?

As student loan delinquencies rise, there are growing fears that borrowers will be treated unfairly by lenders and their servicers. Seeking to get a handle on the situation, the Consumer Financial Protection Bureau (CFPB) wants to extend federal oversight to some so-called "nonbank" student loans.

“The student loan market has grown rapidly in the last decade, and servicers are now facing the stress of an increasing number of delinquent borrowers,” said CFPB Director Richard Cordray. “Our rule would bring new oversight to the student loan market and help ensure that tens of millions of borrowers are not treated unfairly by their servicers.”

The Bureau already oversees student loan servicing at larger banks. Thew proposed new rule would expand that supervision to certain nonbanks, requiring them to comply with federal consumer financial laws.

The Bureau would ensure that banks and nonbanks are following the same rules in the student loan servicing market. The vast majority of student loan servicing is conducted by nonbank servicers.

Under the rule, any nonbank student loan servicer that handles more than 1 million borrower accounts would be subject to CFPB supervisory authority. With that threshold, the Bureau estimates that it would have authority to supervise the seven largest student loan servicers.

Combined, those seven service the loans of 49 million borrower accounts, representing most of the activity in the student loan servicing market.

The CFPB said it will continue to coordinate closely with the U.S. Department of Education, which conducts reviews of companies handling loans in accordance with the federal student aid program.

"Director Cordray and the CFPB team have always been great partners with us, and we have worked together on a number of projects to protect consumers and better support students," said U.S. Education Secretary Arne Duncan. "We look forward to working with them on their efforts to ensure that loan servicers are protecting student loan borrowers."

There are many things that go into a student’s decision when they're choosing a college -- some related to academics, some to cost and some to location.

Sometimes people choose a school because other family members went there, so a student’s desires take second place to a sense of obligation and family pride.

There are also times when a high school student doesn’t have the proper amount of adult guidance and the college decision is simply left up to them, which can lead to students being placed in a school that doesn’t fit their passion or help them develop one. It's also hard for a student to generate excitement for a school if they don’t know enough about it.

Fortunately, there are some websites available that can at least help students get started on their college quest and although you’ll have to couple these sites with some good old-fashioned legwork by visiting schools and speaking to administrators, they can at least give you a basic amount of information that you can fill out later on.

College Scorecard

One of the newer college sites comes from the U.S. Department of Education and was mentioned in President Obama’s last State of the Union address. It’s called “The College Scorecard,” which the President says will not only help parents and students decide which schools are best for them, but also help decide which schools will be best for their budget.

“My administration will release a new College Scorecard that parents and students can use to compare schools based on a simple criteria: where can you get the most bang for your educational buck,” Obama said.

Parents and students can use the site in any number of ways by conducting searches by degree, major, size and location of the campus or campus setting.  You can plug a college name into the search field and pull up information that way too.

Once your search is completed, the screen brings up a digital scorecard that has each school's tuition cost, loan default rate, graduation rate, employment rate and the average amount that’s borrowed per student.

U.S. Secretary of Education Arne Duncan says the virtual scorecard is supposed to provide a quick college overview for students and will help them make a more informed decision compared to just a few years ago.

“We know students and families are often overwhelmed in the college search process, but feel they lack the tools to sort through the information and decide which school is right for them,” said Duncan. “The College Scorecard provides a snapshot about an institution’s cost and value to help families make smart decisions about where to enroll.”

NextStepU

Another useful site, which also serves as a good first step when researching colleges, is NextStepU.com. It lets you search for schools, find available scholarships and get guided tips on how to pay for school.

The site also has different contests that users can join like writing competitions and contests where you can win tuition money, but it would probably be smart to stay away from these offers since you’ll most likely be inundated with annoying follow-up emails and non-stop promotional offers.

Although NextStepU doesn’t seem to provide the same depth of well-researched data as The College Scorecard, the site is still easy to navigate and has some helpful information about many different aspects of the college-hunting experience.

What’s a little annoying about NextStepU is that users will have to register to use some of its features, always an annoying step and one that raises privacy concerns.

But in an email, Diana Fisher, the site's publisher, said the only part of the site that requires registration (aside from the Win Free Tuition contest) is the Scholarship Search Tool.

"The rest of the site you are free to navigate at will. We abide by privacy laws and are quite strict in what we do with the registrations on the site, especially because they are teens and most are under 18," Fisher said.

But without signing up you can still do a quick college search based on your major and location and be able to see the cost of the school, the average amount of student aid awarded and some informational write-ups on each institution. Registered users can click on a link and contact a school of their choice to request information be sent to them.

Deciding on a school is no easy task and doing your homework can be a more cumbersome experience, but instead of picking up phones and using snail mail to get college info like many of us had to do back in the day, the process has been streamlined, thanks to technology and some creative educators who know just how difficult finding the perfect school can be.

These sites and others like them are also useful because parents can make sure their kids are choosing the right schools for the right reason and not making their selections solely based on where the campus is located and what the social scene will be like.

With student loans now topping credit cards as the largest source of consumer debt in the U.S., the Consumer Financial Protection Bureau (CFPB) is gathering information to develop options for policymakers to make repayment of private student loans more manageable for struggling borrowers.

The CFPB says while private student loan borrowers wish to pay their loans, they face high payments, lack alternative repayment and refinance options.

“Too many private student loan borrowers are struggling with unwieldy debt that prevents them from climbing the economic ladder,” said CFPB Director Richard Cordray. “We will be analyzing plans for policymakers to consider that might help avoid a repeat of the mortgage meltdown for today's student loan borrowers.”

Difficulty repaying

In October 2012, the CFPB Student Loan Ombudsman released a report noting that consumers had trouble negotiating affordable repayment plans with their lenders and servicers for private student loans -- loans that are not designed with income-based payment options. This report to the Secretary of the Treasury, the Secretary of Education, the CFPB Director, and Congress recommended that policymakers explore options to spur the availability of alternative repayment and refinance options.

In July 2012, Director Cordray and Secretary of Education Arne Duncan submitted a report to Congress on the private student loan market. The study indicates there are more than $8 billion in defaulted private student loan balances, representing 850,000 distinct loans, with even more in delinquency.

Unlike distressed borrowers with federal student loans, private student loan borrowers generally do not have long-term forbearance, income-based repayment, or rehabilitation options if they default. The study concluded that many borrowers are struggling to pay off private student loans, especially in tough economic times.

The CFPB has released a Notice and Request for Information in the Federal Register. With the information gathered from that notice, the CFPB plans to explore more detailed recommendations to policymakers in order to facilitate greater repayment affordability of private student loans.

Flexible repayment options sought

The Bureau is looking for ways that private student loan borrowers can have more flexible repayment options and is seeking input on a variety of issues related to repayment affordability, including:

• How student loan burdens might affect the broader economy and hinder access to mortgage credit and automobile loans;
• How distressed borrowers manage their student loan obligations;
• What options currently exist for borrowers to lower their monthly payments on private student loans;
• Examples of successful alternate payment programs in other markets and which features could apply to this market; and
• The most effective mechanisms for communicating with distressed borrowers.

Members of the public, including financial institutions, colleges and universities, professional associations representing health professionals and educators, housing finance experts, students, and families are encouraged to submit comments.

Comments will be accepted until April 8, 2013.

November, besides being the kick-off to the holiday season, is also a critical month in the college application process.

So amid planning for shopping and family feasts, students and their parents are trying to meet college decision deadlines. The College Board has unveiled a tool it says could be helpful in staying on track.

It's called BigFuture, a place where students can create a personalized plan that gives them expert advice on all the steps they need to take to apply to college. It might prove helpful to those who tend to procrastinate or get overwhelmed by decision-making.

How-to help

It offers guidance on how to finalize your application list, how to get a great letter of recommendation and how to craft your application essays.

“The key to minimizing the stress of the college application process, whether you are starting as early as middle school or are a senior just beginning now, is to get and stay organized,” said April Bell, director of counseling at the College Board. “A step-by-step action plan will allow you to keep track of deadlines and various elements of a strong college application.”

Students can get started by answering just five simple questions. Parents can also find action plans on the Website to help guide their children.

It also provides comparative information on almost 4,000 college options.

Finding the right school

Worried about getting into college? The site might prove helpful. College admission isn’t as competitive as many students think.

Fewer than 100 colleges in the U.S. are highly selective, accepting fewer than 25 percent of applicants. Close to 500 four-year colleges accept more than 75 percent of applicants. Open admission colleges accept all or most high school graduates. The site can help students find those schools.

The College Board cites research showing that applying to at least three colleges improves your chances of successfully enrolling in college.

“Also critical is the ability to narrow your list once you’ve explored all of your options,” Bell said. “Most counselors recommend that students apply to five to eight colleges -- more than that may not be the best use of time and resources.”

Of course, paying for college is also a challenge. BigFuture has a tool providing students a personalized cost estimate from more than 300 colleges by using the College Board Net Price Calculator. They can also link to an individual institution’s net price calculator by clicking on the “paying” tab on the school’s profile page on the college search section of BigFuture.

People love bargains, except, apparently, when it comes to education. In pursuit of a college degree, students and their families run up huge debts, to the point that total student loan indebtedness is now over $1 trillion.

But is it really necessary to spend tens of thousands of dollars in pursuit of a college degree? Community colleges offer an overlooked alternative.

Community colleges started out almost as vocational schools. Students attended for two years getting a degree that prepared them for a particular vocational field, such as nursing.

Path to four-year degree

But community colleges also offer study in academic fields and increasingly, their credits transfer to most four-year colleges and universities. In many states, community colleges have become aligned with the state's university system, so that community college credits easily transfer to state-supported four-year schools.

The tuition at a typical community college is usually less than half of what it costs to attend a four-year public university. It is much less than a typical private or for-profit university. In fact, many students make the costly mistake of enrolling at an expensive for-profit school to obtain a two-year associates degree.

Sherley, of Hackettstown, NJ, said she pursued an associates degree from Katherine Gibbs, a for-profit school, hoping she could work as an administrative assistant. She said she ran up $50,000 in loans for a two-year degree that would have cost 10 percent of that -- or less -- at a community college.

“After eight years I am still unable to find a job in that field,” she wrote in a ConsumerAffairs post. ”Now I am stuck with a load of bills from two different lenders.”

Better education

Not only do community colleges cost less, the quality of education continues to improve, so that students who do their first two years of work there go on to have successful academic careers when they transfer to a four year college.

Tomas Hult, Director of Michigan State University's International Business Center, says community colleges do an exceptional job in providing courses in international business. His study found that in 2008, about 51 percent of community colleges offered a basic course in international business. Four years later that number had jumped to 85 percent.

“The most important takeaway is that we as a nation appear to be putting funds into community college education to infuse a global mindset in a much larger way than in the past few years,” Hult said. “International business education is really starting to flourish at two-year schools.”

Playing a pivotal role

Forty-four percent of college students -- about 13 million students -- attend about 1,200 community colleges in the United States, so the schools play a pivotal role in educating the 21st-century global workforce, he said.

And how can they do it so much more cheaply than four-year schools? It probably comes down to spending less money.

In recent years the typical four-year school has spent millions of dollars constructing luxury dormitories and other creature comforts to attract students -- not to mention football stadiums and basketball arenas. For-profit schools, of course, have to show a profit for stockholders.

Community colleges generally don't have those cost burdens. In many ways they operate the way colleges did decades ago -- a time when a college education wasn't so expensive.

After facing such things as IEDs and car bombs while serving overseas, the last thing a U.S. servicemember needs upon returning home is a hassle with a student loan.

But according to a newly-released report from the Consumer Financial Protection Bureau (CFPB), that's exactly what a lot of them are facing. The report, “The Next Front? Student Loan Servicing and the Cost to Our Men and Women in Uniform,” describes servicemember complaints regarding the difficulties they have accessing the protections granted to them under federal rules.

The hurdles they describe range from not being able to get the information they need, to being met with roadblocks when they do try to pursue their benefits.

“We are concerned that our men and women in uniform are not being given the opportunities they have earned under federal law,” said CFPB Director Richard Cordray. “For all the service our military members give us, the least we can do is protect them from this kind of disservice.”

Paying off loans

Many servicemembers have student loan debt, including both federal and private student loans. The average cumulative amount of student loan debt for active-duty servicemembers graduating from college in 2008 was about $26,000, according to the National Center for Education Statistics.

Student loan default can be particularly troubling for active-duty servicemembers because it can affect their security clearance and military career. Burdensome debt can also be distracting and difficult to deal with, especially if serving overseas.

Congress put in place laws and programs to grant additional protections to servicemembers with student loan debt. The Servicemembers Civil Relief Act (SCRA) gives an interest rate reduction to men and women in uniform who acquired student loan debt before they went on active duty.

The Income-Based Repayment program reduces monthly payments based on income and family size. And, among other choices, there are special loan deferral programs, principal reduction options on certain loans for service in hostile areas, and loan forgiveness on certain federal loans for public service.

Myriad problems

The report, based largely on complaints filed with the CFPB, as well as input from military borrowers at dozens of town halls and forums across the country, looks at how servicemembers are handling both their federal and private student loans.

It considers servicemembers who entered the military with debt and those who acquired it while serving. The report found that from trying to get good information to trying to take advantage of the benefits, servicemembers said they run into trouble. Specifically, servicemembers say that they:

• Receive incomplete or inaccurate information: A common theme the CFPB heard from servicemembers was that they relied on their loan servicers to properly inform them of their repayment options -- but that servicers were not providing clear and accurate information. According to servicemembers, this was particularly true for military deferment and forbearance. By relying on this information and choosing less favorable repayment plans, servicemembers may be setting themselves up for tens of thousands of dollars in excess debt over the life of the loan.
• Have difficulty navigating the system of benefits: The patchwork of options for military student loan borrowers can be confusing. Some laws and rules apply only to federal loans. Some benefits have specific eligibility requirements or conditions attached. Some require loan consolidation which might exclude borrowers from other protections. And other options vary greatly depending on the private student loan lender. Servicemembers who have multiple loans from multiple lenders say that it can be particularly difficult figuring out which loans are eligible for benefits.
• Face roadblocks when they try to get their benefits: Even if they navigate the maze of options, servicemembers report that they are often met with loan servicer roadblocks. For example, the CFPB has heard from military borrowers, including those in combat zones, who have been denied interest-rate protections because they failed to resubmit unnecessary paperwork. These kinds of servicing obstacles prevent servicemembers from taking advantage of the full range of protections they have earned through their service to this country.

The problems that servicemembers report are typically on top of the problems civilian borrowers report in loan servicing as outlined in the CFPB Student Loan Ombudsman’s Annual Report issued this week. That report -- which focuses specifically on private student loans -- described complaints received from private student loan borrowers, including surprises, customer service runarounds, and dead-end loan terms.

Education program

The CFPB is teaming up with the Department of Defense to create better awareness of the rights and options for servicemember student loan borrowers. The partnership will be multi-pronged, including Judge Advocate Generals, Education Service Officers and working with personal financial counselors on military bases.

CFPB staff, for example, will be visiting the Judge Advocate General’s Legal Center and School in Charlottesville, VA, to train legal assistance attorneys from all branches of the military about issues raised in the report, and to ensure they know about repayment options for servicemembers.

In an effort to educate military consumers and the advisers seeking to assist them, the CFPB has developed a guide for servicemembers with student loans with information on the various student loan repayment options, as well as frequently asked questions commonly posed by military student loan borrowers at Ask CFPB.

Servicemembers can also use the CFPB’s online Web tool, the Student Debt Repayment Assistant, to navigate their options.

More information about how the CFPB is helping servicemembers is available here.

There was a time when it looked like for-profit education had nowhere to go but up. But things change and after a period of explosive growth, the University of Phoenix says its profits are off sharply and it's closing 115 of its smaller locations.

That leaves about 13,000 students looking for someplace to finish their course work. The school said they can transfer to online courses or move to a different locations. The locations being closed are scattered around the country in 30 states.

Students are being notified today, the school said.

UOP has about 328,000 students, down from its peak of about 400,000. After the closures announced today, it will have 112 locations in 36 states, the District of Columbia and Puerto Rico.

University of Phoenix President Bill Pepicello blamed the falling enrollment on economic uncertainty. 

"People are simply holding off investing money in education at a time when the costs are escalating and the outcomes are uncertain," he said said.

Maybe so but while it's true that enrollment is falling at for-profit schools, traditional public and private universities are struggling to keep up with surging student loads.

Heavy backlash

For-profit schools have been feeling a heavy backlash lately, as students complain about the quality of the courses and critics lash the industry for siphoning off billions of dollars in taxpayer funds.

“My experience at this school has been a nightmare,” Shannon, of Chicago, wrote in a ConsumerAffairs post about University of Phoenix. “I feel lied to and used. I specifically chose this school as I was told most of my previous human service credits would be transferred, which they have not. I could accept retaking some classes if I felt I was learning anything useful. Instead, I have had professors who barely understand the material. My biggest complaint however is their heavy reliance on group work, a practice which greatly benefits them by increasing their graduation rate.”

A report issued in July by the Senate Committee on Health, Education, Labor, and Pensions showed $32 billion in the most recent year went to companies that operate for-profit colleges. Yet, more than half of the students who enrolled in those colleges in 2008-9 left without a degree or diploma within a median of four months.

In its report, the committee suggests the corporate structure of the for-profit institutions creates pressure to produce ever-larger returns for shareholders. While small independent for-profit colleges have a long history, by 2009 the committee found at least 76 percent of students attending for-profit colleges were enrolled in a college owned by either a company traded on a major stock exchange or a college owned by a private equity firm. The financial performance of these companies is closely tracked by analysts and by investors.

“Congress has failed to counterbalance investor demands for increased financial returns with requirements that hold companies accountable to taxpayers for providing quality education, support, and outcomes,” the committee found. “Federal law and regulations currently do not align the incentives of for-profit colleges so that the colleges succeed financially when students succeed.”

If there's anything worse than graduating college and not being able to find a decent job, it has to be not being able to find work AND facing a mountain of student loan debt.

According to a report released by the Consumer Financial Protection Bureau (CFPB) Student Loan Ombudsman, private student loan borrowers say they are sometimes surprised by the terms and conditions of their loans, they are given the runaround by their loan servicer, and they have few options to refinance or modify repayment for a better deal.

“Graduates don’t have a fair chance to pay back their debts if they are faced with surprises, runarounds, and dead-ends by student loan servicers,” said CFPB Director Richard Cordray, who was presented with the report today. “These young consumers are facing serious challenges in dealing with their debt, which can hold them back from getting ahead in life.”

Familiar scenario

“Student loan borrower stories of detours and dead-ends with their servicers bear an uncanny resemblance to problematic practices uncovered in the mortgage servicing business,” said CFPB Student Loan Ombudsman Rohit Chopra, who wrote the report. “Consumers deserve clarity, not chaos and confusion.”

“I graduated from college in 2003, had a student loan for $8,000 and have been paying it off continuously since then,” writes Rebecca of Lyman, NH, in a ConsumerAffairs post. “I still owe $5,000 on my loan and have paid more than originally borrowed so far, doubling up on my payment most months. Even so, I will end up paying more than double the amount I borrowed by the time I am done. This is a very bad loan for anyone. Citibank also calls my house up to three times a day at all times of the day and night (often when you pick up the phone there is no one there!) and harasses me from the day the payment is due until it is paid each month. I tell them I have paid it online, the time and date, but they say their system won't update for days and I will be contacted regardless. If there is not a lawsuit on unethical business practices with this company, there should be.”

Kimberly of Cairo, GA, has a student loan with rates of 10.75% with Wells Fargo. “They call me morning, noon, and night asking for money,” she tells ConsumerAffairs. “I could not pay a bill of $650.00, so I took a hardship deference. Now the deference has come to end, they expect me to make a payment of $800.00! I have tried to make smaller payments, but they will not accept these. I also have other student loans which I do stay current because they are more affordable. I am afraid they are going to go after my husband, which is my cosigner. I am not a traditional student either. I am 43 years old, and I have a family. I graduated in May 2011, and dealing with this is a nightmare!”

Huge burden

Student loans have now surpassed credit cards as the largest source of consumer debt in the United States. Earlier this year, the CFPB announced that outstanding student loan debt crossed the $1 trillion mark.

Before the financial meltdown, the private student loan market boomed and many consumers borrowed significantly to pay for post-secondary education. But unlike federal student loans, private student loans generally have higher and variable interest rates and may not allow borrowers to easily manage their payments in times of hardship.

The Dodd-Frank Wall Street Reform and Consumer Protection Act established an ombudsman for student loans within the CFPB to assist borrowers with private student loan complaints. Today’s report, which was mandated by Congress, analyzed approximately 2,900 private student loan complaints, comments, and other submissions and input from borrowers. The report found that roughly 95 percent of the complaints are about loan servicing -- when borrowers try to pay back their debt or are unable to pay.

Top findings

The three major findings of the report are:

• Surprises cause borrower confusion: Private student loan borrowers told the CFPB that after they graduate, some have a hard time figuring out how much they owe. Borrowers complain that they may not receive the information they need about their loans when repayments begin, and are caught off guard by unexpected terms and costs. Some surprises include unknown or misunderstood terms and conditions, accounts changing hands, unauthorized payments, and unexpected forbearance fees. With limited information to anticipate and avoid these surprises, some borrowers end up in trouble.
• Borrowers report getting the runaround from servicers: A common theme found in the complaints is the difficulty some borrowers face when trying to contact their servicer. Borrowers report having difficulty taking advantage of the incentives promised to them before they signed up for the loan. Then, whether it is looking for clear and accurate information about bills, trying to find payment options, or simply trying to get payments processed properly, some borrowers complain about getting the runaround. This may include payments credited late or unevenly, faulty record-keeping, and inadequate assistance from servicing staff. The report finds that the service problems in private student loan servicing reported by borrowers mirrors the experiences borrowers have reported in mortgage servicing.
• Borrowers face refinancing dead-ends: The report found that another theme of the complaints was that responsible borrowers find themselves locked into loan terms they cannot negotiate out of – no matter what their circumstances. Despite efforts to make good on their loans, some borrowers stated that they ended up in distress with limited or no options for deferrals, forbearance, or interest-rate changes. According to the complaints, even some co-signers who were promised that they would be released from responsibility after a period of on-time payments, may find themselves trapped in the loan. The results can be disastrous for some borrowers, especially ones new to the job market and struggling to find work.

U.S. college students and former students now owe more than $1 trillion in student loans, according to the Consumer Financial Protection Bureau (CFPB). A new report shows just how wide-spread that debt is.

The report, conducted by the Pew Research Center, is based on its analysis showing nearly one out of five U.S. households owes money for student loans. That's more than double the share from 20 years ago and a fairly significant increase to the 15 percent of households with student loan debt in 2007.

More people going to college

Since the onset of the Great Recession and the jump in unemployment, more people are choosing to go to college because they can't find a job, or hope to improve their job prospects by earning a degree. Because college costs so much, almost no one goes to college anymore without borrowing money.

It's not just parents who are going into debt to pay for their children's education. The Pew report found that a record 40 percent of all households headed by someone younger than age 35 owe student loan debt -- by far the highest share among any age group.

That's a bit disturbing because it shows the debt burden is being assumed by people early in their careers when the debt service on their loans commands a large percentage of their incomes.

Burden falls heaviest on low-income households

The report also finds that, whether computed as a share of household income or assets, the relative burden of student loan debt is greatest for households in the bottom fifth of the income spectrum, even though members of such households are less likely than those in other groups to attend college in the first place.

Since 2007 the incidence of student debt has increased in nearly every demographic and economic category, as has the size of that debt, the report finds.

The households owing student loan debt owe, on average $26,683. That's up from $23,349 in 2007.

In 2007 10 percent of households holding student debt owed more than $54,238. In 2010, those 10 percent of households owed more than $61.894.

Need help repaying your student loans? The CFPB offers help and advice to students and former students who are trying to get a handle on their payments.

There's new evidence that recent college graduates are struggling under the mounting burden of student loan debt, which earlier this year passed the $1 trillion mark.

Equifax, one of the three credit reporting agencies, has found that student loan delinquencies and write-offs have increased significantly over the past 12 months.

According to the report, student loan write-off rates increased more than 29 percent month-to-month from June-July 2012. Student loan 60-day delinquency rates increased more than 14 percent year-to-year in the same period.

Loan balances growing

Student loan balances are also going up, rising $58.5 billion year-over-year from July 2011-2012. The total number of student loans has increased nearly 24 percent from July 2011, when there were 89 million, to July 2012 when there were 116 million.

In the first seven months of 2012 lenders have written off $9.3 billion in student loan debt, a 10 percent increase over the year before. Severe derogatory balances, which usually comes just before a write-off, are up 14 percent over a year ago.

"Student loans is one area of lending not affected by tighter underwriting standards since the start of the recession," said Equifax Chief Economist Amy Crews Cutts. "The investment in higher education pays off over a person's lifetime, while the tuition cost has to be paid up-front, leading to big demand for student loans. Unfortunately, the current job market has not been kind to new graduates and their student loans start to come due once they graduate – if they don't have a job by the time the first installment is due, they can find themselves in quite a jam."

Other consumer credit areas improving

While student loan delinquency rates are surging, consumers appear to have a pretty good handle on their credit in other area. The Equifax reports shows that, in the July 2011 to 2012 period, auto loan 60-day plus delinquency rates declined 35 percent. Bank credit card 60-day plus delinquency rates were down 21 percent. Consumer finance 60-day plus delinquency rates declined 23 percent.

At the same time, consumers increased their use of new credit. It increased 13 percent from May 2011 to May 2012. The biggest increase in new credit was seen with bank credit cards, which was up 21 percent. It rose from $58.1 billion through May 2011 to $72.9 billion through May 2012.

The Consumer Financial Protection Bureau (CFPB) earlier this year raised the alarm over student debt, noting that the toll of outstanding student loans is now over $1 trillion.

Who owes this money and how are they ever going to pay it back? A researcher at the University of Wisconsin has found that the student debt burden falls heaviest on students from middle-income families.

Upper income students don't need loans. Low-income students have a number of aid opportunities. But researcher Jason Houle says for many middle-income students, loans are the only form of student aid available to them.

Middle-income squeeze

Houle calls it the “middle-income squeeze.” The families of these young adults make too much money for their children to qualify for adequate financial aid benefits, but not enough to afford the rising costs of tuition, room and board, and additional university fees.

In his study, Houle found nearly 41 percent of all students left school with some student loan debt, and the average debt among those students was more than $22,000.

“Young adults from middle-income families are at the highest risk for student loan debt,” Houle said. “As tuition costs continue to rise and outpace inflation, students increasingly use loans as the primary means of financial aid.”

Among those who left school with student loan debt, Houle found that on average young adults from middle-income backgrounds, whose families earned between $40,000 and $59,000 annually, owed over $6,000 more in student loan debt than their low income peers whose families made less than $40,000 per year.

Similarly, students from somewhat more affluent middle-income backgrounds, whose families made between $60,000 and $99,000 annually, racked up nearly $4,000 more in student loan debt than young adults whose families earned less than $40,000 per year.

Pell grants go mostly to lower-income students

Over 90 percent of all Pell Grant recipients come from families with annual incomes of less than $40,000.

“Young adults whose families make just over $40,000 are less likely to qualify for such student aid packages, and tend to suffer a disproportional burden of student loan debt,” Houle said.

Houle looked at other factors besides income. He sound that students whose parents had less than a college degree were also at a higher risk of accumulating student loan debt. African American students were also significantly more likely than their white peers to rack up student loan debt. In addition, he found that young adults with single parents or step families were more likely than students whose biological parents were together, to incur student loan debt.

As college graduates struggle to find high-wage jobs in today’s economy, inflated student loan debt forces young adults to begin their careers at an increased risk of default and penalties for missed payments. Bankruptcy is not an option for students struggling to pay off their student loans, which, Houle said, makes student loan debt a very unique and dangerous liability.

Through federal education aid, taxpayers invest billions of dollars in college students' education. A Congressional report says a lot of that money is going to for-profit institutions without much for students -- or taxpayers -- to show for it.

A two-year probe by the Senate Committee on Health, Education, Labor, and Pensions shows $32 billion in the most recent year went to companies that operate for-profit colleges. Yet, more than half of the students who enrolled in those colleges in 2008-9 left without a degree or diploma within a median of four months.

“My experience at this school has been a nightmare,” Shannon, of Chicago, wrote in a ConsumerAffairs post about University of Phoenix. “I feel lied to and used. I specifically chose this school as I was told most of my previous human service credits would be transferred, which they have not. I could accept retaking some classes if I felt I was learning anything useful. Instead, I have had professors who barely understand the material. My biggest complaint however is their heavy reliance on group work, a practice which greatly benefits them by increasing their graduation rate.”

Profit pressures

In its report, the committee suggests the corporate structure of the for-profit institutions creates pressure to produce ever-larger returns for shareholders. While small independent for-profit colleges have a long history, by 2009 the committee found at least 76 percent of students attending for-profit colleges were enrolled in a college owned by either a company traded on a major stock exchange or a college owned by a private equity firm. The financial performance of these companies is closely tracked by analysts and by investors.

“Congress has failed to counterbalance investor demands for increased financial returns with requirements that hold companies accountable to taxpayers for providing quality education, support, and outcomes,” the committee found. “Federal law and regulations currently do not align the incentives of for-profit colleges so that the colleges succeed financially when students succeed.”

Carlos, of North Hollywood, CA, chose Westwood College after being contacted by a recruiter. He was he was taken aback initially when he saw that the cost of a degree would be more than $72,000. He said he was told not to worry, that student loans and grants would cover most of that.

28 percent graduation rate

“The faculty helped me fill out the FAFSA and I couldn't help but notice that the graduation rate was 28 percent in 2009, updated for 2012 to 21 percent, according to OEDB.org,” Carlos posted. “I was concerned and brought it to the attention of the staff. They told me not to mind that and it just hasn't been updated.”

Carlos said he attended for one year before getting discouraged and going to another school. The committee said many for-profit colleges fail to make the necessary investments in student support services that have been shown to help students succeed in school and afterwards, a deficiency that it suggests contributes to high withdrawal rates.

In 2010, the for-profit colleges examined employed 35,202 recruiters compared with 3,512 career services staff and 12,452 support services staff -- more than two and a half recruiters for each support services employee.

High drop-out rate

“This may help to explain why more than half a million students who enrolled in 2008-9 left without a degree or Certificate by mid-2010,” the committee said in its report. Among two-year Associate degree-seekers, 63 percent of students departed without a degree.”

The lawmakers also voiced concern about the amount of public money flowing to for-profit colleges. The report notes that in 2009-10, 25 percent of the total Department of Education student aid program funds went to for-profit schools.

Pell grants flowing to for-profit colleges increased at twice the rate of the program as a whole, increasing from $1.1 billion in the 2000-1 school year to $7.5 billion in the 2009-10 school year.

For-profit colleges also receive the largest share of military educational benefit programs: 37 percent of post-9/11 GI bill benefits and 50 percent of Department of Defense Tuition Assistance benefits flowed to for-profit colleges in the most recent period. Because of the cost of the programs however, they trained far fewer students than public colleges.

The Consumer Financial Protection Bureau (CFPB) and the U.S. Department of Education today released a report that describes the risky practices and debt that stemmed from the boom and bust of the private student loan market in the past ten years. 

According to the CFPB’s estimates, outstanding student loan debt in the United States topped $1 trillion in 2011 -- $864 billion of federal student debt and approximately $150 billion of private student loan debt. 

“Our findings reveal that students were yet another group of consumers that were hurt by the boom and bust of the financial crisis,” said CFPB Director Richard Cordray.  “Too many student loan borrowers are struggling to pay off private student loans that they did not understand and cannot afford.  Moving forward, we must do our best to leave the next generation in a better place than we are today, rather than buried under a mountain of debt.” 

“Subprime-style lending went to college and now students are paying the price,” said U.S. Education Secretary Arne Duncan. “We still have some work to do to ensure that students who take out private student loans have the same kinds of protections offered by federal loans. In the meantime, if you have to take out a loan to pay for college, federal student aid should be your first option.”

Significant changes

Private student loans were originally designed to supplement federal student loans, and still serve that role in most cases,but there were significant changes in lending in the years leading up to the financial crisis. 

Funded in large part by the asset-backed securities market, many lenders made money by originating and then selling private student loans with less regard for borrowers’ creditworthiness. The market grew from less than $5 billion in 2001 to over $20 billion in 2008, and then rapidly contracted to less than $6 billion in 2011. After the financial crisis, underwriting standards tightened as investors pulled out of the market.

In the Dodd-Frank Wall Street and Consumer Protection Act, Congress mandated that the CFPB and the U.S. Department of Education conduct a detailed study to determine where there might be consumer protection gaps in the private student loan market.  For this report, the CFPBreceived loan data from nine lenders on over five million loans made between 2005 and 2011, as well as data from five nonprofit lenders.

Three major findings of the joint report are:

• Private student loans are riskier: Used appropriately, private student loans have a role to play in financing higher education.  However, compared to federal student loans, private student loans often lack repayment flexibility and other protections when borrowers are struggling to make ends meet.  Most private loans have few options for payment modification or forbearance.  Federal loans have a fixed interest rate and most private loans have variable rates, making estimates about future debt payments difficult.  Prior to 2010, federal law did not require a disclosure showing the actual interest rate on a borrower’s loan until after the lender documented the loan, approved the credit, and readied the check for mailing.

• Lax underwriting practices rise during boom:  Some lenders bypassed school financial aid offices and marketed loans directly to students.  As a result, in many cases, the school could not review the borrower’s financial need, compare it to the loan amount, or even verify that the borrower was enrolled.  Many lenders also lowered the minimum credit score required to receive a private student loan so that they could originate and then sell off more loans.  Many students did not understand the differences and features between federal and private loans.  They ended up using riskier private loans before exhausting their safer federal options.  

• Borrowers are trapped after bust: Defaults on private student loans have increased since the financial crisis.  Based on the CFPB’s sample, there are now over $8.1 billion in defaulted private loans, representing more than 850,000 distinct loans.  Congress amended the bankruptcy code in 2005 to make it tougher to discharge private student loans.  There is little to no evidence that there was an improvement in price and it is unclear that there was an increase in access to credit as a result of these changes.  Borrowers reported their lenders were unable or unwilling to modify or adjust repayment terms.

Since 2008, lending standards in the private student loan market have tightened.  Lenders are not able to easily sell off the student loans they originate, so they have more “skin in the game” when it comes to the borrower’s ability to repay. 

In 2011, 90 percent of private student loans had a creditworthy co-signer, compared to only 67 percent in 2008. The credit scores of those obtaining student loans in the past few years have risen.  More than 90 percent of loans are now reviewed by a school financial aid office to make sure that loan amounts match financial need.

Recommendations 

As part of the study, the CFPB and Department of Education each offered common-sense recommendations to reform the private student loan market to ensure that the bad practices of the past are not repeated.  

They recommended that lenders and school financial aid counselors work together in everyone’s best interest.  Borrowers should have the information they need to have a full picture of their debt obligations, and lenders need to maintain careful underwriting standards. 

They also articulated the need to take a second look at how borrowers might be able to restructure their debt in the bankruptcy process.

The CFPB launched a tool to help borrowers once they have missed monthly payments on their private or federal student loans.  The Student Loan Debt Collection Assistant is designed to help these borrowers understand their options, communicate effectively with their servicer or debt collector, and bring their loan out of default.

Because student loans are not generally dischargeable in bankruptcy, and because federal student loans have specific consumer protections guaranteed by law, it is very important for borrowers to understand their rights and responsibilities.

It doesn’t appear that the student debt problem is going to go away anytime soon. 

A new national study from Sallie Mae and Ipsos Public Affairs finds that 83 percent of college students and parents strongly agreed that higher education is an investment in the future, and that the majority are finding multiple ways to cut college costs. 

Mom and pop back away 

Students now foot an expanding share of the college tuition bill, while parents scale back compared with four years ago. Drawing from savings, income and loans, students paid 30 percent of the total cost of attendance last academic year versus 24 percent four years earlier, while parents covered 37 percent, down eight percent in the same time period. 

“Once again, we see that families recognize the value of a college education and that they are taking steps to keep college costs in line with their financial resources,” said Albert L. Lord, vice chairman and CEO, Sallie Mae, the nation’s No. 1 financial services company specializing in education. “Data confirms again and again that the investment carefully made significantly enhances the lives and livelihoods of those who complete their education.” 

The percentage of families who eliminated college choices because of cost rose to the highest level (69%) in the five years since the study began and virtually all families exercised cost-savings measures. 

How they cut 

The most common cost-savings strategies included living at home (51%), adding a roommate (55%) and reducing spending by parents (50%) and students (66%). In 2012, families continued the shift toward lower cost community college, with 29 percent enrolled, compared with 23 percent two years ago. In fact, overall, families paid five percent less for college than they did a year ago. 

“This is really a tale of the resilient American family who still see the extreme value of a college education and are finding new and creative ways to pay for it,” said Clifford Young, managing director, Ipsos Public Affairs and a principal author of the report. 

The survey 

In response to new survey questions, American families reported that students make college selections largely on their own while parents played a much greater role in deciding how to pay for it. For the first time this year, the study examined student loan borrowing by student course of study. The field with the highest percentage of borrowers was visual and performing arts (53%), followed by liberal arts (42%). 

More than two-thirds of students and parents strongly agreed that college is needed now more than ever (70%) and the path to earning more money (69%). The number of students willing to stretch themselves financially to pay for college (61%) is higher than each of the previous five years of the survey, while parents’ willingness held steady from last year (53%). 

Less than half of parents strongly agreed that they would rather borrow than not send their child to college (47% vs. 51% in 2011), whereas the percentage of students who preferred to borrow rather than not attend remained unchanged (62%). 

Grants and scholarships declined from last year’s peak, but were still higher than previous years, financing the largest portion of college bills (29%). Student borrowing funded a larger percentage of costs (18% vs. 15% in 2010), with federal student loans accounting for 13 percent, private student loans 4 percent and other types of borrowing one percent. 

Thirty-five percent of students took out education loans to pay for college: 25 percent used federal loans only, 9 percent used a mix of federal and private loans, and one percent tapped private loans only. The high usage of federal loans among students with private education loans reflects their nearly universal use of the FAFSA (98% compared to 81% overall). 

Credit card ownership by college students has dropped two years in a row. Overall, 35 percent of undergrads carried a credit card, down from 42 percent in 2010, with the sharpest drops among sophomores and juniors. Of those with a card, the average balance was $755. Thirty-three percent reported carrying no balance on their credit card. 

The 2012 nationally representative study, “How America Pays for College,” is the fifth in the series. Interviews with 801 undergraduate college students, ages 18 to 24, and 800 parents of undergraduates were conducted by telephone spring 2012. The margin of error on percentages from this survey using the whole sample is +/-2.5 percentage points with a confidence level of 95 percent. 

How much will your degree cost? Here’s one way to get a good idea. 

The U.S. Department of Education has released a new interactive loan counseling tool to provide students with financial management basics, like information about their current loan debt and estimates for student loan debt levels after graduation. 

Students can access the new resource, known as the Financial Awareness Counseling Tool here. 

“Managing student loan debt can be a difficult and confusing process for many borrowers. That's why the Obama Administration has been working to unravel the mystery of college financing and arm students and parents with the information they need to make smart educational choices," said U.S. Secretary of Education Arne Duncan. "Students need to know up front how much college will actually cost them instead of waiting to find out when the first student loan bill arrives. This new tool will help bring new transparency to the process of debt management on the front end and empower students to keep their school loan payments on track and on time after graduation.” 

Interactive tutorials 

The Financial Awareness Counseling Tool provides students with five interactive tutorials covering topics ranging from managing a budget to avoiding default. Students are able to access their individual loan history and receive personalized feedback that can help them better understand their financial obligations. 

In addition, college financial aid professionals can monitor a student’s progress in using the tool and provide assistance if necessary to help ensure they can utilize the information the site provides. 

The announcement is part of what the Obama administration says is an effort “to make college costs more transparent for education consumers.” Recently, the Education Department published its annual college cost lists, which detail schools with the highest and lowest published sticker price, schools with the highest net price once grants and scholarships are factored in, and those schools where prices are rising the fastest. 

In the coming weeks, the administration is set to release its model financial aid shopping sheet. The shopping sheet, which all institutions of higher education will be encouraged to adopt, will tell prospective students how much aid they will receive in grants and scholarships; how much they’ll need to borrow in student loans; the difference between private loans and federal student loans; and the average student loan payment after graduation.

Students who took out student loans four or five years ago are graduating into a weak job market with a mountain of debt, posing an increasing worry to both policymakers and bankers.

Earlier this year the Consumer Financial Protection Bureau reported that total student loan debt exceeded $1 trillion. It's even higher now and Eduardo, of Lakehurst, NJ, is part of that staggering total.

Eduardo says he took out student loans in 2005 to attend Full Sail University, a for-profit arts school. The loan was divided into four loans – two federal and two private. He says each has a different interest rates with one as high as seven percent. The debt quickly multiplied.

$80,000 in loans

“Originally, I only owed approximately $40k, but with interest, it has risen to $80,000 -- pretty much double,” Eduardo wrote in a ConsumerAffairs post.

Kathryn, of New York, NY, is pretty much in the same boat. She said she turned to Sallie Mae for loans because she had no co-signer and she considered them the only source of funding.

“The rates are ridiculous,” Kathryn writes. “They make it actually impossible for people/students to actually get out of debt and even make a living after they graduate.”

All of this is deeply worrying, not only to federal regulators but is also getting bankers' attention. A report from Barclays Bank shows the average debt burden for students attending a public four-year collage have risen by only $2,000 per borrower over the last 12 years, the trend is not encouraging.

And of course debt levels for students attending for-profit colleges are much higher, with those enrollments increasing sharply in recent years.

Both young and old affected

The report expresses the worry that these rising debt levels are imposing hardships on both the young, who are graduating without adequate jobs, and retirees, who have co-signed for children or grandchildren and now well past their peak earning years and, in some cases, forced out of jobs.

The report notes that borrowers who got a degree had a default rate of 3.7 percent in 2009 while the default rate for those who didn't finish their education was more than four times higher. And while all this could pose increased stress on the financial system, individuals like Eduardo and Kathryn and left holding the bag. If they had it to do over again, both would have taken a different course.

“Truth is, I'm not benefiting from the education I received at Full Sail,” Eduardo writes. Albeit entertaining and informative, I received no assistance after graduation and haven't worked in what I studied a day in my life.”

“I would have been better off struggling and working through school and finishing slower rather than borrowing money,” Kathryn concludes.

Returning service members are eligible for education benefits under the GI Bill and attracting these students can be lucrative for the growing number of for-profit educational institutions in the U.S.

But in recent years policymakers have been closely monitoring these schools' marketing to ensure the former service personnel are getting reliable and complete information. A number of states sued one company – QuinStreet Inc. - for allegedly putting out misleading information. That case has now been settled.

QuinStreet owns a network of websites that generate leads primarily for the for-profit education industry. The multistate enforcement action arose in conjunction with a larger ongoing effort by state attorneys general looking into the recruiting and deceptive business practices of some for-profit colleges.

Misleading information

The investigation determined that the sites misleadingly gave the impression that the schools immediately listed as "eligible GI Bill schools" were the only schools at which the veterans' benefits could be used.

As part of the settlement QuinStreet will relinquish ownership and control of the domain GIBill.com to the Department of Veterans Affairs, which will use it to promote the GI Bill program and educate service members about the benefits available to them under the program.

In the future, the company must clearly disclose that its sites are not associated with the U.S. government and unequivocally state that companies appearing on certain websites are not the only schools that accept GI Bill benefits. The company will also pay $2.5 million to the settling states.

Complaints from students

Many complaints from students about for-profit schools revolve around funding, including the GI Bill. Ahshayahona, of Shaw Air Force Base, S.C., says she has completely run out of G.I. Bill funds because of what she said is delays by Kaplan University.

“I now have no GI Bill money because Kaplan got all of it and I owe on loans because of Kaplan,” Ahshayahona wrote in a ConsumerAffairs post. They have now kicked me out of my program and told me that I had to apply for re-admission. I have had to pay $50 out my pocket for a background check for Kaplan. I have close to a 3.0 GPA and I feel like Kaplan is blocking me from doing my clinicals because they can not find a facility that would deal with them or their students.”

Consumer advocates and state Attorneys General have seen for-profit colleges intensify their recruitment of veterans since 2008, when Congress enacted the Post 9/11 GI Bill, which made billions of dollars in educational benefits available for veterans and their families. According to a February 2011 General Accounting Office report, $9 billion in educational benefits were provided to service members and veterans in Fiscal Year 2010.

Oregon Attorney General John Kroger notes that of 20 for-profit colleges analyzed by the U.S. Senate HELP Committee, total military educational benefits increa