The Bay Area's for-profit colleges soak up millions of dollars in taxpayer-funded student grants and loans and charge students high tuition, yet many have low graduation rates or high rates of student loan defaults, an analysis of U.S. Department of Education data reveals.
High loan defaults are a growing concern -- not only because they ruin the borrower's credit, but because they are seen as an indication that the schools do not set students on a course toward jobs with high enough pay to handle their levels of debt.
According to the Bay Area News Group analysis of 2010-11 academic year data for more than 100 schools in the region:
In his remarks on Aug. 23 at Binghamton University in New York, Obama answered a question about taxpayer money for students at for-profit colleges:
"So I'm not against for-profit institutions, generally. But ... there have been some schools that are notorious for getting students in, getting a bunch of grant money, having those students take out a lot of loans, making big profits, but having really low graduation rates. Students aren't getting what they need to be prepared for a particular field. They get out of these for-profit schools loaded down with enormous debt. They can't find a job. They default. The taxpayer ends up holding the bag. Their credit is ruined, and the for-profit institution is making out like a bandit. That's a problem.
"... Soldiers and sailors and Marines and Coast Guardsmen, they've been preyed upon very badly by some of these for-profit institutions. ... Because what happened was these for-profit schools saw this Post-9/11 GI Bill, that there was a whole bunch of money that the federal government was committed to making sure that our veterans got a good education, and they started advertising to these young people, signing them up, getting them to take a bunch of loans, but they weren't delivering a good product.
"... If we can define some basic parameters of what's a good value, then it will allow us more effectively to police schools whether they're for-profit or non-for-profit -- because there are some non-for-profit schools, traditional schools that have higher default rates among their graduates than graduation rates -- and be able to say to them, look, either you guys step up and improve, or you're not going to benefit from federal dollars.
"... We don't want money being funneled to schools that aren't doing a good job. We want to encourage students to be smart shoppers, to be good consumers."
To see which California colleges are eligible for Cal Grants -- and which are ineligible -- visit http://sandbox.csac.ca.gov/CalGrant_Inst/CalGrantInstSearch.aspx
Vocational program graduates' average earnings and debt can be downloaded from the office of Federal Student Aid at http://studentaid.ed.gov/node/275
Find more information about loan defaults and college-level data at The Project on Student Debt, a program of The Institute for College Access & Success at http://projectonstudentdebt.org/CDR_resources.vp.html