Would Fraudulent Beauty Schools Still Have Been Committing Fraud if They Were a Legitimate Operation?

The New York Times has a story up today about students who attended cosmetology schools in New York City nearly two decades ago and are still stuck with significant debts even after the institutions have been shut down for misuse of federal money. It's an incredibly sad story and illustrates the strange disconnect in existing regulations by which if your school closes just after or while you are enrolled you can get your federal loans discharged, but not if it closes much after. And though circumstances such as these do not occur all that frequently, the amount of chaos school closings can wreak should not be understated (see Kelly Field's great piece in this week's Chronicle of Higher Education on this).

But there's an unexplored side to this story--even if the closed beauty schools hadn't been engaging in outright fraud, the woman profiled in the story likely would not have ended up in better financial circumstances. According to Amarilis Madera, the focal point of the story, the school she attended promised her a steady career and a good job. And as proof of how it didn't, the author cites the $25,000 a year job Madera currently holds in a daycare program. That's definitely not a great salary. It's also about $2,300 higher than what the median person working as a cosmetologist can expect to earn in a year. Madera was undoubtedly duped out of thousands of dollars, but she very well might be making more money in her occupation than she would have had the institution even been a legitimate operation.

In general, arguments over what's considered a ripoff in higher education revolve around institutions that fail to provide an education remotely comparable to what had been promised. But that's not all we should be concerned about--the programs that provide exactly the training promised, but base it on a fundamentally flawed presentation about their economic return may be almost as dangerous to students as outright fraud.