The Ruinous Return of For-Profit Colleges

I first started reporting on for-profit colleges in 1995, as a reporter for The Chronicle of Higher Education. At the time, there was a widespread belief that these trade schools, as we called them then, had been reformed.

In the early 1990s, Democratic Senator Sam Nunn of Georgia had conducted a high-profile investigation of the for-profit college industry over allegations that many of these schools had been set up solely to reap profits from the federal student aid programs, in part by preying on low-income and minority students. The most unscrupulous of them had been enrolling people straight off the welfare lines and got them to take out the maximum amount of federal student loans available—often without their knowledge or consent.

The hearings, which included a convicted former school owner brought to the witness table in handcuffs and leg irons, helped galvanize bipartisan support in Congress to take substantial steps to rein in the industry. As a result of lawmakers’ actions, hundreds, if not thousands, of schools were shut down or went out of business.

“We’ve seen a fire across the prairie, and that fire has had a purifying effect,” Omer Waddles, the top lobbyists for the schools, told me in 1997. “As our sector has weathered the storms of recent years, a stronger group of schools is emerging to carry, at a high level of credibility, the mantle of training and career development.”

It was a nice sentiment. But within a decade of my taking on the beat, allegations of serious for-profit college abuses began to reemerge. They received little attention at first, but by 2011, the scandals had become so widespread that the Senate Health, Education, Labor and Pensions Committee, led by Democratic Senator Tom Harkin of Iowa, held another round of investigative hearings on the industry. And the Obama administration took steps to put the brakes on the industry again.

What had happened to allow history to repeat itself? That story is fascinating, and it’s why I helped documentarian Alex Shebanow put together Fail State (more on my role below). The documentary airs on STARZ at 9pm on Monday, December 17. The film, which had a limited theatrical run in Los Angeles, New York, and San Francisco, is also available for streaming for a fee on Amazon Prime, iTunes, YouTube, and Vimeo.

Fail State shows how the Bush administration and Congressional Republicans, aided and abetted by some key Democratic lawmakers, went to bat for an industry that was awash in money (federal student aid money, that is). These policymakers weakened and, in some cases, reversed the consumer protection provisions that had been put in place in the early 1990s. And they were well rewarded for their efforts. For instance, generous donations from for-profit colleges and student loan companies helped fuel the rise of Rep. John Boehner, an Ohio Republican, to become Speaker of the House of Representatives.

The film also underscores how recruiters for these schools, many of which are owned by large companies that have, at one time or another, been publicly traded, lure students in by playing with their insecurities and fears, while deceiving them about the schools’ costs and outcomes.

“I graduated summa cum laude. I got my associate degree and that was the beginning of the end. This $50,000 piece of paper is actually worthless.”

The documentary is at its most powerful when it shows the human damage unscrupulous for-profit colleges have wrought. These schools have destroyed lives by leaving the low-income and working-class students they target worse off than before they enrolled, heavily in debt but without the training they need to get jobs in their fields. Many end up in default, chased down by collection agencies, and with their credit ruined.

“This is the final picture of me while I was still happy,” Jennifer Wilson, who attended one of the now-shuttered Corinthian Colleges’ Everest University campuses, says while showing her graduation photo. “I graduated summa cum laude. I got my associate degree and that was the beginning of the end.”

“This $50,000 piece of paper is actually worthless,” she says of her diploma.

As mentioned above, I’m featured in the film. I didn’t know the director until he approached me for an interview after reading my pieces in the Chronicle. I was impressed enough to offer to help serve as a story consultant, mainly by doing fact-checking.

When I was reporting on the new round of scandals that started in the 2000s, I never imagined that such a film would ever be made. At the time, it didn’t feel like anyone was paying attention. In 2005, 60 Minutes ran a piece about allegations against the for-profit college company Career Education Corporation. But other than that, there weren’t many reporters on the case.

Obama administration officials had very limited success in increasing oversight over these schools, but they, along with Harkin and other outspoken Senate Democrats, like Dick Durbin of Illinois and Elizabeth Warren of Massachusetts, got results when it came to getting the news media on the case. Coverage of the industry hasn’t been the same since.

While the Trump administration has tried to undermine the limited regulatory steps Obama took, it hasn’t been able to revive the industry or change the narrative.

Fail State gives me hope. The more people who know this shameful story and speak out, the better. Only then will lawmakers from both political parties understand the damage that has been done—and have the urgency to take the steps needed to make sure that it never happens again.