For-profit college students learn hard lessons
NEW YORK - You've seen the ads - "for-profit" colleges often promise credit for life experience and offer convenient online classes. Students are flocking to them. Enrollment in them is up 225 percent over ten years-- to more than 1.8 million students.
But some claim the "for-profits" saddle students with huge debts, and do little to get them jobs. As CBS News chief investigative correspondent Armen Keteyian reports, the federal government today announced it's cracking down on them.
Kimberly Parrish, a single mother of three, in Jacksonville, Fla., enrolled in an online for-profit school in 2008 with two goals in mind.
"I was hoping to ideally get a job," Parrish says, "that would allow me to be home with my family, allow me to pay for health care for my family."
But after taking out $9,000 in student loans, Parrish says she quickly learned that the degree she thought she was studying for wouldn't get her the job she wanted - processing medical bills.
A CBS News investigation compared for-profit schools to public institutions like community colleges. We looked at how likely graduates are to pass their licensing exams, for jobs like nursing and veterinary technicians.
We surveyed nine exams in five states and in each, the results were the same: students at for-profit schools were less likely to pass the state licensing exam in their field than students who attended a public institution - even though they were paying, on average, about five times more in tuition.
Last summer a Senate report criticized "abusive recruiting" practices and high rates of student loan defaults. Students at for-profit schools make up only 12 percent of all higher education students - but 46 percent of student loan defaults.
"The test in the regulations was intended to say, are your students graduating and are your students getting jobs," asks Amy Wilkins, Vice President for Government Affairs and Communications, Education Trust.
Today's crackdown by the Department of Education includes new rules requiring for-profits to better prepare students for the job market. Schools risk losing federal funds if more than one-third of former students fail to repay any of their loans, or if loan payments eat up too much of their overall income.
The for-profit industry, which lobbied hard against the new regulations today called them biased and unfair.
"This is still a very harmful rule for many students that need the type of career colleges in which we offer and which we run," says Penny Lee, Managing Director of the Coalition for Educational Success.
The new regulations won't go into effect until next year. But there's likely to be a huge fight in Congress over whether they'll even get funded.
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