How for-profits colleges perpetuate the cycle of poverty

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By Bob Obrohta

When I founded a Nashville-based college access resource center in 2008, I never suspected so much of my work would be preventing students from enrolling in college. Or worse, extricating them from a financial situation of enormous student loan debt they had found themselves in due to attending a for-profit institution.

Prior to the for-profit college regulations developed by the Obama Administration, these institutions’ recruitment practices were like “the wild, wild, West”. The only rule seemed to be that there were no rules. For-profits’ strategies and tactics used every trick in the book to enroll students in their institutions, and the institutions promised widly successful job placement upon degree completion. Student after student would come through our door having enrolled in, or having the intention of enrolling in, colleges that would lead to a lifetime of indentured servitude.

Admissions representatives from for-profits would visit our center with the intent of highlighting their institution to create a pipeline of students they could sign up and in turn, receive a hefty commission for every student they enrolled. At first, we were polite, saying, “Thanks, but no thanks”. Then one day, a representative tried to circumnavigate us. The facility, which houses the center, also runs programs for homeless teens and young people transitioning out of foster care within the same building. After politely meeting with the admissions representative and declining her offer, she left the building, walked around and re-entered through a side entrance of the building where the transitional living programs were housed. The professional staff from those programs called our office asking about the representative who had made her way back into the building and was now promising free tuition to a group of about 20 homeless teenagers. She was quickly escorted off the premises. That day, our politeness with for-profit admissions came to an end.

College access professionals are constantly battling to explain to the average person, legislator, business owner, or low-income family, the life-long negative effects for-profits can have on a person. They are fighting against a massive marketing machine that can saturate airwaves and sponsor professional sports stadiums, all but drowning out the experts’ messages that there are better and more affordable alternatives.

Beginning with the rise of for-profits in the 1980s, savvy investors and investment firms had figured out there were substantial federal and state dollars available for the taking through a low-information population of low-income students and families. Using similar tactics found with payday lenders and lottery marketing, for-profits placed themselves in the heart of low-income and working class communities and offered the American Dream with slick marketing and the promise of no-cost access to a degree. They promised opportunity for a better life and future employment through degrees that had little to no value. These “admissions officers,” were incentivized to sign up students as fast as they could without any thought or consideration to academic ability, and the colleges would leverage the maximum amount of federal Pell grants, Stafford Loans, and other state and private funds as profit. Tax payer dollars were going directly into the hands of the investors, and the low-income students were the collateral.

Unfortunately, many of my students enrolled.

The for-profits were signing up low-income students and, in many cases a parent, in droves. The admissions officers were hunting down kids everywhere: juvenile justice facilities, foster care homes, homeless shelters, schools, and housing projects. They would help them fill out their financial aid and loan forms, in many cases flat out lying to students by calling the loans “scholarships.” Desperate students unknowingly set themselves up for a trap where future wages would be garnished for the rest of their lives. As one young woman with no degree once said when I asked her why she was $35,000 in debt with loans, “they just kept sending me these ‘scholarship checks’, and I just kept signing them.”

And then it got worse.

Flush with cash, the for-profits realized they had an opportunity to embed themselves deeper within the public K-12 education system, particularly in low-income districts. Timed perfectly with the rising trend of businesses “sponsoring,” public schools, the for-profit colleges would offer a small sum of money to sponsor a public school and further open up the pipeline.

At first, the school districts were unaware of this new type of college and the damage it was causing students. They were simply happy for the resources. But now, even if they are aware of the damage, some schools are unwilling to sever ties with these institutions, as they have become dependent on the sponsor’s dollars and additional support. A small investment goes a long way for an individual school with high needs and little resources.

I didn’t truly appreciate and understand the genius and horror of the for-profit reach until I attended a college fair being held at the local juvenile justice center. On its face, a college fair at the justice center is a good thing. The staff had coordinated an event in order to show young people being held at the center there was an alternative to the direction of their life’s trajectory. Our program and area colleges were invited to come and share opportunities. After making my way past three levels of security into the general population room and setting up a table for nearly 150 young people, I looked around at the colleges that had agreed to attend the event. All of them were for-profits. Not even one community college or technical center representative was present.

Helplessly, I watched student after student get sucked into the deceit of these colleges. From behind my table, I watched the cycle of poverty playing out before my eyes. Unlike most situations where the cycle is glimpsed in a series of subtle events, I was witnessing students sign up for a lifetime of poverty and indebtedness I knew they would never escape.

The Obama era regulations of the for-profit college industry slowed down predatory for-profit recruiting and in some cases, ground it to a complete halt. Regulations such as monitoring a school’s loan default rate, transparency around program costs, and publicly reporting performance of alumni’s gainful employment, all went a long way toward curbing abuses. I am concerned the current administration, given its recent delays in implementing new regulations, are poised to untether for-profit institutions and their ethically questionable recruitment tactics. To do so, would revert higher education back to the days of “the wild, wild, West”. Many students will suffer, many investors will make a profit, and the taxpayers will receive no return on investment.


Bob Obrohta has worked in higher education and college access for nearly 30 years. He is the founder and executive director of the Tennessee College Access and Success Network and also runs the education consulting firm Underground Education Group.