Abolish the Student Debt! Free Quality Education for All!-Wall Street’s For-Profit University Rip-Off Workers Vanguard No. 1052	19 September 2014

Abolish the Student Debt! Free Quality Education for All!

Wall Street’s For-Profit University Rip-Off

(Young Spartacus pages)

Years of education-funding cutbacks, skyrocketing tuition and the shredding of affirmative action programs have forced most working-class, poor and minority students out of access to community colleges and universities. For-profit universities have jumped into the breach, promising pie in the sky while delivering substandard education and debt bondage. With their tuition fees a whopping five to six times higher than those at community colleges and at least double those of four-year state universities, the for-profits have been big money makers on Wall Street. They particularly cashed in on the devastation following the 2008-09 financial crisis, preying on the growing millions desperate to find a job, for whom a college education is seen as the only way out.

Television, billboard and other extensive advertising for Phoenix, DeVry, ITT Technical and a plethora of other for-profit universities is aimed at the most vulnerable layers of society. Promising education and training for well-paying jobs, they particularly target those who have no options other than federal student loans, from which the for-profits rake in $30 billion a year revenue.

A suit filed against Corinthian Colleges by California’s attorney general, charging that the college lied about the success of its former students, uncovered internal documents describing its prime audience as “isolated,” “impatient” individuals with “low self esteem” who have “few people in their lives who care about them.” Geared particularly to single-parent families with incomes at or near the official poverty level, Corinthian—which includes Everest, Heald and WyoTech colleges—ran ads on the Jerry Springer and Maury Povich shows combined with high-pressure recruitment tactics.

Testifying before a Senate education committee, a former recruiter for ITT said she used and taught a process called the “pain funnel,” where admissions officers would ask students increasingly probing questions about where their lives were going wrong. Another onetime for-profit recruiter reported that she was ordered to make 300 to 450 calls a day with instructions to “get to their pain” and “convince them that a college degree is going to solve all their problems.” Once lured in with the promise of career courses (some of which were not even taught), the for-profits have students sign federal loan applications, leaving them mostly in the dark as to the amount of debt they are taking on. Moreover, it is virtually impossible to get out of student loan debt.

As a policy analyst on federal student loans, interviewed on a 2010 PBS Frontline documentary on for-profit universities, explained:

“It is the most collectible kind of debt there is. It is non-dischargeable in bankruptcy. They will garnish your wages. They will intercept your tax refunds. They will sue you in court…you become ineligible for federal employment. You become ineligible for any other kind of federal benefit. Increasingly, many states piggy-back those prohibitions.”

In short, as he concluded, “it ruins you.”

One of the few regulations curbing the for-profit colleges is a law mandating that no more than 90 percent (!) of college revenue can come from federal student loans. This has made military veterans, whose GI benefits are exempt from this regulation, a hot commodity for the for-profit universities. For many who enlisted to pay for an otherwise unobtainable education and then served as cannon fodder for U.S. imperialism’s dirty wars and occupations abroad, the meager veterans’ benefits are seen as a cash cow for Wall Street vultures at home. ITT came up with another “innovation” to make up its 10 percent shortfall in funding. That was to offer private loans at zero interest rates to new students. If not repaid within a year, the students were made to take on a new loan at up to 14.75 percent interest. A student missing any monthly payment would be pulled out of class and threatened with being kicked out if they didn’t make a payment on the spot. All of this has created huge wealth for the corporations running these colleges. According to a Mother Jones article “Screw U: How For-Profit Colleges Rip You Off” (31 January), ITT’s revenue has “nearly doubled over the past seven years, closing in on $1.3 billion last year.”

As we wrote in “Students in Capitalist America: Huge Debt, No Jobs, No Future” (WV No. 989, 28 October 2011): “It is a measure of the decay in society that the only way for the majority of working class and poor to get a college education is to take on tens of thousands of dollars in loans, only to find themselves reduced to indentured servitude to pay back their financial usurers.” Even those who do graduate from the for-profit colleges often find that their degree is worth little more than the paper it is written on. One group of students studying nursing at Everest College was told they would get jobs paying $25-$35 an hour. Paying nearly $30,000 for a 12-month program, the training these students received would be laughable if it wasn’t so devastating for the students.

As one woman graduate told PBS: “I got my license in December of ’09, and I’ve been on countless interviews. And they all ask if I’ve ever been in a hospital, and I would have to tell them we never set foot in a hospital, ever. We went to a museum of Scientology for our psychiatric rotation.” A fellow graduate of the program added that they went to a day care for their pediatric rotation. Other students have completed their degrees only to find that they were invalid because the college was not accredited.

Capitalist Democrats Weep Crocodile Tears

Amidst the devastation of the 2008-09 economic crash, Obama declared that “every American will need to get more than a high school diploma,” and “by 2020, America will once again have the highest proportion of college graduates in the world.” In the intervening years, Obama’s Democratic Party administration has continued the decades-long assault on K through 12 public education coupled with a union-busting offensive against teachers across the country. At the same time, states have continued to cut funds for higher education to make up budget deficits. With public universities and community colleges stretched to the breaking point, the door was opened for the for-profit universities to step in, promising to fill the gap while in fact filling their pockets.

While imposing token fines and regulations aimed at curbing the “excesses” of the for-profits, the government has allowed them to continue more or less unmolested. Most recently, much has been made of Obama’s proposal to impose a regulation to limit federal student aid for for-profit universities if more than 30 percent of their students default on their loans. In short, the yardstick is not providing education but limiting the costs to the government. Accepting that nearly a third of the students will spend their lives in debt peonage, the regulation allows for 8 percent of the wages and 20 percent of the disposable income of the lucky few who do graduate and find a job to go to repaying their “debt to society.”

The former president of the for-profit college association cynically proclaimed that “we educate the students that traditional higher education has given up on.” But he scored a point by observing that if the government wanted to help it could easily wipe out the student debt! Secretary of Education Arne Duncan shot back that this was the “wrong answer.” While Obama laments with hypocritical concern the plight of students with massive debts and no job, the truth is the Democrats are complicit with keeping afloat the giant corporations that run the for-profits.

Quality education should be the right of all society, not a privilege for the few who can afford to pay for it. But under capitalism, the ruling class only invests in education for the working class and poor to the extent that they can expect returns on that investment in the form of profit. This was baldly explained by a former director of Phoenix University, the granddaddy of the for-profit colleges, who declared: “Listen, I’m happy that there are places in the world where people sit down and think. We need that. But that’s very expensive, and not everybody can do that. And so for the vast majority of folks, who don’t get that privilege, then I think it’s a business.”

We fight for free, quality, integrated education for all—from pre-K to a doctorate. To provide real access to higher education, we call for open admissions, free tuition and state-paid living stipends for all students as well as the nationalization of both the for-profit colleges and the old private universities. These measures must be made retroactive by canceling all student loan debt, both private and federal. We demand full remedial programs at the universities and an end to the “tracking” system in high schools. A country as wealthy as the United States could easily meet such demands. The problem is that the wealth and the power in this society lie in the hands of the capitalist class whose profits derive from the exploitation and immiseration of the many.

The Spartacist League and the Spartacus Youth Clubs are dedicated to building the revolutionary party that can lead the working class in the fight to wrest the wealth created by its labor out of the hands of the greedy capitalist rulers and use it to meeting the needs of the many. In a socialist America, education will not only be the right of all but will also be dedicated to benefiting all of humanity.