08/19/2017
Selling students education is a big business. Individuals and families purchase education as an investment with the expectation that they will receive skills and knowledge that in turn will result in opportunity.
Our state and federal government play an important role in regulating that business and that of student loans. An example would be Trump University, which allegedly made false promises and delivered little in return for tuition and fees. Trump finally agreed to pay $25 million dollars to settle claims against Trump University. That amount is equivalent to about 80% of what students paid, but the settlement is taxable to the students and deductible to Trump.
The for profit schools, driven by the profit motive, can cause individuals great damage. The Atlantic magazine reported in January, citing a study conducted by the US Department of Education, that
"more than 800 vocational programs the department reviewed (at for-profit schools, private nonprofit schools, and public community colleges) failed to show that their graduates were able to find decent jobs, meaning the former students have annual loan payments that are more than 30 percent of their discretionary income and more than 12 percent of their total earnings.
Not insignificantly, virtually all—98 percent—of the programs that do not meet that bar are for-profit schools."
Of course, January 2017 also brought us a new Secretary of Education, Betsy DeVos. One of her changes has resulted in her being sued by 18 States.
NPR recently reported:
"The filing by 18 states and Washington, D.C., asks a U.S. District Court to declare the Education Department's delay of the rule unlawful and to order the agency to implement it. The states say they have pursued "numerous costly and time-intensive investigations and enforcement actions against proprietary and for-profit schools" that violated consumer protection laws.
The Borrower Defense Rule was adopted by the Obama administration last November and had been set to take effect this month. It was created to make it "simpler for students at colleges found to be fraudulent to get their loans forgiven," as NPR's Ed team has reported.
Large amounts of money are potentially at stake. As the states' complaint notes, "taxpayers invested $32 billion in for-profit schools in the 2009-10 academic year, more than the annual budget of the U.S. Department of Justice and the U.S. Department of State during that time period."
http://www.npr.org/sections/ed/2017/07/08/535779235/why-18-states-are-suing-education-secretary-betsy-devos
https://www.theatlantic.com/education/archive/2017/01/what-happens-to-students-when-for-profit-colleges-close/512831/
https://www.forbes.com/sites/robertwood/2017/04/03/trump-university-settlement-nets-25m-write-off-for-trump-taxes-for-students/ #356767397298
Plus other education news: College enrollment is on the decline, school district leaders take a stand against the Senate health care bill, and interest rates on student loans are going up.