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News :: Education
Obama Bails Out Private "Charter" College - For-profit education chain Corinthian College implodes
12 Jul 2014
Amid fraud investigations in twenty states
12 July 2014

Corinthian College Inc. (CCI), one of the largest for-profit college and technical training schools in the US, has cut a deal with the Obama administration to sell 85 of its campuses and shut down 12 others. The publicly-traded company has 72,000 students and 12,000 employees in more than 25 states and Canada which will be affected.

The forced sell-off amounts to the largest collapse in the for-profit education industry to date. Reports indicate the following campuses are slated to close: Bensalem PA, Chelsea MA, St. Louis MO, McLean VA, Silver Springs MD, Salt Lake City UT (Main Campus), Fort Worth TX, Cross Lanes WV (Main Campus), Eagan MN, Grand Rapids MI (Main Campus), Kalamazoo MI and Merrillville IN.

The immediate cause of the selloff was the Department of Education’s (DOE) demand for CCI documents regarding job placement among graduates. When the school failed to produce their statistics, the DOE imposed a 21-day waiting period for the company to draw on federal student aid funds.

The DOE action, together with the reintroduction of “gainful employment” regulations, are largely pre-Congressional midterm election public relations moves designed to camouflage the administration’s abandonment of its election promises to clean up the palpable exploitation and illegality rampant among for-profit colleges.

Faced with the federal measures, Corinthian announced it might close last week. Not uncharacteristically, the Obama administration responded with an immediate $16 million life preserver, with a total of $35 million pledged in the form of accelerated financial aid payments. The government move was unprecedented, and some have likened it to a bank-style bailout. Majority stock in Corinthian is, in fact, held by the bank Wells Fargo.

Additionally, if Corinthian simply shut down, close to $1 billion in student loan debt—held by the federal government—could have been potentially discharged under federal rules.

Frankly, the big question is not why Corinthian—a thoroughly disreputable and wildly expensive educational institution—is closing, but why it managed to operate so long, at taxpayer expense. Corinthian receives $1.4 billion in Pell grants and federal student loans each year, which represents at least 85 percent of total revenues.

CCI is presently under investigation by 20 states, the Securities and Exchange Commission, the Consumer Financial Protection Bureau and the Justice Department. Dozens of students have filed lawsuits or demands for arbitration and two attorneys general (California and Massachusetts) have sued Corinthian for a series of unlawful and fraudulent practices. Florida, for example, listed 100 pages of complaints filed by students and employees which are being investigated. Some of these legal actions go back as far as a decade.

Founded in 1995, Corinthian went public in 1999. It owns the Everest College, Heald and WyoTech career schools as well as an online division. Its programs include various technical fields including: medical assistants, medical insurance billing, licensed practical nursing, HVAC, computer technology, pharmacy tech, associate degrees in criminal justice or paralegal fields.

Lawsuits in the various cases and complaints document a range of legal, financial and ethical violations by the management, including:

* Deceptive marketing: lying about its training program and job placement rates in order to increase profits. The California complaint states “the placement rates published by [Corinthian] are at times as high as 100 percent, leading prospective students to believe that if they graduate they will get a job. These placement rates are false and not supported by the data. In some cases there is no evidence that a single student in a program obtained a job during the time frame specified in the disclosures.” In some instances, the suit says, Corinthian paid temp agencies to give its graduates short-lived jobs—so it could inflate the job placement numbers

* Pushing students into high-interest subprime loans, knowing that half would default. Corinthian began its own institutional loan program in 2008 after private lenders exited the high-risk market. These non-federal loans were designed to keep the school in compliance with the “90/10 Rule,” a government requirement that colleges do not receive more than 90% of their total revenue from federal financial aid. In an investor call, company officials admitted that they expected a default rate of at least 50% on these loans, which can charge up to 18% interest, according to media sources. Meanwhile CCI charged loan origination fees, servicer fees and interest on outstanding loan amounts.

* Deliberately preying on those “on the edge of poverty” including, according to Corinthian College internal documents, low-income single parents or people who seem “isolated,” with “low self-esteem” and who have “few people in their lives who care about them.”

Even within the notoriously rapacious for-profit industry, Corinthian tuition charges are extremely high, running four or more times more expensive than community college programs. Most of its students are from lower-income brackets and a majority are minorities. The overall statistics for the largest for-profits show that one out of two students leave without a diploma or certificate.

* Misrepresenting course offerings and available programs (bait and switch) and then harassing students to register. As one student noted “[the recruiter] called me every day at any time during the day or night to tell me that a car[eer] will change my life” as noted in the Massachusetts complaint.

* Poor instruction and misleading students about expected earnings potential as a result of certificates.

While much of the evidence of poor instruction is anecdotal, a two-year congressional investigation of the for-profits, released in 2012, showed 67% of Corinthian associate degree students leaving the program without completion, among the highest of any similar company. Also looking at instruction based on its funding, the report noted Corinthian spent $3,969 per student on instruction, compared to $2,465 on marketing and $998 on profit.”

The legal complaint filed in Massachusetts says students were told medical assistants start at $17 or $18 an hour, another was told $21 to $22 an hour, and the actual average wage in the field is $14 an hour.

* Enrolling students knowing that they would be unable to obtain employment in their fields of study due to criminal backgrounds, inability to speak or understand English, or lack of high school diplomas, as stated in the brief filed by Massachusetts. One student reported that Corinthian provided her with correct answers to ensure that she passed a test intended to measure her ability to benefit from the program. Corinthian also allegedly told prospective students that Everest credits transfer to any accredited school, when, in fact, few schools accept credits from Corinthian’s Everest campuses.

Former Everest librarian Laurie McConnell resigned in protest from one of its California campuses last month, after she says the school enrolled a 37-year-old developmentally disabled man who suffers from shakes, has difficulty speaking, and reads at an elementary school level. He’s pursuing a criminal justice degree with hopes of becoming a police officer. McConnell added that the man did not even have a driver’s license and could not understand the loan documents he was asked to sign.

The fraud and double-dealing of CCI of course has another side—those who have benefited handsomely from the sale of education. There are the wildly paid executives— CCI CEO Jack Massimino, for example, took home over $3 million in compensation in 2013, according to Forbes. The top five earners drew $12.6 million in 2010.

Behind corrupt individuals, however, stand the real culprits, the financial industry. Among CCI’s 108 Institutional stockholders, the largest is Wells Fargo, a bank, followed by a whole series of hedge funds including Shah Capital Management, FMR LLC, Dimensional Fund Advisors, Vanguard Group and Blackrock. According to a congressional report, profits increased 11-fold at Corinthian between 2007 and 2010, growing to $240.8 million.

Desmond Summers, a student at Everest College in Southfield, told the WSWS “I think they are just trying to get more money—the costs of tuition, student loans and books. I think it’s ridiculous, it shouldn’t be so high a cost to get an education.”

The Medical Assistant program in Southfield costs $17,506 for tuition and fees and $1,972 for books and supplies. The program is designed to take 41 weeks, but only 40% of students are able to graduate in that time, according to the Everest website. To complete such a program at a nearby community college is less than a quarter of these costs.

Desmond was shocked to learn that while he was taking on student loans, the CEO of Corinthian was making $3 million a year. “They’re taking education from students. It’s all about their money,” he concluded.

The growth of this industry has not just been the result of a free hand given to semi-criminal profiteers. It has been the defunding of public education that has created a growing “market” for students in technical fields. The huge decline in trades programs offered by cash-strapped high schools together with budget cuts to adult education and community colleges has led to a growing number of students desperate for training or retraining for jobs.

Students in the Southfield Information Technology program told this reporter that they had heard the chain may be closing and had been trying to get the truth from teachers and the administration. “Teachers gave us the corporate spin. We’re intelligent students and we got a circus story that there was nothing to worry about.”

The students were particularly angry that they had not gotten real hands-on training at Everest, specifically to learn how to put a computer together. “We are getting simulator labs, YouTube videos and movies with bad actors. A movie is not teaching me, I can do that at home,” said one young man.

“They told us Everest would change our lives, but nothing has changed. All we get is excuses and lies” another concluded bitterly.

Finally, it is possible that the demise of Corinthian may just be the tip of the iceberg. On July 3, it was reported that another major player in the for-profit college industry, ITT Educational Services Inc., with 57,000 students, may lose some of its federal funding and face heightened scrutiny from regulators as a result of missing similar compliance audit paperwork with the DOE.

ITT’s tack for overcoming the “90/10 Rule,” according to the New York Times, consisted of providing loans with zero interest rates to first-year students, calling them a “temporary credit.” When students were unable to repay the loans within one year, ITT forced them to take out loans at rates as high as 16.25%. The company is facing a suit from the Consumer Financial Protection Bureau for predatory lending.
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College, Inc.
12 Jul 2014
Gary Lapon documents the abuses of the growing for-profit higher education industry.

August 27, 2012

IMAGINE A business that rakes in billions of dollars in taxpayer funds, but provides its customers with a defective product that fails for more than half of them--though that track record hasn't stopped the business owners from enjoying ever-increasing profits.

Sounds like the parasites of Wall Street or the insurance industry, doesn't it?

But according to a U.S. Senate report, the same is true of a growing number of colleges and universities--the expanding sector of higher education that is run for profit.

The Senate report is a shocking exposé of a new growth industry that turns out to be another scheme for the 1 percent to make money at the expense of some of the most vulnerable people in society.

But anyone who investigates the for-profit college scam will be struck by something else, too--the abuses of College Inc. are extreme examples of a trend toward privatization and business-like operations throughout all of higher education, which threaten to undermine the system as a whole.

- - - - - - - - - - - - - - - -

FOR-PROFIT colleges are capturing a greater share of students nationwide. Over the past 10 years, the for-profit higher education industry has tripled in size, with fall enrollment growing to more than 2.4 million in 2010. That increase is seven and a half times faster than the 28.8 percent increase in enrollment at public colleges, according to the College Board.

This is despite the fact that for-profit colleges are more expensive than even the most prestigious public institutions. Bachelor's degrees average $62,702 at for-profit institutions, versus $52,522 at flagship state public universities. The average associate degree at a for-profit college costs $34,988, more than four times the $8,313 at the average public community college. Certificate programs at for-profit colleges average $19,806, compared with $4,249 at community colleges.

It's no surprise, then, that students at for-profit colleges are more likely to end up deeper in debt. Fully 96 percent of students at for-profit colleges borrow to pay for tuition, compared with 48 percent at four-year public and 13 percent at community colleges, according to the Senate report, titled "For Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Access," the result of a two-year investigation by the Senate Committee on Health, Education, Labor and Pensions, chaired by Democrat Tom Harkin.

"Independent students, who make up most of the for-profit student body, leave for-profits schools with a median debt of $32,700, but leave public colleges with a median debt of $20,000 and private non-profit colleges with a median debt of $24,600," the Senate committee report found.

As a result, according to the New York Times, "Students at for-profit colleges make up 13 percent of the nation's college enrollment, but account for about 47 percent of the defaults on loans."

Although the profits generated by for-profit colleges end up in private hands, the vast majority of revenues come from the government, in the form of federal grants and federally guaranteed student loans. According to the Harkin report, the Apollo Group, the largest of the for-profit education companies and operator of the infamous University of Phoenix, "$3.1 billion in federal student aid, in addition to $46 million in military education benefits...86.8 percent of the company's revenue, and $925 million of their profit, is attributed to federal taxpayer sources."

At the same time that states, pleading poverty, are slashing public university budgets and the federal government now charges interest on loans to graduate students while they're in school, more than $30 billion are funneled each year to for-profit colleges from the federal government, in the form of grants and loans.

Despite paying (and borrowing) significantly more, students at for-profit schools are less likely than their counterparts at public four-year institutions to leave school with a degree. Of the nearly half a million students who enrolled in an associate degree program in 2008-09, the report found that nearly two-thirds (62.9 percent) had dropped out by the middle of 2010. Over half (54.3 percent) left their bachelor's degree programs by that point.

And studies show the benefits of a degree from a for-profit school are likely negligible. A study published in June by two Boston University economists found that while those who get degrees from public or private non-profit colleges and universities experience significant benefits, including higher wages and lower unemployment, students who attended for-profit universities don't. As Time magazine reported:

The [Boston University] researchers found that six years after they enter college, for-profit students are more likely to be unemployed--and to be unemployed for periods longer than three months. And, further, if they are able to find a job, students who attend for-profits make, on average, between $1,800 and $2,000 less annually than their peers who attended other institutions.

This isn't surprising given how little of their inflated tuition prices for-profit colleges actually spend on students' educations. The Senate report estimates average per-student spending at for-profit colleges to be just over $2,000 in 2009--and some spend much less.

For example, the Apollo Group, which "educated" over 500,000 students in 2010, spent just $892 per student on instruction. According to its own estimates--which the bosses at the University of Phoenix reserve the right to change at any time--a bachelor's of arts degree at the school will likely cost over $10,000 per year, while a bachelor's of science degree runs nearly $15,000 annually, well over 10 times the amount spent on teaching.

- - - - - - - - - - - - - - - -

FAR FROM being the most efficient way to deliver a service, as proponents of free enterprise like to claim, market-based, for-profit approaches to higher education result in massive waste. Instead of student instruction, the bulk of tuition money goes to marketing to bring in new students, multimillion-dollar salaries for top executives, lobbying politicians and, last but certainly not least, profits.

Marketing is a top priority to for-profit institutions. An investigative report by the Village Voice revealed that recruitment is typically aimed at the most vulnerable--for example, veterans suffering from post-traumatic stress disorder and brain injuries--and often involves outright fraud, such as encouraging under-age applicants to lie to their parents and the federal government about their eligibility for financial aid.

Last year, the Institute for Higher Education Policy released a report revealing that low-income students are four times as likely to attend a for-profit college as students from more well-off families. And low-income women are disproportionately likely to attend for-profit schools, enrolling at twice the rate of low-income men.

A number of these students would have attended public schools in the past--according to the report, the portion of students who grew up in poverty who enrolled at four-year public institutions dropped from 20 percent in 2000 to just 15 percent in 2008.

Students of color are also disproportionately represented at for-profit schools. According to a working paper published by the National Bureau of Economic Research: "African Americans account for 13 percent of all students in higher education, but they are 22 percent of those in the for-profit sector. Hispanics are 15 percent of those in the for-profit sector, yet 11.5 percent of all students."

For-profit colleges use student recruitment techniques similar to those used by the brokers who pushed sub-prime mortgages during the 2000s--the predatory housing loans that disproportionately targeted African Americans and Latinos, and poor and working-class borrowers. According to the Voice, for-profit colleges:

buy lists [of potential students] from companies like QuinStreet, which made its name providing leads to subprime-mortgage brokers...The idea is to prey on people's hopes and desires, offering that yellow brick road to the American dream: an education and a better job. [Recruitment workers] are trained to identify emotional weaknesses and exploit them.

In fact, a recruitment staffer quoted in the Village Voice article, who worked for Education Management Cop., an operator of for-profit colleges owned in large part by Goldman Sachs, said, "Half the people I worked with, their previous job was in the mortgage industry. They targeted people in that industry...They were the ones that did the best because they were so unscrupulous."

Like those who orchestrated the sub-prime mortgage crisis, top executives at for-profit education companies have been rewarded with multimillion-dollar compensation packages.

According to the Senate report, "[T]he CEOs of the large publicly traded for-profit education companies took home, on average, $7.3 million each in fiscal year 2009"--about seven times the amount earned by the highest-paid heads of the most prestigious public and private non-profit institutions. The best paid of all was Richard Silberman, CEO of Strayer Education, Inc., whose compensation totaled $41.5 million in 2009, placing him among the highest-paid corporate executives in the world.

And that's not to even mention profits. For-profit "education" is incredibly lucrative. Senate investigators say that "many of the companies had profit margins that topped most of Wall Street...the 30 companies examined by the committee generated $3.6 billion in profit, or 19.4 percent of revenue [in 2009]." ITT Educational Services Inc. and Strayer Education Inc. had profit margins of 37.1 percent and 33.7 percent, respectively. On average at these companies, a greater share of total revenues went to profits than to educating students.

And it's the usual suspects who are making money. The Senate report found that "by 2009, at least 76 percent of students attending for-profit colleges were enrolled in a college owned by either a company...traded on a major stock exchange or a college that is owned by a private equity firm."

- - - - - - - - - - - - - - - -

THE SENATE report paints a picture of the for-profit higher education industry that looks an awful lot like the sub-prime mortgage industry, whose collapse triggered the financial crisis of 2008.

Wall Street firms and other big-money investors are raking in billions backing companies that aggressively target low-income people, especially Blacks and Latinos, offering them an inferior product at higher costs. More often than not, students at for-profit schools end up in massive debt with little or nothing to show for it.

Even worse for those caught up in the scam is that student loans, unlike mortgages, cannot be discharged through bankruptcy--and lenders can even garnish Social Security payments to collect on outstanding debts. Without major reforms, student loan debt will cripple many of these borrowers for the rest of their lives.

And just like they let the banksters off the hook for the financial crisis, political leaders have refused thus far to do much of anything about the schemes of the for-profit education industry.

Earlier this year, the Obama administration announced new regulations that were supposed to identify education programs which burden students with high levels of debt--for example, by measuring how many attendees get "gainful employment." But the new rulers were full of enough holes that even the worst offenders among for-profit colleges could pass muster. According to Higher Ed Watch:

Responding to a massive lobbying campaign from the for-profit higher education industry, the administration watered down their proposed regulations to such an extent that only programs that flunk all three of the department's low-bar gainful employment tests are considered to be out of compliance. That means that only programs at which fewer than 35 percent of former students are repaying their loans and where the typical graduates have annual student loan payments that exceed 12 percent of their total earnings and 30 percent of their discretionary income would have eventually been in jeopardy of losing access to federal financial aid.

The for-profit college industry paid good money to avoid any trouble in Washington. According to the Village Voice, "The industry had discovered the value of paying protection money to Congress. It spent $16 million on lobbying last year alone, buying a dream team of former officials that includes former House Majority Leader Dick Gephardt (D-Mo.) and no less than 14 former congressmen."

To add insult to injury, the bulk of the millions that for-profit colleges spend on lobbying comes from the federal government--the source of most of the industry's revenues. So they are essentially using government money to prevent the government from regulating them.

- - - - - - - - - - - - - - - -

THE ABUSES of for-profit colleges are an inevitable result of applying the profit motive to a public need like higher education.

In business, the drive for profit trumps every other consideration. For-profit colleges make their money by minimizing costs and maximizing revenues--in this case, spending as little as possible on educating students while charging them as much as possible; spending intensively on marketing to bring in new "customers," regardless of whether or not they actually finish their degree or receive a quality education; and extracting as much of the revenue as possible in the form of profits and lavish salaries and bonuses for top executives.

However, while for-profit colleges are responsible for the worst outrages, they are merely more grotesque examples of a broader trend toward the privatization of public higher education and a "business model" approach to education.

In recent decades, tuition and fees at public colleges has tripled, while grants are increasingly replaced with loans, leaving students drowning in debt. Instead of a public service provided by the state, higher education has been transformed into a prohibitively expensive product, paid for with debt.

Many of the loans students take out to attend public and private non-profit colleges generate massive profits for private lenders. For example, Sallie Mae, the largest lender to students, was privatized in 2004--it rakes in billions from its operations.

And an investigation by then-New York Attorney General Andrew Cuomo a few years ago found widespread evidence of unethical and often illegal relationships between lenders and college officials at hundreds of colleges, benefiting the student lending industry at the expense of students.

There are plenty of other examples of how higher education generally is following the privatization trends. Many public universities outsource aspects of their operations to private, for-profit corporations. Full-time professors are increasingly being replaced with lower-paid adjuncts, who lack benefits and job security.

Finally, although public universities and private non-profit colleges are not supposed to generate a profit, trustees and top administrators are often able to enrich themselves in various ways at the expense of students, staff and professors.

So while for-profit colleges are an extreme example of the failure of the market to meet human need, the threat to higher education posed by the pursuit of profit runs much deeper. Addressing this means building a movement that demands higher education--provided by full-time professors with union protection, job security, and good wages and benefits--as a human right.
Screw U: How For-Profit Colleges Rip You Off
12 Jul 2014
Click on image for a larger version

The folks who walked through Tressie McMillan Cottom's door at an ITT Technical Institute campus in North Carolina were desperate. They had graduated from struggling high schools in low-income neighborhoods. They'd worked crappy jobs. Many were single mothers determined to make better lives for their children. "We blocked off a corner, and that's where we would put the car seats and the strollers," she recalls. "They would bring their babies with them and we'd encourage them to do so, because this is about building motivation and urgency."

McMillan Cottom now studies education issues at the University of California-Davis' Center for Poverty Research, but back then her job was to sign up people who'd stopped in for information, often after seeing one of the TV ads in which ITT graduates rave about recession-proof jobs. The idea was to prey on their anxieties—and to close the deal fast. Her title was "enrollment counselor," but she felt uncomfortable calling herself one, because she quickly realized she couldn't act in the best interest of the students. "I was told explicitly that we don't enroll and we don't admit: We are a sales force."

After six months at ITT Tech, McMillan Cottom quit. That same day, she called up every one of the students she'd enrolled and gave them the phone number for the local community college.

With 147 campuses and more than 60,000 students nationwide, ITT Educational Services (which operates both ITT Tech and the smaller Daniel Webster College) is one of the largest companies in the burgeoning for-profit college industry, which now enrolls up to 13 percent of higher-education students. ITT is also the most profitable of the big industry players: Its revenue has nearly doubled over the past seven years, closing in on $1.3 billion last year, when CEO Kevin Modany's compensation topped $8 million.

To achieve those returns, regulators suspect, ITT has been pushing students to take on financial commitments they can't afford. The Consumer Financial Protection Bureau is looking into ITT's student loan program, and the Securities and Exchange Commission is investigating how those loans were issued and sold to investors. (Neither agency would comment about the probes.) The attorneys general of some 30 states have banded together to investigate for-profit colleges; targets include ITT, Corinthian, Kaplan, and the University of Phoenix.

A 2012 investigation led by Sen. Tom Harkin (D-Iowa) singled out ITT for employing "some of the most disturbing recruiting tactics among the companies examined." A former ITT recruiter told the Senate education committee that she used and taught a process called the "pain funnel," in which admissions officers would ask students increasingly probing questions about where their lives were going wrong. Properly used, she said, it would "bring a prospect to their inner child, an emotional place intended to have the prospect say, 'Yes, I will enroll.'"

For-profit schools recruit heavily in low-income communities, and most students finance their education with a mix of federal Pell grants and federal student loans. But government-backed student loans max out at $12,500 per school year, and tuition at for-profits can go much higher; at ITT Tech it runs up to $25,000. What's more, for-profit colleges can only receive 90 percent of their revenue from government money. For the remaining 10 percent, they count on veterans—GI Bill money counts as outside funds—as well as scholarships and private loans.

Whatever the source of the funds, the schools' focus is on boosting enrollment. A former ITT financial-aid counselor named Jennifer (she asked us not to use her last name) recalls that prospects were "browbeaten and hassled into signing forms on their first visit to the school because it was all slam, bam, thank you ma'am." The moment students enrolled, Jennifer would check their federal loan and grant eligibility to see how much money they qualified for. After students maxed out their federal grants and loans, there was typically an outstanding tuition balance of several thousand dollars. Jennifer says she was given weekly reports detailing how much money students on her roster owed. She would pull them from class and present them with a stark choice: get kicked out of school or make a payment on the spot. For years, ITT even ran a (now discontinued) in-house private loan program, known as PEAKS, in partnership with Connecticut-based Liberty Bank, with interest rates reaching 14.75 percent. (Federal student loans top out at 6.8 percent.)

Jennifer, who had previously worked at the University of Alabama, says she felt like a collection agent. "My supervisors and my campus president were breathing down my neck, and I was threatened that I was going to be fired if I didn't do this," she says. Yet she knew that students would have little means to get out from under the debt they were signing up for. Roughly half of ITT Tech students dropped out during the period covered by the Harkin report, and the job prospects for those who did graduate were hardly stellar. Even though a for-profit degree "costs a lot more," Harkin told Dan Rather Reports, "in the job market it's worth less than a degree from, say, a community college."

Jennifer says the career services office at her campus wasn't much help; students told her they were simply given a printout from (ITT says its career counselors connect students with a range of job services and also help them write résumés, find leads, and arrange interviews.) By the time she was laid off, Jennifer believed the college "left students in worse situations than they were to begin with."

It's not just whistleblowers who are complaining about ITT. There's an entire website,, dedicated to stories from disappointed alumni. That's how we found Margie Donaldson, a 38-year-old who says her dream has always been to get a college degree and work in corporate America: "Especially being a little black girl in the city of Detroit, [a degree] was everything to me."

Donaldson was making nearly $80,000 packing parts at Chrysler when the company, struggling to survive the recession, offered her a buyout. She decided to use it to get the college degree that she never finished 13 years before. Five years later, she is $75,000 in debt and can't find a full-time job despite her B.A. in criminal justice from ITT. She's applied for more than 200 positions but says 95 percent of the applications went nowhere because her degree is not regionally accredited, so employers don't see it as legitimate. Nor can she use her credits toward a degree at another school. Working part time as an anger management counselor, she brings in about $1,400 a month, but there are no health benefits, and with three kids ages 7, 14, and 18, she can barely make ends meet. She has been able to defer her federal student loans, but the more than $20,000 in private loans she took out via ITT can't be put off, so she's in default with 14.75 percent interest—a detail she says her ITT financial-aid adviser never explained to her—and $150 in late fees tacked on to her balance each month. Donaldson says she has tried to work out an affordable payment plan, but the PEAKS servicers won't agree until she pays an outstanding balance of more than $3,500—more than double her monthly income. "It puts me and my family, and other families, I'm sure, in a very tough situation financially," she says.

Donaldson says she didn't understand how different ITT was from a public college. If she had attended one of Michigan's 40-plus state and community colleges, her tuition would have been roughly one-third of what it was at ITT. Now, she says, all that time and money feels wasted: "It's almost like I'm like a paycheck away from going back to where I grew up."