Students get trapped in financial debt

Cost is an always present thought for college students.

Rightly so, because college is getting more expensive.

The average student-loan debt for a 2014 college graduate was $33,000, according to an analysis of government data by Mark Kantrowitz, publisher at Edvisors, a group of websites about planning and paying for college.

That number doesn’t really shock me - as I’m sure it doesn’t shock others who have had statistics like that quoted to them since the time they began college.

What shocked me is what I recently learned about for-profit colleges.

For-profit schools, the online chains you see advertised like the University of Phoenix, enroll about 12 percent of students nationally. But they happen to account for about 44 percent in student-loan defaults, more than any other type of college, according to newly released federal data.

The reason for the high default rates is that so few students actually graduate from these schools.

At the University of Phoenix, only about a quarter of students who enter seeking a bachelor’s degree ultimately complete one within six years, giving them a six-year completion rate of four percent.

The few students who do complete their education through the institution have troubles getting jobs.

Survey data shows that employers are skeptical about hiring someone from a for-profit school.

A team of economists backed this data up with a real-world experiment. The researchers sent out nearly 10,000 fictitious resumes in response to online job ads. They varied details, including the kinds of institutions the imaginary applicants graduated from, while holding job experience constant.

The applicants who got the least number of emails or phone calls inviting them to interview or continue the application process were from, you guessed it, for-profit schools. Applicants with a bachelor’s degree from an online for-profit school were about 22 percent less likely to get a callback than applicants with similar degrees from non-selective public institutions.

The Department of Education created a “gainful employment” regulation to single out and cut off student aid to allegedly poor programs that leave students strapped with debt and with little job prospects.

Maybe this would fix the for-profit problem. But what happens when these institutions collapse?

The students affected will most likely have no clear plan for how to finish their education.

Yes, they could try to attend one of the many public or private institutions available.

But how accessible is a college education especially for minority, disadvantaged and older students - who are enrolled in for-profit colleges in greater fractions?

For-profit colleges offer more, at least presumed, flexibility and accessibility than other colleges do for those who need it in order to further their education.

In a roundabout way, that’s the real problem. In today’s world not everyone can get a college education.

A government audit conducted by the U.S. Government Accountability Office revealed that nearly 22,000 Americans age 65 and older had a large piece of their Social Security benefits withheld last year in order to pay for outstanding student loans. According to the Consumer Financial Protection Bureau, student loan debt is the second highest form of consumer debt behind mortgages, and there is more than $1 trillion is outstanding student loan debt nationally.

So it’s not just the for-profit colleges that are hurting students. It’s the entire higher education system, and the fact that we live in a world where if you try to further your education, you may be paying for it for the rest of your life.