A Predatory Industry

Exploiting the promise of higher education

For decades, the predatory for-profit college industry has exploited the promise of higher education, perpetrating a massive fraud on students who are trying to build a better life.

The industry specifically targets low-income students, students of color, single parents, and veterans. Many are the first in their family to attend college.

For-profit colleges recruit students with lies and false promises of well-paying jobs and meaningful careers. One school told prospective students that it placed 70 to 99% of students in jobs, when the reality was only 20 to 30% of students got jobs.

Instead of providing the quality programs promised by recruiters, these companies invest almost no money into meaningful career training. Schools often lack the basic equipment necessary to teach a trade. In one study, less than 25% of for-profit colleges’ revenue went to expenses related to education. The majority of revenue goes to marketing and advertising, executive compensation, and shareholder profit.

As a result, students are left with mountains of debt and without the employment to pay for it. For-profit colleges account for 13% of the student population, but 47% of federal loan defaults. And 98% of all loan cancellation applications sent to the federal government in 2016 and 2017 were due to fraudulent for-profit colleges.

Government funding and policies intended to help people improve their lives are instead enabling this industry to cheat students. The for-profit college industry is among the most heavily tax-subsidized of any private sector, taking more than $30 billion in taxpayer money each year in the form of federal student aid.

Despite these predatory practices, the Department of Education has repeatedly sided with the industry, and against students and taxpayers. It continues to fund these companies and collect fraudulent student loans, while delaying and rewriting borrower defense rules that would protect students from forced arbitration.

The Project on Predatory Student Lending represents students against the predatory for-profit college industry. The Project was formed in 2012 to combat the massive fraud that is being perpetrated against students and taxpayers by for-profit colleges, and government policies that enable the predatory industry to continue to cheat borrowers and taxpayers.

For-Profit Colleges and Racial Justice

The tax payer-funded for-profit college industry specifically targets students of color with aggressive and manipulative advertising tactics. Black and Latino students are disproportionately harmed. The debt associated with for-profit colleges is not only predatory, but racist. Click below to learn more about for-profit colleges and racial justice.

25%

Focused on profits, not education

25% of money paid by students at for-profit colleges goes to their education. The rest is taken by the industry for marketing, executive compensation, and profits.

47%

Leaving students in their wake

For-profit colleges account for 13% of the student population, but 47% of student loan defaults

$30

Paid for by taxpayers

More than $30 billion in federal tax funding goes to this predatory industry each year, making it one of the most tax subsidized of any private sector.

Student Experiences

 

Mary is a single mom who entered the Medical Assistant program at Everest Institute. The quality of the program was horrible. The students were forced to practice on themselves. One time, a student practiced drawing blood from Mary but due to a lack of training from the program, forgot to take the tourniquet out before the needle, and Mary’s blood spilled everywhere. Mary had to abandon the program. Shortly thereafter, she couldn’t find a job, lost her apartment, and lived in a shelter for two years. She never got a medical job, and is now a domestic violence case manager. She is in default on her $7000 in student loans from Everest Institute.

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Christine left high school at age 15 when she had a child. After enrolling in community college, she was drawn into Everest with the promise that she would get a job as a medical technician more quickly at Everest than if she remained at community college. Had she stayed at community college, she would have graduated debt-free. Instead, she has tens of thousands of dollars in student loans. She has managed to find work outside the medical field earning minimum wage, but these wages are being garnished because she fell behind on her student loan payments. She’s currently living in a shelter with her daughter, and had planned to use her tax refund as security deposit on an apartment. Instead, this money was seized by the government to pay for her debt to this fraudulent “school.”

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Tina attended a Medical Assisting program at Sanford-Brown Institute (SBI), relying on SBI’s promises that its graduates had high rates of employment in their field of study; that SBI would provide meaningful job placement assistance; and that SBI’s credits were widely transferrable to legitimate higher education institutions. Only after incurring substantial student loan debt and graduating with a 4.0 grade point average, despite a period of homelessness, did Tina learn that all of these promises were false. After graduation, the only employment Tina could find was a part-time retail job paying little more than minimum wage, where she worked for almost four years to make ends meet. Tina is rightfully proud of her perseverance in obtaining her degree, but feels that in all practical senses, her degree is worthless.

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Our Approach

We represent students in their efforts to counter the for-profit college industry's immense money and lobbying power. We take on cases where we think we can make the biggest difference, directly or indirectly, to this corrupt and corrupted system.

Villalba et al. v. ITT

Class action by former ITT Tech students in ITT’s bankruptcy proceedings. Students are the true creditors of ITT and debts from ITT are invalid.

Colon v. DeVos

Asks a court to declare that student loan debt from Sanford-Brown Institute, a for-profit college determined to have violated New York state consumer protection laws, is invalid and not enforceable.

Calvillo Manriquez v. DeVos

Class action challenging the federal government’s failure to discharge tens of thousands of student loans from Corinthian College discharge applicants whom the government already deemed entitled to discharges.