For-Profit Colleges and Racial Justice

Perpetuating Racial Inequality Under the Guise of Higher Education

Society holds out higher education as the entry point to the middle class, a key ingredient for financial stability and upward mobility of individuals and communities. This message has been targeted with particular force at the African American community, from W.E.B. DuBois’s “talented tenth” to the United Negro College Fund’s “a mind is a terrible thing to waste” campaign.

 

And yet, there remain unacceptable racial disparities in higher education outcomes, from participation to attainment to resulting debt. There is a severe gap in the number of African Americans who obtain college degrees compared to their white counterparts. And African Americans who do go to college end up with more debt and more loan defaults.

 

These data points suggest that, in the aggregate, participation in higher education by African Americans is actually entrenching, rather than erasing, existing patterns of inequality that are the result of longstanding racism in the United States. The for-profit college industry is an important piece of this problem. It is as predatory as any payday or subprime lender, and is disproportionately responsible for racial disparities in education debt.

 

African Americans and other people of color are disproportionately enrolled in for-profit colleges. Black and Latino students make up less than one third of all college students, but represent nearly half of all those attending for-profit institutions.  In 2015, more than half of all African American college students were low income (qualified for Pell grants). A student receiving a Pell grant is three times more likely to attend a for-profit college than someone not qualifying for such aid.

 

 

Outcomes across the board are extremely bad for this sector. Less than one in five students who enroll in a for-profit school will ever graduate. Less than a quarter of the money for-profit students borrow to pay for their education actually goes to their education. The rest goes to slick marketing and advertising, executive compensation, and shareholder profit. And studies show that those who do graduate from for-profit colleges do worse in the labor market than those with only a high school education.

 

Department of Education statistics show that close to 70% of African Americans who borrow to attend a for-profit college default on their loans within ten years. Because the industry targets its worthless products in explicitly racial terms, the debt associated with for-profit colleges is not only predatory, it’s racist.

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For-Profit College Industry Spin

This predatory industry compounds the effects of the entrenched, systemic racism that has unfairly disadvantaged some while advantaging others.  It closes the path to the middle class for thousands of African-American students simply trying to do what we are all told to do, which is to pursue higher education.

The industry also hides behind racial tropes in order to oppose—and often, defeat—any attempt to regulate its predatory conduct. For example, the industry encouraged member schools to attack the “gainful employment” regulation as “academic redlining.”  It consistently elides the distinction between historically black colleges and universities and so-called “minority serving institutions.” The former are authentic cornerstones of the African-American community, forged at a time when higher education was legally denied to people on the basis of race, and continuing today as important forces for education and racial justice.  The latter are profit-seeking corporations targeting people on the basis of race.

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Using Manipulation and Lies to Cover Up Corporate Greed

For-profit college groups manipulate government data to lie to the public about the harm they cause to minority students.

Legal Action

Tiffeny Anderson, Dianna Bond, Veronica Boyd, Crystal Larkin, Sharonda Nixon, Barbara Turner, and Shirley Washington v. Virginia College

A lawsuit asserting that Virginia College engaged in “reverse redlining” in violation of the Equal Credit Opportunity Act by targeting African Americans.

United States of America, ex rel. Saphronia Boyd, Ruthie Parker and Stanley Watts v. Corinthian Colleges

Former employees assert that Corinthian College in Merrionette Park, Illinois used discriminatory practices to enroll a student body that was 72 percent African American.

Mary Morgan, et. al., v. Richmond School of Health and Technology, Inc.

Case charging for-profit vocational school with targeting African Americans for recruitment into sham programs, in violation of civil rights and consumer protection statutes.

"Despite the claims that for-profit colleges serve an unmet need, are more nimble than stodgy traditional colleges, and increase access to poor and minority students, for-profit colleges target and thrive off of inequality."

The Atlantic

"Black Americans who recently graduated college owe close to twice as much on their student loans as whites, a racial gap that has climbed nearly 14-fold over the past 15 years."

Bloomberg

Reports

May 2016, Revised January 2018

Gainfully Employed? Assessing the Employment and Earnings of For-Profit College Students Using Administrative Data | NBER

Despite the much higher costs of attendance, earnings effects are smaller in the for-profit sector relative to the effects for comparable students in public community colleges.

February 2017

A Profile of the Enrollment Patterns and Demographic Characteristics of Undergraduates at For-Profit Institutions | NCES

The rapid growth of the for-profit sector has renewed public scrutiny and concern about the historically poor labor market outcomes of students at many of these institutions and the amount of debt students in these institutions often take on.

October 20, 2016

Black-White Disparity in Student Loan Debt More Than Triples After Graduation | Economic Studies at Brookings

Our analysis reveals the surprising, disproportionate role of graduate school enrollment—particularly for-profit graduate enrollment—in contributing to the overall black-white debt gap.

For-Profit African-American Students

Taking Financial Advantage of Minority Students

African-American students attending for-profit colleges borrow student loans at significantly higher rates than public institutions.

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Targeting Minority Students for Corporate Profits

Predatory for-profit colleges coerce minority students into borrowing more in student loans than they would to attend a public university.

Coverage

July 30, 2018

For-Profit Schools’ Predatory Practices and Students of Color: A Mission to Enroll Rather than Educate | Harvard Law Review

In a move with significant implications for federal civil rights enforcement, the Department of Education has halted investigations into several large for-profit institutions widely accused of defrauding students.

June 18, 2018

Are Betsy DeVos's Policies Exacerbating Racial Inequities in Student Debt? These Lawmakers Think So. | Washington Post

Senate and House Democrats are accusing Education Secretary Betsy DeVos of exacerbating racial disparities in student debt by failing to help defrauded borrowers, enforce consumer protections and examine the root causes of debt inequity.

March 27, 2017

How For-Profit Colleges Sell 'Risky Education' to the Most Vulnerable| NPR

For-profit colleges have faced federal and state investigations in recent years for their aggressive recruiting tactics.

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Focused on Targeted Advertising, Not Education

Public records indicate Corinthian Colleges spent over $600,000 placing ads on BET in a two-week period.

Tell Us What You Know

Do you know about discrimination happening in the for-profit college sector?