For many, getting a vocational degree may seem like the best way to get a leg up in this economy. Unfortunately, more and more people are turning to private, for-profit schools for their higher education.
Enrollment at these trade schools has expanded about 20 percent per year in the last two years, according to the Career College Association. These schools have been accused of tricking students into paying exuberant tuitions in exchange for a nearly worthless degree that often doesn’t translate into a higher-paying job.
These schools are extremely adept at getting federal financial aid, which increases their profits, often puts students in massive debt and drains taxpayer money that should go to more worthwhile endeavors.
And now the U.S. Department of Education (DOE) is considering new regulations that would take federal loans away from some of these for-profit trade schools. The government doesn’t want schools to charge more tuition than students could possibly afford to pay, compared to the salaries they would earn after obtaining their degree.
Under the proposed regulations, the average annual debt for a program’s graduates can’t exceed their expected starting salary by 8 percent, or else the schools will lose access to Title IV federal financial aid, a major revenue source.
Companies like ITT Technical Institute, a chain of schools that charges about $40,000 for two-year associate degrees in computers and electronics, according to the New York Times, would surely have to lower tuition to maintain student loans.
Not surprisingly, the billion-dollar companies behind some of the schools are protesting the proposals. The DOE needs to stand firm behind the proposals and bring an end to the fleecing of education-seeking Americans and the federal loan system.
The Career Education Corporation reported revenue of $1.84 billion last year, and about 80 percent of that came from federal loans and grants, according to BMO Capital Markets, a research and trading firm.
Students at these schools received $3.2 billion in Pell grants two years ago, according to the DOE.
These schools are clearly profiting, but many of the students who attend them are not. Students who graduated from a culinary arts program at Le Cordon Bleu in Oregon between July 2007 and June 2008 got jobs earning only $21,000 a year on average, according to the Times.
It is time for the federal government to put more restraint on these schools.