The Tragedy of Student Loans


One of the big scams going around right now is student loans for individuals attending for-profit universities. It goes something like this: Heavy advertising for pain free, at-your leisure online or on-site degrees—encouraging students to take on a large debt load to pay for their studies—and then frequently little (if any) support for students, inadequate classes, and difficulty transferring credits to other institutions. The dropout rate is typically substantial. Personal student debt is growing at a staggering rate.

Here’s the thing though—students at for-profit institutions represent only 9% of all college students, but receive roughly 25% of all federal Pell Grants and loans, and are responsible for 44% of all student loan defaults.

study by The National Bureau of Economic Research, in Cambridge, Massachusetts, suggested that students who attend for-profit education institutions are more likely to be unemployed, earn less, have higher debt levels, and are more likely to default on their student loans than similar students at non-profit educational institutions. Although for-profits typically serve students who are poorer or more likely to be minorities, these differences do not explain the differences in employment, income, debt levels, and student loan defaults. The Government Accountability Office has also found that graduates of for-profits are less likely to pass licensing exams, and that poor student performance cannot be explained by different student demographics.

For-profits have higher completion rates for one- and two-year associate’s degree programs, but higher dropout rates for four-year bachelor’s degrees. However, studies have suggested that one- and two-year programs typically do not provide much economic benefit to students because the boost to wages is more than offset by increased debt. By contrast, four-year programs provide a large economic benefit.

An investigation by the New York Times suggested that for-profit higher education institutions typically have much higher student loan default rates than non-profits. Two documentaries by Frontline have focused on alleged abuses in for profit higher education.

The following infographic from will give you a good visual of what’s going on with student debt. Call me old-fashioned, but I’ve always thought that the fundamental purpose of an educational institution should be to educate, not to turn a profit.


The Tragedy of Student Loans

Leave A Comment!