For profit fraud rhetoric

By: Tonya Mead, CFE, PI, MBA, MA Educational Psychology

Senator Warren (D-Mass) has taken the mantle to accuse US Department of ED Secretary DeVos of “helping for- profit colleges swindle students by illegally delaying an Obama-era Department of Education rule” [para 1].

Fraud is fraud. Whether from for profit college, non-profit university, traditional public, public charter or private elementary and secondary school operators.

Sen. Warren frequently tweets using the hash tag #4profit. While student debt has reached $1.3 trillion; the debt owed by student borrowers range from $39,950 (for profit), $32,300 (non profit private colleges and universities) and $25,550 for graduates of public universities.

Additionally, 71% of all student graduates in 2012, when earning their diploma, were also saddled with student debt. Of the 1.3 million students earning a 4-year diploma in  2012; eighty-eight (88%) of students from for profit schools still had student loans on the books; seventy-five (75%) of the non profit private colleges and universities and sixty-six (66%) of the graduates of public universities [The Institute for College Access and Success para one].

So while misrepresentation is a major concern, so too is the overly liberal application of the repayment rule established to protect students from predatory lending practices. Both appear as symptoms of industry-wide fiscal irresponsibility,  price fixing, and collusion to keep the cost of college exorbitantly high without regard to stagnating wages, lowered job prospects and opportunities for promotion and advancement.

Take for instance, see my book [page 19], illustrating a New England Center for Investigative Reporting study of staffing data from 1987 to 2011. It determined that “universities and colleges collectively added 517,636 administrators and professional employees, or an average of 87 every working day.

Additionally, in my book [page 34], I point to findings by the Ohio University economist, Richard Vedder, who speculated that for every dollar of grant funding received, university systems increase tuition by 35 cents. Similarly, a New York Fed study found that for every dollar obtained in direct and subsidized loans, tuition prices are raised by 65 cents. For every one dollar granted from Pell federal funds, tuition increased by 55 cents.

So these superficial complaints about delinquent student debt brought about by for-profit entities obscures the larger problem; namely that fraud in education is placing higher education (in the traditional sense) beyond the reach of the  typical middle class American.

Resources

  1. J. Marcus, “ New analysis shows problematic boom in higher ed administrators,” New England Center for Investigative Reporting, Boston, MA. February 6, 2014. Available: http://eye.necir.org/2014/02/06/new-analysis-shows-problematic-boom-in-higher-ed-administrators/
  2. S. Saulny, R. Coolidge, and J. Phelps,“Is college worth it?” Yahoo News. June 27, 2014. Available: http://news.yahoo.com/blogs/power-players-abc-news/is-college-worth-it—new-documentary-explores-higher-education-costs-and-rising-student-debt-223233460.html
  3. College Aid Means Higher Tuition,”Wall Street Journal,  Review and Outlook Section, 20 July, p. A14 , 2015.

Tonya J. Mead, CFE, PI, MBA, MA, Certified K-12 Administrator and School Psychologist is author of Fraud in Education: Beyond the Wrong Answer and president of Shared Knowledge, LLC http://ishareknowledge.com

 

 

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