Project 1999 - Corporate Colleges Produce More Loan Defaults than Graduates

For-profit colleges have sprung up like toadstools after a rainy spell during the last decade or so.

Unlike traditional colleges, which most have attended, for-profit colleges are corporations which use student loans to finance their product. A new report raises the question: just what is the product produced by these corporate colleges?

If the product was supposed to be education, as it is with traditional state and private colleges, the results would be based on graduation and employment rates following graduation. Those are 2 of the criteria used by the annual US News and World Report college rankings. The reason for this is obvious: if a college is successfully teaching and training its students, they not only will graduate, but they will be able to get good jobs in their field of study, and the higher those rates are, obviously, the better the college is meeting those goals.

So, how do these new corporate colleges rate? Not only are their rates far below even the least competitive 'party schools,' these corporate colleges seem more successful in causing their students to default on loans, and suffer all the financial consequences thereof, than they are at actually educating those students.

Out of over 2700 colleges in America, in all, there are 265 colleges in the US which produce more student loan defaults than college graduates. Of those, 117 are corporate profit colleges, 44% of the lousy performers; the rest are a combination of public, private and community colleges. No other category of colleges approached the 44% rate of corporate colleges, with public colleges comprising 33% of these low-performing schools.

A Senate investigation last summer found that students at for-profit colleges on average had lower graduation rates and higher default rates than those enrolled in non-profit institutions. USA TODAY's analysis found 117 for-profit institutions where default rates were higher than graduation rates, with most offering four-year degrees or higher. ITT Educational Services, which has 145 technical institutes nationwide, operated 45 of them.

Last week, the Education Department updated its College Affordability and Transparency Center website established in 2011 to highlight institutions where costs are rising fastest. Tim Ranzetta, a financial aid analyst in Palo Alto, Calif., says transparency is not enough. His proposal? Require flagged schools to post a disclosure: "Warning: This education can be hazardous to your health."

I think we need to find a new term for such colleges, which are designed to make money rather than provide their students with an education which will result in career advancement. Instead of corporate colleges or for-profit colleges, how about Predatory Colleges?