Subprime Student Loan Crisis

By Virginia Prescott on Thursday, November 12, 2009.

The recession is encouraging a record number of Americans to attend or return to college. Enrollment reached a record 11.5 million last fall. With unemployment on the rise, that number is expected to climb.

For-profit colleges are aiming to fill the demand. Many students drawn in by promises of close personal attention and immediate career growth agree to take on high interest loans, often times unaware of what they’re signing. On graduation day they face the real world saddled with tens of thousands of dollars in debt.

In many cases private student loans come with variable interest rates that can top twenty percent. In addition, a number of recent graduates contend that the education they paid for included sub-par labs, mediocre instructors, and fell short of the quality education that was advertised. The New America Foundation’s Stephen Burd has been investigating the for-profit college industry for The Washington Monthly and joins us with more on what he found.

The Washington Monthly: The Subprime Student Loan Racket

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Schools like the ones we discussed are often described as "diploma mills." Well, some skeptics proved just how easy it is to walk away with a degree - by enrolling their cats. Now users of Wikipedia have posted a list of several such accomplished felines. Like Colby Nolan. Undercover agents enrolled the housecat at Trinity Southern University in Dallas, which earned him an MBA degree. And science journalist Ben Goldacre was able to score a diploma in nutrition from the American Association of Nutritional Consultants for his dead cat, Henrietta.

(Photo by BdwayDiva1 via Flickr/Creative Commons)

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When I first began attending The New England Institute of Art, I had many of the concerns discussed on the radio show. The major red flag was the ease with which I was able to gain admission to the college. The total 4-year degree program that I chose runs in the neighborhood of $90,000. At the time, I was eligible for the Montgomery GI Bill and decided that there wasn't too much risk in trying one semester there. I had researched 3D Animation programs through community and state colleges but there really wasn't anything available.

Luckily, I found the Media Arts and Animation program at The New England Institute of Art to be very good. Students graduating from NEiA have found job placement in some of the best colleges worldwide, including Industrial Lights and Magic, Pixar and WETA.

Researching schools was very, very difficult. Every school will have had negative feedback, where that school is a private college or not. It would be extremely beneficial if the government provided a Better Business Bureau type model for colleges.

Submitted by John Anderson on Thu, 11/12/2009 - 12:57.

Nice expose -- you provided good information for those out in the cold because of the economy who certainly don't need their initiative kicked in the head by scoundrels. And you offered an alternative: community colleges. Thanks --

Submitted by Randall Neukam, Ph.D. on Thu, 11/12/2009 - 13:03.

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Word of Mouth is all about what's new. Online and on-air, the show looks at our fascinating and ever-changing world, and puts the latest ideas under a microscope. Word of Mouth investigates everything from science and technology, to health and the environment, to new trends in popular culture. The show airs Monday through Thursday at noon and is hosted by Virginia Prescott.