AVERAGE DEBT
States with the highest amount of average debt for students graduating with loans in 2012:
Delaware: $33,649
New Hampshire: $32,698
Pennsylvania: $31,675
Minnesota: $31,497
Rhode Island: $31,156
Iowa: $29,456
Maine: $29,352
New Jersey: $29,287
Ohio: $29,037
Michigan: $28,840
Source: The Institute for College Access and Success
When Murray Hastie returned to New York in January 2006 after two tours of duty in Iraq, he hoped to use the GI Bill to complete his college education.
Denied admission to two state colleges, Hastie came upon DeVry University. The day after he filled out an online request for information, a representative from the for-profit university visited him at his home and encouraged him to enroll in a biomedical informatics program in New Jersey.
DeVry said he would receive in-state tuition and that his GI benefits would cover all of his educational costs, and helped him apply for loans, Hastie said.
Three semesters into the program, Hastie was struggling. He was being taught to write computer code, not preparing to work in a research lab, which is what he had been told he would be doing. Meanwhile, he was increasingly worried about his mounting debt. By the time he decided to cut his losses and move back home, Hastie had racked up more than $90,000 in student loans — with no degree to show for it.
Inundated by stories such as Hastie’s, a number of states are working to protect college students as consumers, even as the federal government plays a more important role in regulating both for-profit colleges and the student loan industry.
Thirty-two states are now working together under the leadership of Kentucky Attorney General Jack Conway to investigate potential abuses in the for-profit college industry, which saw enrollment more than triple between 1998 and 2008, according to the Consumer Finance Protection Bureau.
One reason for the concern is the amount of taxpayer dollars involved: Some for-profit colleges receive 90 percent or more of their revenue from the federal and/or state governments in the form of student aid.
“While some for-profit schools offer quality training and legitimate diplomas, we have found that this industry often markets subpar programs to veterans and low-income students who depend on federal aid,” Massachusetts Attorney General Martha Coakley said. “When students don’t receive the training they sign up for, or default on their loans, it not only greatly impacts their future but it also impacts taxpayers who have backed these loans in the first place.”
Coakley’s office is investigating DeVry, as are Illinois Attorney General Lisa Madigan and the Federal Trade Commission.
“We’re approaching them with a view toward transparency and an interest in demonstrating the compliant nature of our practices,” Ernest Gibble, a spokesman for DeVry, said on the investigations. DeVry declined to comment on Hastie’s particular situation, citing federal privacy restrictions.
Coakley also has taken aim at for-profit Corinthian Colleges and Corinthian Schools, with more than 100 schools nationwide. In a lawsuit filed earlier this month, she alleges Corinthian used deceptive marketing and high-pressure tactics to persuade students to enroll and take out high-interest subprime loans.
According to the complaint, Corinthian misrepresented the job placement rate of its graduates and misled students about the salaries they could expect after completing their programs. The lawsuit also alleges that Corinthian encouraged students to take out subprime loans with interest rates of up to 18 percent.
In disputing the allegations, Corinthian said Coakley’s office “disregards substantial, independent evidence that our two schools in Massachusetts have a strong record of offering students a quality education and treating them honestly and fairly.”
Last October, California Attorney General Kamala D. Harris also filed a lawsuit against Corinthian, alleging it engaged in false and predatory advertising and misrepresented job placement rates.
In January, 13 states issued subpoenas to four for-profit colleges, including Corinthian, over concerns about possible misrepresentations to students about financing, recruitment practices and graduates’ employment rates.
Also in January, Coakley’s office in Massachusetts held hearings on proposed regulations for for-profit colleges and occupational schools. The rules would require schools to disclose accurate information about tuition and fees along with placement statistics and graduation rates; prohibit them from using high-pressure sales tactics such as repeated phone calls and text messages; and bar them from calling recruitment personnel “counselors” or “advisers.”
In February, the new federal Consumer Financial Protection Bureau, created by the 2010 Dodd-Frank Act, filed suit against another for-profit college chain, ITT Educational Services, which operates about 150 institutions in nearly 40 states, alleging predatory student lending. The lawsuit was the bureau’s first public enforcement action against a for-profit college.
About the Author
