Personal loans to attend for-profit schools can be risky

Saturday, December 21st, 2013 By

College graduates

A college education is a wonderful thing, but be sure to check out for-profit colleges thoroughly before taking out massive personal loans to attend. Image from Wikimedia Commons.

Potential students should be cautious if considering going to a for-profit, private college. Though college is usually worth taking out some personal loans to fund, the for-profit schools have higher default rates and are often at odds with state authorities. Some schools are worth it, but people should do their homework before attending.

The Donald may come under The Indictment

It was recently ann0unced that the New York Attorney General was beginning an inquiry concerning five companies that operate private, for-profit universities, according to CNN. One of the schools involved is the former Trump University, the small for-profit college launched by Donald Trump several years ago. The organization had to rename itself the Trump Entrepreneur Initiative after the New York Department of Education said it couldn’t call itself a school. The four other companies are, according to the New York Times, the Career Education Corporation, Corinthian Colleges, Bridgepoint Education and Lincoln Educational Services. No charges are being filed just yet, but these corporations and the schools they operate are being investigated.

Latest brouhaha between schools and states

State governments and the federal government are beginning to come down on for-profit universities, and some former students are not thrilled. Donald Trump is currently being sued in California by students of the now Trump Entrepreneur Initiative because they say they were misled. Corinthian’s colleges are also under investigation in Massachusetts, California, Florida and Georgia, according to Reuters. The Massachusetts Attorney General, according to the Boston Globe, is also investigating Apollo Group, the company that runs the University of Phoenix, as well as the Kaplan Career Institute, which is operated by the Washington Post Company. Smaller private colleges can be less stable than their megacorporate counterparts, as well. For instance, Alpine College in Spokane, Wash., recently closed its doors permanently in the middle of a term, leaving students holding the bag for thousands in personal loans and no degree to show for it.

Difficult to afford and impossible to pay for

One of the considerations one must make in choosing a university is cost. For-profit, private colleges can be incredibly expensive. In 2009, 15.2 percent of students who attended a for-profit college defaulted on their loans within a year, nearly twice the 7.3 percent of public university students who defaulted in the same period, according to Reuters. Private, not-for-profit schools had a default rate of 4.3 percent. For-profit college students also account for about half of student loan defaults overall. Many people have accused for-profit universities of fraudulent advertising and of not preparing students well enough for the job market, thus making it harder for them to meet their loan obligations. The Department of Education is currently trying to institute a rule that would deny federal loans to students attending a school with a 35 percent default rate or higher.

Sources

CNN

New York Times

Reuters on for profit default rates

Reuters on for profit school investigations

MSNBC

Boston Globe

Previous Article

« Bad credit money loan

A bad credit money loan is the perfect loan for people looking to avoid banks and still have access to quality loans. Don't wait - apply now! Close up woman face smiling
Next Article

Thanksgiving Quotes | Wit, Wisdom, and Smarmy Platitudes »

Thanksgiving is almost here. While Pepto Bismol stock soars, there are plenty of Thanksgiving Quotes to celebrate with. READ MORE... Several Thanksgiving dishes on a table.

Other recent posts by Sam Hoober

Experian adding renter history to credit scores calculations

Experian, the credit bureau, is adding rent payment history to its formula for calculating credit scores, which is good news for many people.
Apartments

Chase fees may cost customers more cash per month

Chase bank is raising fees. If customers who get direct deposits don't make enough money, Chase will charge instant cash for their banking.
Chase

Hybrid vehicle tax rebate expiring

Anyone who wants to get some instant cash for buying a green vehicle had better do it now. The tax credit for most green cars is expiring.
GMC Yukon Hybrid