Scrutiny of for-profit colleges is growing, deservedly. The story from the New York Times points out that students are borrowing "aggressively" to enroll in trade programs for computers, food service and health care, racking up tens of thousands of dollars in debt that will be difficult to eliminate given the wages of their chosen fields.
Recruiters for the proprietary schools target low-income students because they qualify for federal Pell Grants and other assistance. The U.S. Department of Education seems to be taking notice.
"During a recession, with increased demand for education and more anxiety about the ability to get a job, there is a heightened level of hazard," Robert Shireman, a deputy under secretary of education, told the Times. "There is a lot of Pell grant money out there, and we need to make sure it's being used effectively."
In both the Times story and an earlier story from Bloomberg News, ITT Educational Services Inc. is singled out. The Carmel, Ind.-based company recently paid $20.8 million for Daniel Webster College in Nashua, N.H. According to Bloomberg, ITT wanted the debt-ridden college for its regional accreditation, which would allow the for-profit school to tap into government tuition payments worth as much as $1 billion.