Money-Hungry For-Profit Colleges Exploit Homeless Students

UPDATE 5/5/2010: Under intense scrutiny, some for-profit colleges have suspended recruitment in shelters indefinitely.

For-profit colleges have always seemed a little sleazy to me. With good reason, apparently. In a scathing new Bloomberg Businessweek exposé, it's revealed that these diploma mills are recruiting students from homeless shelters and welfare agencies. Because they care about the homeless and are committed to helping them get an education and a good job so that they can be self-sufficient? Wrong.

For-profit colleges make most of their money from federal student loans and grants given to needy students by the government. For-profit schools got more than $26 billion from the government last year, according to Bloomberg Businessweek. (The ubiquitous University of Phoenix gets a whopping 86 percent of its cash from federal student aid, dangerously close to the federal limit of 90 percent.) They charge several times more than comparable programs at community colleges and are more than happy to accept aid dollars to cover the discrepancy.

In fact, these schools are so desperate for bodies to fill the classrooms that the New Jersey branch of the Drake College of Business, a for-profit school for aspiring medical and dental assistants, actually pays a majority of its students $700 per month to show up to class and keep at least a C average. (This might be illegal — the Accrediting Council for Independent Colleges & Schools has opened an investigation.) It sounds like a nice way for people in need to make some cash — in the short term. Like payday loan shops and appliance-rental companies, there's a much bigger pricetag down the line. After graduation, or even after dropping out, homeless people can find themselves tens of thousands of dollars in debt and without a living wage job that will enable them to repay it. This debt can prevent them from getting public housing or future student aid. In short, their attempt to get an education can leave them worse off than they were before.

This business model is immoral and shamelessly exploitative. Bloomberg Businessweek relays story after story about students who aren't given the tools they need to succeed once they enroll. There's the former crack addict who was promised she'd find a job in a medical office, which is unlikely. There's the single mom who spent her educational loans on Christmas presents. And the one who moved into a shelter with a broken computer and couldn't complete her homework.

When the national three-year graduation rate for associate's degrees is a dismal 27.5 percent, there's no way these for-profit colleges can have the reasonable expectation that the students they recruit at shelters will graduate and find gainful employment. All that's guaranteed are checks from the government, and that's what these "schools" are banking on.

Photo credit: Schlüsselbein2007