Report spotlights a grim corner of sobering student debt crisis

More debt, lower graduation rates and higher student loan default rates. That’s the reality for many students who choose for-profit colleges and universities to prepare for their careers, according to a report by New Jersey Citizen Action.

For-profit schools routinely spend more money on marketing than on educational programs, and many times the promises made to students don’t pan out, said Beverly Brown Ruggia, a financial justice organizer for the progressive advocacy group, and the author of the report, entitled: “Students Before Profits.”

“Students expect that when they pay tuition, the money that they’re spending is going to give them a good education, and they’re going to have the tools and the resources they need when they get out of school to earn a living, pay back their student debt and improve their lives,” she said. “Invariably, the students we’ve spoken to find that the courses take much longer than they were told. The schools often require that they take more courses than they understood.”

Using data from the U.S. Department of Education and the Center for Responsible Learning, the report compares for-profit institutions, often vocational or trade schools, to public and private nonprofit schools. In four different categories, the for-profit schools in New Jersey under-performed — with lower graduation rates, higher student-borrowing rates, higher per-student debt levels and default rates nearly double those of their counterparts.

The report highlights how one student suffered as a result of her school’s practices. Identified only as Jessica, she transferred from a community college to a for-profit offering a program in multimedia design and development. She was told her program would take two years to complete when actually it took three, the result, she said, of administrators steering her into unnecessary classes. At $40,000, her debt load ended up being twice what she expected, and the job she was advised to take paid only $9 an hour.

“What’s important to us is that all schools have transparency in reporting in terms of what their programs offer, what the costs are, what kind of responsibility the students are going to have in terms of paying for those programs,” Ruggia said. “Public institutions do have to provide information about finances and programming. And we want the playing field to be level.”

Overall, the level of student debt in the nation stands at $1.5 trillion, and $43 billion in New Jersey alone, according to the report. That’s an average of about $38,000 a person in the state.

New Jersey has taken steps to address the crisis, recently requiring that schools create a “shopping sheet” that details costs, loan options and estimated debt levels. Another law regulates the companies that service student loans. And in 2020, a student loan ombudsman will be in place to help students understand their rights and responsibilities.

“The administration is working to protect students by approaching the issue from multiple angles,” the state Secretary of Higher Education said in a statement, “including addressing student loan burden, predatory practices, and oversight to ensure that New Jersey students have high-quality academic programs that prepare them for success in the global economy.”

Ruggia says these steps are critical, especially in light of changes on the federal level.

“The Department of Education has all but dismantled its team that investigates and looks into abuses in the for-profit industry,” she said. “So it’s really important that New Jersey step up and make sure that we’re doing everything we can to prevent students from incurring more debt or having trouble paying back their debt.”

New Jersey Citizen Action is asking anyone with experience of this sort to come forward, so it can alert the appropriate government agency and connect the student with available support.