Foreclosure times Spawning the New Poor

Foreclosure times are spawning the new poor who are enrolling in for-profit colleges and trade schools. At these institutions the students are trained for various careers like health care, food services, computers etc. The numbers of entrants are swelling as the people worried about bleak job opportunities are borrowing recklessly to pay for the fees. Sometimes these fees can be more than $30,000 annually.

But all this is happening at the cost of the taxpayer. Various doubtful benefits are offered to the participants but according to many the fees are exaggerated while financial aid is being pocketed. The schools elaborate on the worth of the degrees. Dreams of middle class earnings are sold to the young entrants while they default on unmanageable debts incurred to be admitted to these institutions. The schools meanwhile are reaping federal dollars including Pell grants given to students coming from low-income category.

Professor Rafael I. Pardo of Seattle University School of Law said, “If these programs keep growing, you’re going to wind up with more and more students who are graduating and can’t find meaningful employment. They can’t generate income needed to pay back their loans, and they’re going to end up in financial distress.”

There are many charges leveled against these types of for-profit trade schools. They are known for their over-promises and under-delivery. But the sad state of the economy has opened up opportunities for them. These schools are making use of the recession as a way to lucrative earning while simultaneously drawing on federal aid meant for education.

Amanda Wallace previously of ITT Technical Institute said, “They tell people, “‘if you don’t have a college degree, you won’t be able to get a job.’ They tell them, ‘You’ll be making beaucoup dollars afterward, and you’ll get all your financial aid covered.’” Wallace discontinued her work with ITT in 2008 after having been there for five years. She did not feel comfortable about the deceptive method of recruiting students.

It lured in the young people with promises that they would be able to earn enough to repay the big loans they have incurred to be admitted for this costly course. In her position as financial aid officer she was expected to give the students advice. But if she was open and frank about the future jobs chances and debt commitments she invited the anger of the management.

She commented, “If you said anything that went against what the recruiter said, they would threaten to fire you. The representatives would have already conned them into doing it, and you had to just keep your mouth shut.”

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