For-Profit Colleges: Rough Times Ahead for Working-Class Students

Emily White and Marc Dann

With the promoter of the now disgraced “Trump University” at the helm of the federal government for the next 4 years, we are likely to see for-profit companies playing a bigger role in higher education.  But history shows us that many for-profit colleges can do lasting damage to poor students and families, as well as taxpayers and communities.

During the Reagan administration, for-profit trade schools rapidly expanded across the country.  Federal student aid to for-profit schools jumped from $684 million in 1982 to $4.15 billion in 1988.  Fraud and misrepresentation was widespread in the for-profit sector.  Recruiters used high pressure tactics to enroll students and targeted low-income students and people of color.

Programs were lightly regulated by the accreditors, and many schools closed before students could complete their degrees.  Many of the new programs offered worthless training and credentials and failed to prepare students to find a job in their field of training, and consequently dropout and default rates soared. As Open Secrets has documented, for-profit schools lobbied aggressively for their industry. For example, the parent company to the University of Phoenix was a gold level sponsor of both the Republican and Democratic Attorneys General Association.

Many students victimized by for-profit schools in the 1980s still feel the effects today.  Not only did shoddy trade schools offer inadequate programs in fields like radio broadcasting, truck driving school, or computer repair, they failed to live up to their promises for employment upon graduation.  Students in such programs were less likely to complete their educational program and much more likely to default on their loans.

Those who default also face extraordinary extra-judicial collection remedies implemented by the Department of Education, including having their federal tax refunds intercepted and social security benefits and wages garnished. For working-class people already living on the edge of poverty, the loss of 25% of their net pay or the earned income tax credit can push them off the cliff of homelessness and poverty.

Compounding the financial spiral is a government-sanctioned deal that gives student loan servicers and debt collectors collection fees of 25% of amounts garnished. Many borrowers find it impossible to get out of default even after suffering from years of collections actions.  Even that premium collection fee does not seem to be enough for greedy student loan servicers like Navient, who became the target last week of a lawsuit by the Consumer Finance Protection Bureau and two states alleging that the company purposefully pushed borrowers into repayment plans that benefited Navient’s profits over the best interests of the defaulted borrower.

Under the Obama administration, the Department of Education enacted many new regulations to relieve the burden on student borrowers victimized by trade schools.  These include new rules restoring eligibility for Pell Grants to students whose schools closed before they could complete their education and a streamlined process for applying for a loan discharge due to fraudulent misrepresentations by their schools.  The Obama administration also created new flexible repayment plans and made it easier for borrowers who are unable to work because of disability to discharge their federal student loans.

The Department of Education also enacted important new rules to protect taxpayers and students from shoddy for-profit schools, including restricting access to federal student aid for programs with high default rates and low salaries compared with the average debt burden.  The Department also cracked down on accreditors for for-profit schools, which have failed to ensure that programs provide quality education and training.

Unfortunately, much of this progress is at risk under the Trump administration. “Trump University,” an expensive series of get-rich-quick real estate seminars which was recently the subject of numerous fraud suits by former students, bears many similarities to other for-profit education schemes. The nomination of Betsy DeVos, a charter school advocate with little experience or apparent knowledge of higher education issues, signals a further erosion for public support of higher education.  In addition, one of  Trump’s first executive orders freezes enactment of new regulations and puts a hold on implementing any that have not yet taken effect.  This includes many important Department of Education regulations, such as the new borrower defense and gainful employment rules. It appears that for-profit higher education programs will flourish again under the Trump administration, likely to the detriment of working-class students and taxpayers.

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This was reposted from Working-Class Perspectives.

Posted In: Allied Approaches

Union Matters

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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There is Dignity in All Work

There is Dignity in All Work