By Professor Doom
“Sub-prime” refers
to loans which basically should never be made, because the borrower has no
legitimate chance of paying it back. The sub-prime real estate crash of 2008
came very close to revealing the fundamental fraud of the entire economic
system, only the last minute printing of trillions of dollars and handing it
over to the banks (i.e., transferring real wealth from citizens to bankers and
the politically connected) allowed the illusion to continue until, well, the
next big crash.
The sub-prime real
estate crash did lead to banks no longer allowing a wide range of fraudulent
real estate loans, but other sub-prime loan categories, such as sub-prime
car loans, emerged.
Of course, I’m
more knowledgeable of the largest new category of sup-prime loans: student
loans. The
official rate of default for such loans is around 11.3%, but this
number is misleading, as many students with such loans cover up the default by
using a host of special programs which shuffle numbers around without actually
resolving the fact that the debt cannot, ever, be repaid.
The College Meltdown is a blog
which very sporadically addresses its title, and a recent post on the sub-prime
college crash caught my eye.
University
of Phoenix, now part of Apollo Global Management,
continues to close campuses. In total, they have closed more than 450
campuses and learning sites. I expect UoPX to close half of their remaining
campuses in the next 12-18 months.
The crash has
been particularly hard on for-profit schools like UoPX. Sadly, it’s not just
the school which takes the hit here. Students escaping for-profits often find
that, in addition to horrific debt, their credit hours they bought with that
debt are worthless, to the point that other schools won’t even allow a
transfer. The students with degrees likewise often find their degrees are
worthless. Either way, the student loans cannot be paid back.
Art Institutes are
closing most of their campuses in 2018 after being taken over by Dream Center Education Holdings.
David Halperin has been covering the story in the Huffington Post, but it has
received little attention. Argosy
University, another system of DCEH schools, is teaching out at least
14 campuses.
--I’ll talk about Art Institutes soon.
Even as the
student base is dropping, the schools make so much money that they’re still
easy enough to sell off. This eventually will lead to a name change, the better
to lure in more suckers who might avoid an infamous for-profit school.
DeVry
University will be closing more campuses after
their parent company, Adtalem, dumped their brand and practically gave it away
to Cogswell Education/Palm Ventures. They have already closed eight sites
in 2018. Over the past few years, DeVry has closed 44 of their 90 learning
sites.
Just as the more
astute banks saw the writing on the wall and bailed out early in 2008, saving
themselves from huge losses, so too we are seeing the smarter for-profits
selling out as quickly as they can. It’s a shame nobody in power outside of the
for-profits can see the writing on the wall here and start making plans for the
nosedive which must come to higher ed soon.
Kaplan
University is now operating
as Purdue University Global. But
the school remains a subprime effort despite fraudulent claims that it offers a
"world-class education."
The site mentions
many schools which are clearly heading towards bankruptcy, or at least shutting
their doors while the getting out is easy, but the question here is: why is it
only obscure sites are connecting the dots? If over the course of a few months,
every fast food restaurant in your neighborhood closed down, yes, you could
reasonably be glad people are no longer eating that crap but…wouldn’t you be a
little curious why they were closing down?
That’s my big
puzzle over all this: why hasn’t the “mainstream” media noticed what anyone
paying attention can see?
Ashford
University (Bridgepoint) continues to profit
amidst state and federal investigations, but enrollment is down as it pursues
non-profit status.
One way the scammy
universities get by is to change their name. Problem is, they still have to
advertise themselves as “for-profit” institutions, and since nearly all
for-profit institutions are scams, it doesn’t really matter what the name is.
So, now formerly
for-profit schools are getting themselves re-categorized as non-profit. Don’t
be fooled by this, as accounting legerdemain can allow for non-profit schools
to rip off their students every bit as voraciously as a for-profit (Hi NYU! There’s a
reason why you’ve the
most prostitute/students, honest).
A school that
claims to be non-profit can still rip students off, bottom line, but I digress.
Why isn’t this massive,
obvious, collapse in this segment of higher ed not triggering warning flags
large enough for the media to notice? Much like with the 2008 crash being
presaged by clear (but completely missed) signs that a crash was coming, I
suspect when the big collapse in higher ed comes, we’ll be bombarded with
talking heads on TV saying how “obvious” it was that the crash was going to
come, because of the schools above I’ve identified as closing down.
Hey, at least I
and College Meltdown are pointing out what’s coming before it happens. Too bad
I don’t get anywhere near the pay the “geniuses” on TV will get when they use
their 20/20 hindsight to tell you in a few years what I’ve told you today.
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