Monday, October 15, 2018

The Predatory Art School



By Professor Doom

     It’s no secret that the for-profit schools are doing the most harm to human beings via student loans…it’s such common knowledge that they are shedding students quickly, many have lost half or more of their students or shut down in the last five years.

     Now, the only reason these schools gained such infamy is our government has finally decided it’d had enough of our fake accreditation system.



     Corinthian was raking in over 1.4 billion a year off its 72,000 students even as the Federal government was shutting it down. It was an utter joke of an institution, but the accreditor didn’t care because Corinthian “complied” with the criteria. What are those criteria? Mainly, accrediting only asks the school if it thinks its doing its job...it’s all self-reported, and Corinthian was only too happy to say it was satisfied it was doing a great job.

     Now if you’re running a scam school, you’ll need students…students who don’t know what they’re getting in to. Most schools, for-profit and community colleges especially, focus on “first generation” students for just this reason, but the for-profits found an even better market to target: art students.

     The whole “left brain/right brain” stereotypes might not be always true, but there’s absolutely a grain of truth there, particularly with the idea that “artsy” people generally aren’t the best “numbers” people.

      If they don’t know about numbers, then they’re particularly vulnerable to loan predation, as they simply aren’t going to understand that it’s fiscally suicidal to get a $100,000 loan for a degree leading to a job paying $10,000 a year.

     And so art students were sucked into art schools, drained of their loan money, and spit back out on the street. Am I exaggerating?


     Please understand that even if these loans were for complete rip-off education, even if the school knows the degrees are worthless…the students are still on the hook, as these loans are secured with the brutal force of the federal government (which still took over 2 years to decide the victims of Corinthian shouldn’t still be in debt, incidentally).

Under President Barack Obama, the Department of Education had cracked down on for-profit schools, but President Donald Trump’s administration appears to have eased the pressure on such institutions considerably.


     I do wish the article had cited this assertion—Trump gets accused of many wrong things inaccurately. That said, I suppose it’s possibly true, although with so many of these schools already shut down, I’d rather expect there’d be less shutting down of schools.

Students are calling on the Department of Education to enforce an Obama-era regulation that would erase debts accrued at predatory schools of higher learning, according to CNBC. The Art Institutes’ financial aid offices, students say, would routinely call students to inform them that their student loans had run out and pressure them to take on more debt. The bill for a two-year associate’s degree could run as much as $90,000 and leave students with little to show for it, according to some alumni.


     Wow, you just know those art students had no idea that $45,000 a year in tuition, and only for a 2 year degree, was ridiculous. There are rules to erase student debt, incidentally, but they’re pretty draconian, something like 1 student in 280 actually qualifies (I’ll document this in a later post).

      The article puts much effort into blaming Trump for all this, and while he’s certainly not fixing the problem…the $1.5 trillion dollar student loan debt didn’t happen overnight, or even since Trump was elected.

…the Obama Administration to discharge severely disabled veterans’ student loans, but they were set aside due to complicating tax laws that would have required those with erased student loan debt to have to pay tax on it. The cancelled debt was considered to be taxable income.

--Wait, Obama wasn’t like, the head of the government? He had no influence over law enforcement (hi executive order)? For what it’s worth,Trump is trying to make it easier for Disabled Veterans to escape debt, but it’s not much of an issue--About half of them are in default. The government may as well write those off anyway.

    
     Back to our main article:

On the I am AI Facebook group page, some students claim that high interest rates have doubled the principal of their loans. “I have two loans totaling 13k with interest rates of nearly 9 percent and 11 percent,” wrote Sam Kotowski, asking for advice about refinancing private loans. “I have paid these fully since 2012 and, while it hasn’t grown, the total balance has only decreased about $300 when I have paid about 14k on them.


     Artsy people really aren’t the best with money, eh? Not only were they being charged about four times as much as your typical rip-off school, they were paying double the usual interest on the loans. Insult to injury, the payments were set up so a student could make regular payments essentially forever. In the above example, the student will, assuming he makes regular payments, be free from debt in about 40 years. Whew, good thing he’s only $13,000 in debt, the ones with more like $90,000 in debt will be paying for over 250 years. You really can’t expect art people to make such calculations.

     So, these art schools, having looted with abandon for years, will close down and ride into the sunset with immense profits. At least the scam ends, right? I mean, we all now know to avoid for-profit schools. Hmm, wonder what will happen with those old campuses…

Early last year, Dream Center Education Holdings, part of faith-based Los Angeles charity the Dream Center, purchased the 31 Art Institute schools, as well as the Argosy University and South University schools, from Education Management for $60 million.
Dream Center moved to convert the schools into nonprofits. (The approval from the Department of Education is still pending.)


     Now, “nonprofit” sounds better, but it’s really just a bit of accounting legerdemain, I assure the gentle reader a non-profit can be every bit as predatory as any for-profit, as NYU readily demonstrates.

     I really to point out the key detail here: the only reason the for-profits are now widely known as frauds is because our Federal government stopped trusting accreditation and decided to look with their own eyes. As the for-profits scuttle off into the darkness, we’ll see non-profits as scam schools just as soon as the government decides to take a look there.

      I assure the gentle reader, if the day ever comes when our government realizes the accreditors for for-profit schools are the same as for our state schools, and decides to look at what’s happening in state schools, especially community colleges, they’ll see fraud even more epic than in the for-profits.