Everybody is out there trying to make a dollar, and many don't care how they make it. Those with the least amount of information and resources are always the prime targets of these opportunists. We clearly saw this phenomenon at work during the recent real estate crisis.
Working-class communities of color like Bed-Stuy were the ones most devastated by these events. As a result of the predatory lending practices, hundreds of families lost their homes and were pushed into financial ruin.
There's another scam that has been quietly ruining the financial lives of Bed-Stuy residents and residents of communities similar to Bed-Stuy. The perpetrators of this fraud are proprietary institutions also known as the for-profit "colleges."
These wolves in sheep's clothing take the form of educational opportunity and prey upon the aspirations of the poor, unskilled and under-educated. As the economy gets worse, more and more people become victimized by these charlatans.
These so-called institutions of higher learning can care less about the people that they're supposed to serve. For them, it's all about the money. In an analysis conducted by the Associated Press in 2009, it was revealed that large numbers of low-income students were recipients of Federal Financial aid, and a lion's share of that money went to the for-profit schools.
Out of $18 billion distributed in Federal Pell Grants in 2008, $4.3 billion went to the proprietary schools. They collected another $7 billion dollars in federally subsidized Stafford student loans.
People are often drawn to the schools for convenience, flexibility, ease of admission, and promises of guaranteed job placement. Because they do not have a competitive admissions process, anyone can get in.
They also take advantage of the fact that many poor people are intimidated by the complex admissions and financial aid procedures that exist at the reputable public and private colleges. As an alternative, they offer to complete each step of the admission and financial aid process with (and in some cases for) the applicant.
These high-pressure sales tactics are pushing their way into the classrooms of high schools located in poor neighborhoods by offering " free" career or education workshops. Unsuspecting schools allow them to present to their students unaware that all the information collected during the sessions will be used at a later time to pressure kids to sign up for the programs.
Few of the people who sign up for the schools will realize any benefit. According to the AP analysis, only 38 percent of the students who enroll in these programs actually graduate. And of the 38 percent, most have difficulty finding work in the field that they were trained in.
For those who didn't graduate, they find themselves in a much worse position than they were in before they even started. They may have exhausted all of the federal grant money that they were eligible for and will therefore not be able to get any assistance if they decide to go to another school.
They may also find themselves saddled with enormous loan debt that they have no way to pay back. These loans go into default, ruining the students' credit and making it impossible for them to purchase a home or a car, or borrow money to start a business.
Here's some advice to help you avoid falling into the for-profit educational booby trap:
- Start with your local community college - when looking for educational opportunities beyond high school. The City University of New York (CUNY) and State University of Ney York (SUNY) community colleges will admit any city resident who has a high school diploma. Consider that the tuition at a CUNY community college is $3,300 for the year while the tuition at some proprietary institutions with inferior reputations can be as much as $25,000 a year.
- Avoid schools that promise too much - a popular tactic used by these predatory schools is to promise unlimited amounts of financial aid. They also " guarantee" job placement after graduation.
- Avoid schools that use high pressure sales tactics - schools that constantly harass you with phone calls at all times of the day and night, make visits to your home, or flood your email or mailbox with solicitations. They're not making these efforts because they are so enthralled with how great you are, but are desperate to get the federal dollars that may be attached to you.
- Avoid schools that advertise during daytime reality TV programs - these schools have paid a lot of money for demographic research, and that research tells them that viewers of Maury or Judge Karen are more likely to be persuaded to enroll in their schools than say, the viewers of CNBC's Marketwatch.
Today, persuing education beyond high school is the surest path to achieving the American dream. Avoiding these schools that do nothing but offer snake oil will be the best way to prevent your dream from turning into a nightmare.
*This is a reprint of an article that ran in Bed-Stuy Patch on February 20, 2011