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ITT Tech’s Closure Strikes a Blow Against Inequality

At their worst, for-profit colleges aren’t just scam operations.

By Nathan Pippenger

Tagged Collegecollege affordabilityEducationFor-profit collegeInequality

Recently, Ben Miller wrote in Democracy that the potential closure of the for-profit college behemoth ITT Tech, which has been weighed down by a “litany of problems” in recent years, “increasingly feels like a matter of when, not if.” Only a few weeks later, that event has come to pass: On Tuesday, ITT shuttered its nearly 140 campuses. Facing lawsuits and investigations from a battery of state and federal authorities, and at risk of losing its accreditation (from an accreditor that itself could soon be shut down), ITT might still have limped along for another semester if not for last month’s drastic move by the Department of Education to ban the school from enrolling any new students on federal aid. Federal loans are more or less what keep the for-profit college industry alive: They accounted for almost 70 percent of ITT’s total revenue in 2015, which came to $850 million. For-profit colleges cost about four times as much as community colleges, and more than 80 percent of their students receive federal loans—at great cost to taxpayers, since students at for-profit colleges default at astronomically high rates.

The downfall of ITT—which, as the Washington Post explains, “has spent much of the past two years clouded by allegations of fraud, deceptive marketing and steering students into predatory loans”—is most obviously a victory for consumer protection and quality control in higher education. But research suggests that increased regulatory scrutiny of the for-profit sector is also likely to strike a blow against inequality. Recent work by Cornell’s Suzanne Mettler shows that attending a low-quality, high-cost college makes many students “worse off than if they had never enrolled.” And for-profit schools are a major culprit in this respect: A full 96 percent of their students borrow money to attend, but fewer than one-quarter finish with a degree—and even the few who graduate are poorly equipped for professional success. The result: “For-profit students, including graduates, leave with high levels of debt and are often unable to get jobs or earn wages to let them pay back their loans, leaving U.S. taxpayers on the hook.”

“A few decades ago,” writes Mettler, “going to college seemed to be the surest route to the American dream, a path to greater opportunity for most young people.” But now, before our eyes, “the U.S. system of higher education is evolving into a caste system with separate and unequal tiers.” There is a particular sadness in the dashed hopes represented by each of these individual failures to reap the promised rewards of the degree. A 2012 Senate report found that for-profit colleges employed more than twice as many recruiters as they did support services staff, and that recruiters were trained to enroll students by psychologically exploiting them:

Recruiters are encouraged to search for and exploit potential students’ emotional vulnerabilities by finding a “pain point”—unhappiness with a dead-end job, inability to support one’s children, fear of disappointing parents or relatives—and pushing on that point to convince prospects that easy, fast, affordable college is the way to finally address previous failings.

The educational stratification described by Mettler takes advantage of inequality and exacerbates it in turn. An unequal society may appear to put economic security within sight, even as it moves tantalizingly out of reach. The elusiveness of that security fuels the very desperation that aggressive recruiters rely on, but the wasted years of effort, the crippling debt, the blows to self-esteem, and the perverse professional setbacks combine to erect even bigger obstacles to advancement for those who enroll. There’s something especially unsettling about taking advantage of human frailties—the hopelessness that comes from a dead-end job, the fear of shame before one’s children or family—in this way. The regulatory scrutiny facing the for-profit industry is likely to uncover many more misdeeds, some of which will no doubt be worse than what ITT Tech engaged in. And it may lead to more closures—which, yes, will cost some jobs and disrupt many educational plans. That, however, is no reason to keep pouring taxpayer money into an industry whose practices, too often, prey on despair and worsen our crisis of inequality (especially when, as Miller’s recent piece suggested, a better model is possible). This crackdown is long overdue.

Read more about Collegecollege affordabilityEducationFor-profit collegeInequality

Nathan Pippenger is a contributing editor at Democracy. Follow him on Twitter at @NathanPip.

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