A couple of weeks ago, PBS's "Frontline" aired an episode about for-profit schools like The University of Phoenix.
Not Quite Ave Maria, but Getting There.
(Ironically, I could not watch it when it first aired. I was working at a temp job, and all I have is a VCR when it comes to recording television. I'm still miles away from getting a DVR, and am probably further from having a DVR in my lifetime thanks to the debt of advanced schooling).
Frankly, I'm not sure what compels people to choose University of Phoenix over the local university or community college, although its not as mysterious as people who would choose ITT Tech over a community college.
I knew a person who went to ITT Tech nearly two decades ago. He couldn't find the promised "good job" with the amazing "skills" that they taught him. He defaulted on his student loans. The government garnished his wages, and it was no small cry of victory when he finally paid off his loans.
One of the more interesting parts of the "Frontline" piece is the explanation about how schools hide the default rates on loans. Schools like University of Phoenix boast a repayment rate of 90%. According to one interviewee, the schools lobbied Congress to define a default as failure to pay WITHIN two years of going into repayment.
That means if you get in trouble four years after you went into repayment, you don't count as a statistic. Therefore, the populace at large is led to believe that college is still a great investment. Otherwise, how else would everybody get the money to make those payments of hundreds of dollars per month?
It is interesting, isn't it? I keep hearing statistics that over 40% of student loans are currently not being paid for some reason or other, but I'll bet the vast majority of schools boast a 90%+ repayment rate just like University of Phoenix.
I suppose a scenario can play out like this:
When you reach the end of your six month grace period, you will probably not have a job. You can ask for a deferment which will give you another six months to look for a job. In the meantime, hundreds of dollars continue to pile on your unpaid loans. At that point, you will probably find something menial and start repayment....which, in your mind, is OK because you are new in the job market and you're young which means that you don't have major expenses like a house or family. A few years later, you morph into a true adult with obligations. The car breaks down. You have a child. Your rent increases.
Your salary, however, stagnates. You might get a cost of living raise, but it only covers inflation of what you were already buying. The "upward mobility" that you thought was going to come thanks to your college degree doesn't exist. Your superiors are holding onto their jobs because there is nowhere to go, and there are cuts everywhere else. Those two years you spent working as a receptionist in a doctor's office is not going to count for crap in jumping careers to "what you majored in" because they can already find somebody with years of relevant job experience to fill that spot. Your salary won't increase to take into account for the fact that you need to feed others in the household.
That is...IF you get to keep your job. They may run you off from your job, and that point, if you slip up and miss a payment in the melee, you can't defer your loans unless you are in "good standing."
But then, the first payment you miss won't count as a default. You will be "delinquent" for a while. I'm not sure where the magical threshold appears, but the chances are, this shit storm won't hit until well after the two year "statistic" period is over. You'll try to keep up as much as you can in the beginning because you have heard how the Student Loan People are just like King John's tax collectors in the newest "Robin Hood" movie where they go through the countrysides and pillage their own citizens for their last penny. After a while, it's too overwhelming for most of those people to keep up with and that's when they shut down.
More than a few of those people become so embittered for being sold a shit sandwich that they just quit paying.
Not that I advocate not paying, but what does it truly say about this great country when the education machine is trying desperately hard to hide the fact that student loans are being defaulted upon at an incredible rate?
"Oh, we don't need changes in the bankruptcy laws! See the statistics? Over 90% repayment rate! YOU are the only one who can't pay back your loans! And why is that? YOU are a deadbeat! You should try something like getting a roommate and stop eating as much. Try remaining sedentary as you may hurt yourself and need medical attention (which is expensive) and avoid expenses like the occasional cup of coffee from Starbucks. We know that you went to school to 'better' your standard of living, but seriously....coffee? WTF? As a side note, schools do not charge unconscionable rates of tuition because the students are obviously doing well if they can take on a loan payment of a few hundred dollars and still live not live in a cardboard box."
What I want to know is, how did the schools sell this to Congress?
"Hey, could you limit your statistics on student loan defaults to the first couple of years or so after repayment?"
"That's a weird request. Why?"
"No particular reason."
"Come on! There must be some reason."
"Defaults that happen later on are obviously for some other reason than the cost of tuition. Instead of remaining childless and living in a bad neighborhood and working three jobs to pay us back, that person obviously chose to have a life, which is highly irresponsible."