Posts Tagged ‘student loans’

Let’s Talk Payback

So, while many prospective students would agree that these programs are expensive, the key point is that you can pay back the education with the increased salary that you will get after the training.

this logic is solid, but needs to be confirmed or mapped out.  in the long run, almost any increase will pay off because anyone under 30 will likely see over 30-35 years in any projection of an increase.  in fact, if the increase was only $1.00 per hour for someone at 25 years old and planning to retire at 65, the benefit would be over $80,000 paying for just about any education costs.

however, one of the key selling points to prospects from the for-profit market and American Career College is the speed.  they say, “in just 8 months you will learn medical assisting and you will immediately start this new career with increased pay”.  so the real question is how long will it take for you be able to break even on the expense and actually get to spend the extra money that you are earning?  the answer is not very exciting for those who have to take out loans to pay for this decision.

so let’s take a look at medical assisting and look at the sources.  on the American Career College website, they reference the bureau of labor statistics – an excellent government source about employment.  on that page they show the following table about wages:

the school would love to tell you that you will make the median wage.  but this figure is the median for ALL medical assistants and at the time of graduation, you will have zero experience.  more realistic salary will be somewhere around the 10%-25%.  what is true, is that california pays more and this chart is for all of US.  so, because this information is not available, we will assume the top end (25%) for any student coming out of the American Career College MA program.

also, we will compare the change from minimum wage job and from a job at $10/hr.  additionally we will compare at various levels of grants versus loans.

bottom line, unless you are getting at least 50% of the program covered in grants (money that does not have to be paid back), you will need at least one full year of living in the same conditions you were before you go to school to use the extra money to pay off your school loans.  If you were making $10/hour and pay for the entire program with loans, it will take almost 5 years.  we are absolutely sure, given the stories we have heard about American Career College and other for-profit schools, that this is not being shared with prospective students.

lets compare it to community college.  using cerritos college information from the web site, a comparable program would be 30.5 credits at $20 a credit for a total of $610.  there are a number of other fees like parking and the like so we have used $1,000 for the analysis.  also, we are going to assume that all of it is loaned versus having any grants – see below:

yes, you are reading that correctly.  the community college comparison requires either 2 months or 4 months to pay back the debt.  and while we acknowledge that the community college system is more difficult to navigate and may take a little longer, think about waiting 5 years after you are done with school to actually feel the benefits of the new job.

*Analysis assumes 40 work weeks, 52 weeks a year.

Categories: Student Advice Tags: ,

Why Can’t We See the Books of ALL For-Profit Schools?

at this point in time, the US Senate HELP committee and the US Department of Education are considering various actions to try and better manage the enormous amount of funding that goes to student loans and grants. we would like to suggest better transparency for ALL institutions that collect these funds – including privately-held for-profit education institutions.

according to an article from Andy Kroll on Mother Jones, for-profit education institutions represent almost 25% of our education loans and grants while only educating only 10% of our students. this alone is not the reason for the scrutiny as a number of these institutions legitimately argue that they have lower admission standards to extend educational opportunities to those less fortunate and, thus, need more aid.

the problem is that we have no mechanism or leverage to ensure that they are actually educating this group. as Daniel Golden has demonstrated in a number of articles, including this one about recruiting the homeless, this argument leaves a huge loophole for profit seekers to simply admit anyone to collect our tax dollars and fill the pockets of its investors.

but it gets worse. lets consider shades of gray. according to an article in the LA Times by Julia Love, the average publicly traded for-profit school grew profits to “$229 million in 2009, up from $150 million the year before.” however, while the publicly traded for-profit schools admittedly access public funds on a larger scale, the profits that are created are at least available through the purchase of shares in the organization. and while this is not getting back to the lower class that it leveraged to collect the funds, it is available to anyone with a 401k or any investment tool in his or her portfolio.

in privately held firms like american career college and west coast university in LA, things are completely different. these firms take from over 5,000 or 6,000 students per year and share the proceeds with 50 people with a vast majority going to one individual. while this alone is no crime – it is capitalism – someone has to ensure that we are getting the benefits we are contracting. the fact that these books are closed and not available for public review leaves the system ripe for manipulation and malfeasance. surrounding this are rumors of land development, family excursions, extra houses, and boats purchased by the education organization – how does that help educate the students of the greater Los Angeles area?

you say “the accrediting bodies are there for this”? they are in bed with the schools they govern. just like the recently uncovered challenges found with MMS in the oil industry, the same organization that collects the fees of the schools are the same organizations that regulate them. there is no way they are going to cut off their nose to spite their face. they need the revenue to pay for their existence. a simple example of this was a request for placement rates by our group to ABHES, the accrediting body of american career college and a number of other health care educators. they referred us back to the schools. how do we even know if they are checking that these are accurate or that we are receiving accurate information? isn’t this the sole function of this organization? it is a mess.

if sunlight is the best disinfectant, i say we shine it here. it is by no means radical and it makes everyone responsible – a simple quid pro quo. you want our money, we see how you are spending our money. if we like it, then you can have it. if not, it does not keep them from being educators – they simply need to find a way through private loans or through performance like any other private institution.

or they can educate without the for-profit part of the business. lets see how many Michael Clifford’s stay in the industry after that. we think we could make a pretty tidy profit betting that they would get out as quickly as they came in.

History Repeating Itself

hard to believe that this article was written 13 years ago. this is the same story that is going on today – only change the $4,700 tuition to something like $15,500.

Scam Schools

the recommendations at the end are still applicable as well.

  • # Call the human-resources departments of some businesses in the field you’d like to enter. Ask what credentials they look for in prospective employees. Do they recognize certifications from trade schools? If so, which ones? Ask, too, if openings in the field are plentiful.
    # Get the name of the agency that accredits the school. Write and ask for the results of the school’s latest review. The agency will tell you whether the school passed, and if not, why.
    # Ask the school for its graduation rate. A decent school should boast a 50 percent completion rate in any program—70 percent for courses of less than a year. Lower rates generally mean that students are dropping out discouraged. Request the percentage of students who pass their licensing exams and get placed in jobs. If a school publicizes its placement rate, it must also, by law, provide all information necessary to back up its claims. Those numbers must be available to you by the time you apply for admission.
    # Request the names and phone numbers of recent graduates. Ask them: Did you find the training useful? Did you find work? While you run the risk that the school will give you only the handful of happy graduates, that’s at least something; a school that can’t cough up even a few satisfied customers is one you should definitely avoid.
    # If the school tells you that local colleges will turn the program into credit, call the colleges directly and confirm. If it turns out the trade school gave you wrong information, it’s a good bet they’ve misled you on other fronts too.
    # If, after taking these precautions, you still feel your education was inadequate, or if the school closed while you were a student, you might have some legal recourse. Contact your lender or the U.S. Department of Education (800-4-FED-AID), and ask for the “Fact Sheet for Students Adversely Affected by the Closure of a School or False Certification of Eligibility to Borrow.” It warns you to keep making loan payments until you are notified otherwise, and outlines the narrow conditions under which you might be eligible to have your loan discharged—if the school closed, for example, or you can prove that they knew you’d be unable to meet licensing requirements because of your age or disability.
  • Senate Investigating For-Profits

    the US Senate is in the process of reviewing the actions of the for-profit sector of education. basically the for-profit story is that it is helping those that did not make it through or like the traditional education process. the question is around whether they are delivering what they are getting paid to do.

    Senate article in the Chronicle