College Students "Drowning" In Debt, Say Experts

By Andy Wiltrout and Alex Harris

Members of the Senate Health, Education, Labor and Pensions Committee heard testimony on Tuesday from experts who illustrated the financial hardships faced by lower class and minority college students.  

Before the hearing began, committee aides distributed reports which found that for-profit colleges are asking a higher percentage of their students to borrow more than any other sector of higher education.

For-profit schools are run by private businesses or organizations, and are often viewed by prospective students as easier, more affordable alternatives to traditional four-year universities. The University of Phoenix is a generally recognized for-profit school, with an enrollment of over 100,000 students worldwide.

According to the report, 96 percent of students at for-profit degree granting colleges borrow to pay for college, compared to just 13 percent at community colleges, 48 percent at four-year public colleges and 57 percent at four-year private colleges.

Witnesses testified concerning the issue of student debt and the reliance of minorities and the poor on the for-profit colleges.

“The for-profit sector is engaging in predatory lending practices, overcharging for their product, failing to deliver on programs leading to “gainful employment” leaving large numbers of students saddled with enormous debt and leaving taxpayers holding the bag” said Wade Henderson, President of the Leadership Conference on Civil and Human Rights. 

The committee’s Chairman, Sen. Tom Harkin (D-Iowa), compared the sub-prime loans offered to students to the sub-prime mortgage bonanza of recent years, which contributed to a larger housing crsis from which the nation has yet to recover from.

“Instead of packaging these loans into securities and selling them to investors, this time they’re passing the debt off to American taxpayers in the form of federally guaranteed student loans.” 

Department of Education Unersecretary Martha Kanter expressed concerns pertaining to the consequences of the for-profit sector.

“Education is at the heart of American promise for a nation built by immigrants and sustained by the emerging ideas of people from all across the world, said Department of Education Undersecretary Martha Kantor. “Education remains the gateway to citizenship, civic engagement and prosperity.”

The full witness list for today’s hearing included: Education Undersecretary Martha Kanter; Sandy Baum, independent higher education analyst and consultant; Wade Henderson, president and CEO of the Leadership Conference on Civil and Human Rights, Eric Schmitt of Hampton, Iowa; and Pauline Abernathy, vice president of The Institute for College Access & Success, Philadelphia, Pa.