For Immediate Release - May 30, 2012

AG Coakley Testifies at Boston City Council Regarding For-Profit Schools and Excessive Student Loan Debt

AG Coakley, Councilor Ayanna Pressley Offer Advice To Consumers Considering Enrolling In For-Profit Colleges

BOSTON – At a Boston City Council hearing today, Massachusetts Attorney General Martha Coakley expressed her concerns regarding the recruiting tactics of for-profit colleges, which frequently target veterans and young people.

At the hearing, called by At-Large Boston City Councilor Ayanna Pressley, AG Coakley and Councilor Pressley also offered advice to consumers considering enrolling in for-profit colleges.

“For-profit colleges are heavily reliant on taxpayer funds,” AG Coakley said. “They are typically more expensive and leave students in greater debt than not-for-profits, and often deliver less value. We are increasingly concerned with the schools’ marketing, especially targeting our young people and veterans, and reports that they are overpromising graduation and placement rates to prospective students.”

“We assume that any school is a good school,” Councilor Pressley said. “Unfortunately, not all educational opportunities are created equal. There are many for-profit schools preying on young adults, veterans, and single mothers who are trying to do the right thing by their families. We want to make sure the consumer is fully informed of the risks and has the tools to make the best choice for their future.”

In 2009, profit at the 16 largest for-profit schools totaled $2.7 billion. According to the AG’s testimony, although for-profit schools provide programs similar to community colleges and typically target the same student demographic, the average for-profit school tuition is six times higher than a community college and twice as high as four-year public colleges.

As a result, data shows that students at for-profit schools take on substantially more debt than those at public and non-profit colleges. According to AG Coakley’s testimony, 53 percent of students at for-profit colleges borrowed more than $30,500, more than double the number at not-for-profit colleges and four times more than public colleges. Twenty-five percent of students at for-profit schools default on their student loans within three years of leaving school. For-profit schools rely almost exclusively on taxpayer funding for support, with federal financial aid programs accounting for nearly 90% of their revenue.

For-profit schools have also been accused of using deceptive marketing tactics and hiding the true cost of enrollment from students. Often times, it has been reported that for-profit institutions encourage prospective students to sign onto loans with expensive “preferred” lenders. AG Coakley said that her office has heard repeated complaints from students who believe they were misled into enrolling at for-profits. For instance, students reported that the colleges exaggerated their potential salary after graduation and deceived them about the job placement rates.

Yesterday, AG Coakley signed a letter with 21 other attorneys general asking Congress to end a loophole allowing for-profit schools to derive more than 90 percent of their revenue from Veterans’ Assistance educational programs.

AG Coakley and Councilor Pressley offered the following advice to students who are considering a for-profit school in order to pursue their education:

  • If recruiters use high pressure sales tactics consumers are encouraged to walk away. Prospective students should beware of any recruiter who warns of “limited spots” in a class, especially if classes are online or if the school doesn’t follow a traditional semester calendar.
  • No college can guarantee jobs after completing their programs, especially in these tough economic times.
  • Job placement numbers may be deceptive or inflated by excluding various groups of students who did not get jobs or by including temp jobs and jobs that have nothing to do with the program of study.
  • If schools say their diplomas are “easy to obtain”, they often will not be accepted by employers or by other degree-granting schools.
  • Schools should disclose information as required including clear and accurate information about the college's program duration, costs, or graduation rate.
  • Consumers should never lie on financial aid forms and if a recruiter asks them to they should walk away.
  • No one can walk away from student loan debt. Students who fail to pay their loans can have their Social Security benefits and tax refunds intercepted or have wages garnished.
  • No matter what recruiters say, all programs cost money.


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