By Anthony DiMaggio
The rapid decline of the ITT for profit-college may represent a pivotal moment in modern history, as seen in rising challenges to predatory capitalism. ITT is in deep trouble, subject to numerous lawsuits, from the Securities and Exchange Commission and Consumer Finance and Protection Bureau (CFPB) for defrauding students. The con that is for-profit education is finally being exposed, and these “higher learning” institutions are increasingly recognized for their rapacious treatment of students. Within this context, the Wall Street Journal seeks to reframe the attack on ITT as the work of the big, bad government, which is committed to stifling the liberties inherent in private enterprise. Contrary to the paper’s propaganda, however, the narrative of for-profit colleges as a beleaguered David facing the onslaught of a brutal government Goliath bears little resemblance to reality.
In a recent piece in their “Review and Outlook” section titled “Obama’s For-Profit Execution,” the Journal attacks the Obama administration for trying to “kill a company without proving a single allegation” in court. The paper laments the Department of Education for requiring ITT to increase its letter of credit from 10 percent to 20 percent, in light of the possibility that the corporation will lose its accreditation in the near future. A letter of credit refers to the collateral a for-profit institution must maintain to assure that it can pay back money owed to the federal government in the case of bankruptcy, which may be right around the corner for the ailing college.
The ITT accreditation fiasco arose when the Accrediting Council for Independent Colleges and Schools (ACICS) – the nation’s largest accrediting institution for higher education – alongside 20 state Attorney Generals, began a detailed investigation into students’ complaints of ITT’s predatory lending practices. Accreditation withdrawal threats are gaining steam in light of various government lawsuits filed against ITT over the last two years. The grievances against the for-profit are spelled out in the CFPB’s lawsuit. They include:
* Exorbitant tuition rates, accompanied by increased risk of student loan default.
* Dishonest lending, characterized by pressuring students to accept large privately-funded loans, without fully disclosing the details and loan terms to borrowers.
* Poor job prospects flowing from for-profit degrees with dubious value on the job market.
* The persistence of low educational standards, resulting in two and four-year educational institutions rejecting for-profit transfer credits.
None of these charges are particularly surprising for anyone who has paid attention to complaints against for-profit colleges.
What is particularly bizarre is the complete refusal of the Wall Street Journal to discuss any of the specific problems that have been well documented regarding ITT and other for-profit’s practices. The paper condemns the DOE for its “lawless” attack on ITT, independent of any effort to address why the school is under attack. Sadly, the Journal appears willfully blind to the realities of higher education. For one, a court conviction has never been necessary to pull accreditation from a learning institution with a troubled background, and it is certainly unrelated to states’ choice to investigate predatory lending in higher education. ITT will have its day in court, but this doesn’t mean it can or should avoid public scrutiny in the meantime, or avoid government regulations aimed at protecting taxpayers from the college’s looming bankruptcy.
The Wall Street Journal’s defense of ITT is symbolic of a larger political-economic culture in the U.S., in which pundits and intellectuals assume that for-profit institutions engage in valiant work by virtue of their for-profit nature, which ensures societal freedom and liberty. If ITT is inherently virtuous, as we know all corporations to be, why allow the bumbling regulators of the big, bad federal government to ruin such a valiant enterprise? If profits are next to godliness, then government bureaucratic efforts to interfere with the miracle of the “free market” are destined to fail and will only disrupt the wondrous self-regulating efficiencies inherent in capitalism. These free market fantasies have little to do with how for-profit colleges really work, yet such language is used to justify an industry that enriches itself by victimizing its clientele.
It’s difficult to characterize for-profits like ITT as anything less than parasitic institutions, praying on the ignorance and naiveté of first-generation college students seeking to improve their economic lot and career prospects. They are hardly “free market” entities, as they receive billions in guaranteed federal student loans. In light of the vacuum of government regulation, these corporations victimize students with impunity. Their educational “product” is widely regarded as sub-par among those in non-profit private colleges and public colleges and universities. Problems inherent in for-profits are explored below. Courtesy Counterpunch