Corporate Accountability

For-Profit Colleges: Screw U?

To the booming for-profit college industry, low-income students are a treasure trove of federal subsidies, grants, and high-interest loans — all for degrees that fizzle in the job market.
Credit: ALEX NABAUM/MOTHER JONES

The folks who walked through Tressie McMillan Cottom's door at an ITT Technical Institute campus in North Carolina were desperate. They had graduated from struggling high schools in low-income neighborhoods. They'd worked crappy jobs. Many were single mothers determined to make better lives for their children. “We blocked off a corner, and that's where we would put the car seats and the strollers,” she recalls. “They would bring their babies with them and we'd encourage them to do so, because this is about buildiing motivation and urgency.”

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McMillan Cottom now studies education issues at the Univesttiy of California-Davis's Center for Poverty Research, but back then her job was to sign up people who'd stopped in for infomration, often after seeing one of the TV ads in which ITT graduates rave about recession-proof jobs. The ideas was to prey on their anxieties — and to close the deal fast. Her title was “enrollment counselor,” but she felt uncomfortable calling herself one, becasue she quickly realized she couldn't act in the best interest of the students. “I was told expplicitly that we don't enroll and we don't admit: We are a sales force.”

After six months at ITT Tech, McMillan Cottom quit. That same day, she called up every one of the students she'd enrolled and gave them the phone number for the local community college.

With 147 campuses and more than 60,000 students nationwide, ITT Educational Services (which operates both ITT Tech and the smaller Daniel Webster College) is one of the largest companies in the burgeioning for-profit college industry, which now enrolls up to 13 percent of higher-education students. ITT is also the most profitable of the big industry players: Its revenue has nearly doubled over the past seven years, closing in on $1.3 billion last year, when CEO Kevin Modany's compensation topped $8 million.

To achieve those returns, regulators suspect, ITT has been pushing students to take on financial commitments they can't afford. The Consumer Financial Protection Bureau is looking into ITT's student loan program, and the Securities and Exchange Commission is investigating how those loans were issued and sold to investors. (Neither agency would comment about the probes.) The attorneys general of some 30 states have banded together to investigate for-profit colleges; targets include ITT, Corinthian, Kaplan, and the University of Phoenix. [...]

To read the full article, pick up the September/October 2013 issue of Mother Jones, on newsstands now.

This story was reported in partnership with The Investigative Fund at The Nation Institute, now known as Type Investigations.

About the reporters

Yasmeen Qureshi

Yasmeen Qureshi

Yasmeen Qureshi is a broadcast reporter, producer and shooter based in New York City.

Sarah Gross

Sarah Gross

Sarah Gross is a veteran journalist with experience across all media. She’s obsessed with grammar as well as with good stories, well told.

Lisa Desai

Lisa Desai

Lisa Desai is an Emmy-nominated journalist based in New York City.

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