At the Technical Learning Centers, a for-profit college in a dreary basement in downtown Washington where posters declaring “Optimism” and “Determination” line the walls, fewer than 1 in 20 students make payments on student loans several years after completion — the fourth-lowest rate of any school in the nation.
Successful job placements are so few and the debt so big that for the average graduate, the annual student loan payment equals every penny of discretionary income.
“Wow. Wow,” said Tamika Foster, 22, a nursing student who recently enrolled after seeing an advertisement in the Express newspaper and being lured in because “they give you a free computer if you graduate.” She was not aware that the school is a for-profit company.
Technical Learning Centers is just one of 126 programs at 30 schools in the District, Maryland and Virginia where less than 35 percent of the students are making payments on student loans three and four years after leaving school. At six programs, for those who do pay, annual payments also amount to more than 12 percent of their salaries and more than 30 percent of their incomes after basic expenses, according to federal data released last week.
The D.C. government has made direct payments of hundreds of thousands of dollars more to these schools.
Nationally, taxpayers sank $365 million into 176 such worst-of-the-worst programs at 85 schools in a two-year period ending in 2009, the figures show, and may receive little of it back as recipients default and leave Uncle Sam with the bill — while the college profits.
“I don’t understand. I thought Obama wanted everyone to go to college,” Ms. Foster said.
The Department of Education statistics have come to light as the Obama administration attempts to crack down on colleges that entice low-income people into incurring loans that they will not be able to pay back. The rules measuring “gainful employment,” designed to ensure that the programs offered fill a necessary training void and prepare students for careers, will be phased in slowly starting next year, when a program will not be denied student loans unless it fails all three measures for four years in a row.
The rules apply to for-profit colleges as well as vocational programs that award non-degree certificates at all schools, including public and private universities.
By dollars of financial aid sent to programs that failed to meet the payback threshold, the third-biggest offender in the country was Strayer University, a nationwide chain whose flagship campus is in a basement on 15th Street Northwest. Fifteen programs there failed measures, though none failed all three.
In its educational administration master’s program, for example, only 22 percent of students who signed up with a 2010 graduation date have been successfully making payments. The average student has more than $20,000 in federal loans.
Taxpayers spent $161 million sending students to failing programs at Strayer in the two-year time frame. Meanwhile, the company is earning money for shareholders, as Sonya Udler, a senior vice president of Strayer, was quick to note.
“The data pretty much is what it is. The company is in a quiet period as we prepare to release our earnings. We can’t really say much more before we release our earnings,” she said. Profits were $24 million in the first quarter; second-quarter earnings are to be released July 26, the school announced Friday.
ACT College in Arlington received more than $1 million via student loans in the two-year period ending in 2009, and abruptly closed its doors in April after being barred from the student loan program — leaving students with an average $8,800 debt and no certification to show for it.
The bulk of the programs plunging students into unpayable debt offered business skills and medical or nurse certifications, followed by cosmetology schools and massage therapists.
But the new requirements also snagged a few private universities and even some public schools, underscoring college’s rising costs and the tolls they take after graduation.
Ninety-nine percent of public university programs easily passed each of the three measures, while 89 percent of private ones did. The figure was 64 percent for four-year for-profits.
In addition to the taxpayer dollars lost when students default, the District is paying for-profit schools directly for some students through its Rehabilitation Services Administration (RSA).
It paid a quarter-million dollars to Strayer and the Art Institute of Washington, a for-profit fashion and art school, for 33 students this year. For the same amount, it sent 145 students to the University of the District of Columbia.
Deborah Bonsock, chief of staff of the RSA’s parent agency, said RSA works with participants to create “individual paths to employment,” but said “certainly we’d love to see people go to UDC” because it is cheaper and has higher success rates.
The Association of Private Sector Colleges and Universities, a trade group that spent $2 million in the past two years lobbying Congress to protect the industry, said the federal numbers are flawed and that for-profit colleges provide flexible schedules and that legislative action against them harms the minorities attending the schools.
“The Department of Education’s ‘gainful employment’ regulation has an unfortunate history using erroneous metrics … while dismissing the impact on minority students who represent 39 percent of all career college graduates and rely almost exclusively on federal financial aid to attend,” said Steve Gunderson, the association’s president.
But at the Career Technical Institute, in the basement of an office building on L Street Northwest, a 30-year-old black student whose tuition was paid by RSA said students are attracted by its lack of academic rigor and the fact that attendance is not enforced.
“Most of the people don’t work, they’re on some type of assistance. But they don’t come to class either,” the woman said. “It’s an open-book test, and in one of my classes people were just Googling the answers. How many places give out open-book tests?”
She attributed their desire to drift aimlessly through a curriculum and their failure to do research to poverty, which she said makes them easy pickings for executives.
“They know what’s going on,” she said of administrators. “They pass out fliers only at Metro stations in the poor neighborhoods.”
As a reporter pulled out statistics to show the student on the L Street sidewalk, school administrators emerged and said they would call the police if the reporter did not take the statistics a full block away. The student asked not to be named to avoid angering managers at her school.
“Just seeing what just happened alone makes me wary about this place,” she said.
The federal government provided more than $1 million in loans for students attending Career Technical Institute to learn how to do “data entry.” After completing the program, they earn an average of $17,000: minimum wage.
In its computer and health programs, only 15 percent of former CTI students make on-time payments. But even being shown the repayment statistics did not faze a dreadlocked, middle-age man entering to enroll at CTI.
“That’s on the individual. I’m going to be one of the 15” percent, he said.