The NYT on For-Profit Trade Schools

http://www.nytimes.com/2010/03/14/business/14schools.html?pagewanted=print

Jeffrey West was working at a pet store near Philadelphia, earning about $8 an hour, when he saw advertisements for training programs offered by WyoTech, a chain of trade schools owned by Corinthian Colleges Inc., a publicly traded company that last year reported revenue of $1.3 billion.

After Mr. West called the school, an admissions representative drove to his house to sell him on classes in auto body refinishing and upholstering technology, a nine-month program that cost about $30,000.

Mr. West blanched at the tuition, he recalled, but the representative assured him the program amounted to an antidote to hard economic times.

“They said they had a very high placement rate, somewhere around 90 percent,” he said. “That was one of the key factors that caused me to go there. They said I would be earning $50,000 to $70,000 a year.”

Some 14 months after he completed the program, Mr. West, 21, has failed to find an automotive job. He is working for $12 an hour weatherizing foreclosed houses.

With loan payments reaching $600 a month, he is working six and seven days a week to keep up.

“I’ve got $30,000 in student loans, and I really don’t have much to show for it,” he said. “It’s really frustrating when you’re trying to better yourself and you wind up back at Square One.”

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This is a really good article on how people are getting ripped off by these schools, but they dance around the real issue here which is the availability of easy credit and government grants that is making a bubble out of this section of the economy. The other question they fail to ask is whether or not the same thing is happening at four year schools. The reality is that this is part of the bubble in higher education.

I liked this comment from a reader of the article:

You think this type of indentured servantry is ruthless?

Wait until students at traditional colleges and universities realize they've been had . . . sold on the cultural assumption that a college degree (which amounts to nothing more than the myth of credentialism) is an absolute imperative to leading a meaningful, respectable life. The students at these traditional schools are, indeed, treated like customers, and--as we know from Marketing 101--the customers are always right. Hence, grade inflation is rampant, and schools compete to enroll students with lures like state-of-the-art gyms and upscaled student housing.

Higher education is THE next bubble to burst.

The remedy for this situation is simple. Quit giving out the student financial aid especially Pell Grants. Unfortunately, the NYT focuses on these for-profit schools because of the profit angle. But with all this government money in the system, the costs of the educations exceed the financial rewards. Supply is exceeding demand in a big way in much the same way the housing bubble formed. The culprit is the same--cheap money from the government.

When it comes to the trades, you can learn many trades from on-the-job training especially those in the culinary arts mentioned in the article. Anyone who pays for a cooking school is wasting their money. You can go work in a kitchen for pay, and they will teach you all you need to know. Rachael Ray never went to chef school. Other trades require some degree of training like auto repair and the like. My recommendation is radical, but here it is. Never go into debt for training. Spend money you earned and saved. And you might as well go to a public institution because your taxes are already paying for it, and they will have accreditation.

The problem isn't a lack of jobs or jobs that don't pay enough. It is the expense of training for these jobs that kills people. Being in debt is the problem. I like this comment someone posted to the article:

This article would be more accurate if it included "non-profit" colleges and graduate schools. Many law and other graduate programs lure students with promises of wealth and stable careers; these students typically graduate to unemployment or part-time, dead-end jobs (adjunct teaching, document review, long-term temping). Today's ordinary college graduates face daunting odds at finding stable employment.

I went to my state's top public university, graduating Summa cum Laude with a liberal arts degree. It took two years of retail and P/T work, $3,000 of additional training (a certificate program), and a lot of job hunting just to land an entry-level position, and this was before the 'Great Recession' even got rolling. Some of my classmates are in far worse positions than I am.

We are told to attend college because a BA/BS is necessary to compete for an entry-level job that until recently was manned by high school grads. Ambitious students, or those who couldn't land an entry-level job, flood professional and graduate schools, taking on more debt.

BTW, student loan debt cannot be discharged in bankruptcy. Salle Mae can send you through multiple collection agencies, adding fees each time. Should you default, the lender is repaid by the US gov't. Graduates trying to service over $100,000 in debt on near-minimum wage are not going to be able to make purchases, buy houses, raise families, or otherwise participate in this society.

This is not sustainable. You can't have tens of thousands of MBAs, MFAs, PhDs and JDs defaulting on their student loans because Starbucks won't give them more shifts. Like the subprime market, at some point the higher education bubble will burst, either because students stop participating or because Uncle Sam can no longer support bailing out Sallie Mae et al.

Sallie Mae is the next Fannie Mae. Government tomfuckery in this area creates the economic distortion as people train for jobs not available in the free market.

This is another great comment:

I never went to college and instead worked in the trades. I learned my craft and made money at the same time. After 27 years, work goes up and down but there is always work to be done. I am a licensed General Contractor in California, every two years I pay my $250 to renew my license, keep my bond and liability insurance up. Sorry to hear that people have to take on so much debt load for low paying jobs.

There's stealing with a ski mask and a gun, and then there's stealing with promise and hope and lies.....

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