Talk about student loan debt is nothing new, but what is new is that students being defrauded by for-profit colleges and universities due to misrepresentations.
A bill has recently been discussed in Washington D.C. in order to stop the fraud. This bill will require for-profit colleges and universities to report consistently to students and their families with data for them to make their personal decision on finances.
Victims of these incidents are not only left with massive debt, but also no transfer credits or even a degree. Claims were made that students would make more money with a degree from their chosen college. But, in reality, it was a scam to encourage students to pay a higher tuition.
The bill is referred to as HB 1949 and would bar for-profit schools from making such claims online or in recruitment meetings.
These false advertisements of making more money once students graduated college ended up costing them additional funds. Regulating the institutions of higher education, including for-profit institutions and private vocational schools, to protect students from unfair business practices will open new doors for those seeking higher education.
If the state passes this bill, comparisons of job placement, average wages and loan default rates will be checked by the state. This will help students avoid large amounts of debt and think about the options and opportunities they can achieve. A recent case with Corinthian College was documented that the private college targeted potential students who had little or no understanding of loans, and sold its own student loans to the students.
The loans had rates as high as 15 percent, including interest. Students were also required to start making payments while still being enrolled. Other for-profit colleges and universities had students obtain higher loans than they needed, and then the college or university would close down leaving the students to transfer. Unfortunately, students were lied to about credits being transferrable, so both time and money were lost.
If HB 1949 is passed, it would be the first state legislation in the nation to bar for-profit colleges from selling student loans in which the private college or university has a financial self-interest.