Wednesday, April 18, 2012

Utah students caught in web of college costs, few jobs

Utah students who attended for-profit colleges are showing up in growing numbers at the offices of bankruptcy lawyers hoping to find a way out from under student loans that they can’t repay. Verifiable numbers are hard to come by, but a Salt Lake Tribune survey of Utah lawyers suggests that client cases involving student loans have jumped to 15 percent to 30 percent of their caseloads after the recession started four years ago — even though student debt rarely can be eliminated through bankruptcy.

"The growth is in the for-profit colleges," said Marji Hanson, a Salt Lake City attorney. Many of her clients are nontraditional students who lost jobs during the recession and enrolled in for-profit institutions hoping to quickly launch new careers. Many either quit before completing their education or, upon graduation, found the job market remained difficult.

The schools "tailor their programs to provide career education [and] job skills. But if there are no jobs on the other end, then [the students] just have a loan that is non-dischargeable" in bankruptcy, Hanson said. For-profit schools are the clear beneficiaries of two economic recessions during the 2000s and the current poky recovery.

In Utah, the increase was 5.6 percent, which brought the number of students enrolled at for-profits to 9,001 in 2008. Although the velocity lagged behind the U.S. rate, it was close to the 6.7 percent gain at Utah’s not-for-profit colleges and universities. Slightly more than 4 percent of Utah college students attended a for-profit in 2008, according to the federal data.

Many students who attend for-profit colleges are older. The NCES says 30 percent of full-time students were at least 35 years old in 2009. Nearly all borrowed money to finance their educations. Ninety-two percent took out loans during the 2007-08 school year, according to the Institute for College Access and Success, a nonprofit research group.

Brian Moran, executive vice president of government relations at the Association of Private Sector Colleges and Universities, said his organization urges for-profit institutions to counsel students on borrowing and how to manage debt as soon as they are accepted into a program. The association pushes the schools to provide information about how much to borrow, payments and the reality that loans are not dischargeable in bankruptcy, he said.

Moran attributes higher default rates and higher tuition at for-profit schools to a mix of factors. Tuitions are more expensive than public institutions because student demand is high and for-profits don’t receive tax subsidies to underwrite expenses. What’s more, students enrolled at for-profits "do not have inherited wealth or parental support. They are typically working or the first in their families to go to school. So they have a number of disadvantages that your more-traditional student who enjoys parental support possesses," he said. Salt Lake Tribune

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