[Congressional Record (Bound Edition), Volume 158 (2012), Part 12]
[Senate]
[Pages 16576-16577]
[From the U.S. Government Publishing Office, www.gpo.gov]




                         COLLEGE PRICING TRENDS

  Mr. DURBIN. Madam President, the College Board recently released its 
annual report on trends in college pricing. What the report found was 
more students in debt with higher amounts of debt than ever before.
  The biggest offenders? No surprise, for-profit colleges. Study after 
study continues to show that for-profit college students fare far worse 
than their peers who graduate from public or private nonprofit 
colleges.
  For-profit college students have more debt and oftentimes they 
graduate with worthless degrees and no way to even repay their debt.
  The College Board report found that for-profit institutions accounted 
for 12 percent of all students enrolled in 2008-2009, 28 percent of 
those who entered repayment of their loans in fiscal year 2009, and 47 
percent of those who defaulted on their loans by the end of September 
2011. Madam President, 12 percent of students; 47 percent of the 
defaults--for-profit schools.
  Why? They charge too much. The kids get too deeply in debt. The 
diplomas are worthless or the kids drop out of school because they 
cannot afford to finish.
  Another report recently released by the Institute for Colleges Access 
and Success found that for-profit college students take out more 
private student loan debt than their peers.
  Private student loans are tough. They are burdensome. They do not 
come with any of the consumer protections that Federal student loans 
come with, such as flexible repayment plans or loan forgiveness for 
public service. Private loans are most prevalent at for-profit 
colleges--there is money to be made on these kids--where 64 percent of 
graduating students at the for-profit schools have private loan debt.
  One constituent recently contacted my office about his experience at 
a for-profit college. He attended the International Academy of Design 
and Technology, a for-profit college in Chicago owned by the Career 
Education Corporation, one of the major league for-profit colleges.
  His parents did not have the means to pay for his education but 
helped him out by cosigning his loans. Now the student and the parents 
have $103,000 in student loan debt. One of the loans has a 13-percent 
interest rate and his balance continues to rise.
  This young man--young man--would like to finish his degree, but he 
cannot afford to. He cannot borrow any more money. He is too deeply in 
debt. How about that for a dilemma? Madam President, $103,000 in debt, 
no degree, he cannot borrow the money to get a degree.
  Many of these students find out these for-profit courses they took 
are worthless. They do not transfer anywhere. The diplomas themselves 
turn out to be worthless, and many employers just laugh at them. You 
would never know that from the advertising these for-profit schools 
engage in.
  I had a group of students in my office this morning. They are from 
Archbishop John Carroll High School--not too far from the Capitol. They 
are students who know a little bit about being wooed and enticed by 
colleges and universities. We talked about this. They are just being 
inundated by these schools trying to sign them up.
  These young people are 18, 19, 20 years old. How are they supposed to 
know that this so-called college is a joke, that it is a sucker school 
that basically will drag them in, heap debt on them, and then toss 
them? They all remembered an ad that I remember from television in town 
that I thought was the worst.
  For-profit colleges put out an ad that had a pretty young girl. She 
looked like she was 19 or 20 years old, and there she was lounging in 
her bedroom saying: You know, you can go to college in your pajamas. 
They try to get

[[Page 16577]]

them in this mindset that this is just a click away, a degree is just a 
click away--as long as you sign up for the debt.
  I think these students are starting to catch on to the fact that they 
are being enticed into impossible situations.
  The Federal Reserve Bank of New York's Quarterly Report on Household 
Debt and Credit revealed that total consumer debt fell again in the 
third quarter. Sounds like good news--but not for student loans. All 
other types of consumer debt besides student loans has been decreasing; 
that is, mortgages, auto loans, even credit card debt. Meanwhile, 
student loan debt has been growing every quarter for the last 10 years.
  The Federal Reserve Bank of New York calculates that 11 percent of 
student loans are now at least 3 months delinquent. And it is not just 
the young people. It is their parents, their brothers and sisters, even 
their grandparents who are trying to show a little kindness, be 
helpful, who cosigned for these deadly private student loans at these 
for-profit schools. It could be people who graduated years before who 
are still making payments--people in their forties, fifties, and 
sixties who end up with student loan debt.
  One of these people is Eileen Cruz. Eileen took out loans to help her 
sons pay for college. She said she educated her sons to the highest 
standards, as most parents dream they will do someday. But now she says 
she feels she is being punished for having done what parents are 
supposed to do--send their kids to college.
  She goes on to compare student loan debt to mortgages, but unlike a 
mortgage she cannot refinance it. She is stuck. People like Eileen Cruz 
are putting off major life decisions--health care, dental decisions, 
retirement--because of student loan debt they incurred for their kids.
  Ana McNamara is another borrower who contacted my office when she 
started to feel hopeless about her student loans. Ana is nearly 45 
years old and owes more than $200,000 in student loans. How about that? 
She did what you are suppose to do. She went to college. She worked her 
way through school. She had to take out some loans to help pay the 
cost.
  After graduating, she said: I need to go to law school. She took out 
some more loans. When she graduated, her total loan balance was 
$90,000. That is pretty tough. She thought it was manageable though. 
With interest rates up to 9 percent, though, her balance kept growing 
faster than she could pay off the loan.
  Now she says she does not have anything on the Earth but student 
loans. She says she will never have anything to call her own because 
her credit is ruined, ruined because she went to college and law 
school, borrowing too much money to do it. She cannot even qualify for 
a car loan she is so deeply in debt. She believes no matter how hard 
she works she will never be able to pay off her loans.
  I guess this is a good point in this presentation to remind 
everybody, student loans are not dischargeable in bankruptcy--no matter 
how bad it gets. When you are so deep in debt you cannot imagine 
getting out of it, you cannot get relief in court. Why?
  Well, we decided, years ago--maybe 50 years ago--that government 
loans would not be dischargeable. There were a few, perhaps anecdotal 
stories, Apocryphal stories, maybe, about doctors graduating from 
medical school, then declaring bankruptcy, and walking away from their 
government loans.
  Well, we took care of that. We said: You cannot discharge government 
student loans in bankruptcy. Then, about 5 years ago, the for-profit 
schools came in and said: Count us in too. Let's make sure they cannot 
discharge our loans either--which, of course, means the for-profit 
schools get the money and the student never ever can escape the debt.
  Ana McNamara does not think now that she should have even gone to 
college. She says it was a big mistake that destroyed her life.
  What a somber message to hear from a person who originally thought 
college was part of the American dream, as most of us were taught.
  The cost of college is increasing five times faster than inflation. 
It is not just the for-profit schools, it is across the board. Many 
for-profit colleges and universities are charging top dollar, many of 
them from the people who can least afford it. They will accept anybody, 
anybody who can sign on the dotted line that they are a college 
student.
  Students often borrow from the private sector rather than from the 
Federal Government, which means the terms of their loans give them 
little protection. These factors and others have led to a national 
student debt crisis. For people who really have no other option, as I 
said earlier, bankruptcy is no relief.
  We need to do something about this. This for-profit college industry 
is a national disgrace--to think that they siphon off $30 billion a 
year in student assistance. If it were a Federal agency, the for-profit 
schools in America would be the ninth largest Federal agency, they take 
in that much money from the Federal Government. They use our money, 
taxpayers' money, to advertise their worthless schools and worthless 
diplomas. Everywhere you turn you see their advertising.
  Young people are lured into it. They do not know any better. Who can 
blame them? It is tough to keep up. You have to believe if the Federal 
Government is going to give me a loan to go to school here, this must 
be a decent place. Not true. It is our fault. We need accreditation 
that counts. We need to hold these schools accountable for what they 
are doing to these students. We need to put a limit on the amount of 
money they can force these kids into borrowing. We need to put some 
skin in the game so if these kids cannot get a job after they get out 
of the college, the schools themselves bear some responsibility for the 
debt that is left behind.
  We seriously, seriously need to look at this bankruptcy exemption. 
This is awful, to think that somebody in their 30s or 40s is $200,000 
or $300,000 in debt with a worthless diploma from a for-profit school. 
Congress needs to take a look at this issue. We cannot ignore it.
  We also need to find some relief for Ana and the countless others 
whose futures are held back by student loan debt and who cannot find a 
way out. This is not a simple problem; there will not be a simple 
solution. But for those Americans who have nowhere to turn but 
bankruptcy, we should at least provide reasonable and realistic relief 
from private student loans. As I said to these students as they were 
walking out, and I am sure they were stunned this morning: Be ever so 
careful. These schools will say, you know, it is going to cost $40,000 
a year in tuition, but because we like you, it is only 20. Think about 
signing up for $20,000 in debt, unless it is a school that is really 
worth the money. That, of course, is an important decision each family 
and student must make.
  I will put in a plug here. For many students who are not quite sure 
where to turn, start with a community college. These are affordable; 
they are local; they have a variety of courses. Learn a little bit 
about college and yourself before you plunge into debt for something 
that may not pay off.

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