The Student Loan Bubble

“Students are taking out loans that they may not be able to repay, and some fear massive defaults.” Iowa Senator Tom Harkin says for-profit colleges may be doing a public disservice. “Critics [of for-profit colleges] say that the entire business model, especially in the case of publicly traded companies, is premised on a college’s ability to churn through many thousands of students, whose federal Pell grants of up to $5,550 and Stafford loans are paid to the school, with no accountability for student learning or graduation. Even good actors in this industry are lured into the vortex of bad practices in order to compete and meet investors’ expectations.”