Bobby Ruffin Jr. was only 14 when a recruiter from Ashford University called. The Birmingham, Mich., boy thought he'd clicked on a link promising help finding money for college. It was actually just a lead generator for the for-profit, online school's sales staff.
At the time, Bobby was an A student. His parents had pulled him from the troubled Detroit schools in hopes that home schooling would deliver something better for their son. He told the recruiter that he wanted to be a doctor. She assured him that Ashford could be a stepping stone to that dream.
Never mind that he was only in the eighth grade.
"She said you'll be working toward a degree as a medical doctor, so when you do graduate high school you're almost there," Bobby says today. "I'm like, 'This is great, I'm going to talk to my mom.' And she's like, 'No, I wouldn't tell your parents because that would take away from the shock when it happens. If I were you, I'd complete the program, and when graduation comes around let them know. Mom and Dad will be super excited.' "
Admission to Ashford requires a high school diploma or equivalency. So when it came time to fill out the financial aid forms, the recruiter told Bobby to claim that he'd already graduated. He objected, but she insisted "the loan processing company will go back and correct everything." Still, he left the graduation date blank. Someone filled it in, because Ashford soon was receiving federal student loan money on his behalf.
Of course, it's illegal for kids Bobby's age to receive financial aid. But for-profit colleges haven't always been scrupulous when it comes to raiding the federal treasury. Between student aid and GI Bill programs, most schools receive 90 percent of their revenue from the American taxpayer. And the recruiters — often little more than salesmen paid largely based on how many people they enroll — are driven mercilessly to keep those cash registers ringing.
Students don't get much in return. Though tuition rates can run as high as at America's most esteemed universities, the education generally is substandard. In the end, most kids wind up walking away with a questionable degree bought at top dollar — and a mountain of debt to accompany it.
Bobby took online classes for almost a year. But when he wouldn't endorse Ashford's lying on his financial aid forms, administrators miraculously discovered that he was under 18. Since this left him ineligible for federal aid, Ashford was forced to return his loan money to the feds.
The school wouldn't be eating those costs. Bobby would. Ashford, which declined interview requests for this story, sent him a bill for $13,000.
Last fall, Bobby finally was able to enroll at a real university, Eastern Michigan, where he was named a National Collegiate Scholar. Yet he still owes Ashford. Because that's a private debt, he isn't eligible for deferments while he's in school, and any future wages could be garnished.
Unfortunately, this isn't a scam that targets only the young and naive. The for-profit industry is so rife with deceit, it's been billed as the second coming of the mortgage-loan debacle. And the same people are behind it. Three-quarters of all for-profit students are enrolled at schools owned by Wall Street banks and private equity firms.
All told, they soak $30 billion a year from American taxpayers. But even in the age of slash-and-burn government, Congress has shown no interest in stopping it.
"The problem with the subprime [housing] scam was that it got so big it almost brought down the entire world's economy," says Barmak Nassirian, a former official with the American Association of Collegiate Registrars and Admissions Officers. "This one's wisely limited to $30 billion a year, which is highly sustainable. In the context of a multitrillion federal budget, that's not even a rounding error."
Consumer fraud as a business model
You may not know it, but you're sitting on $117,000. That's how much every American is potentially worth in government student aid. Want to attend grad school? Throw in another $114,000.
And as for-profit colleges have discovered, an 18-year-old with 100 large makes for a very easy mark.
In order to get on the gravy train, a school only needs accreditation from some supposedly neutral body. But Congress neglected to say who should do that accrediting, resulting in a system loaded with charlatans. Some agencies have built sturdy reputations over decades. Others are little more than rubber-stamp factories, more geared toward gobbling up members' dues than safeguarding kids.
"It never occurred to [Congress] that as billions of dollars get attached to that, the recognition process, the process would get corrupted," Nassirian says. "When you say yes, you gain membership dues. After all, you're living off these dues."