But the coverage didn’t provide some crucial context: The Corinthian scandal was only the latest example of scam colleges flourishing in California, taking student-loan dollars from students while either providing substandard educations or just being out-and-out “diploma mills.” Santa Ana-based Corinthian, which at its peak had 107 campuses before its May bankruptcy, is far from the first such university to operate in the Golden State.

The GetEducated.com website, which provides consumer information to potential online college students, notes that California has long had the nation’s worst record in policing fake colleges. The site’s explanation:

California ranks no. 1 among degree mill states because the state has long allowed unaccredited colleges to legally operate and award degrees.

 

Historically there has been much confusion in California between a “state approved” school and an “accredited” school.

 

Many degree mills located their headquarters in California after obtaining state “approval” to operate as a business under California law. Consumers are easily confused by the term “approved,” which is not the same as “accredited.”

‘What exactly is going on in California?’

The problem is so severe that California has even come under criticism from outside the United States. This is from a January 2012 report in the Bay Citizen:

Education experts say California leads the nation in unaccredited schools. Frederick Taylor is one of nearly 1,000 unaccredited or questionably accredited colleges and vocational schools that have been operating in the state without regular inspections or evaluations of educational quality, which is required under a state law that has rarely been enforced. State approval is basically a license to operate. Accreditation comes from national or regional agencies that review curriculums and educational standards.

 

“There are a lot of schools that beg the question ‘What exactly is going on in California?’” said Eyal Ben Cohen, managing director of Accredibase Limited, a company based in London that monitors diploma mills. “California has very weak oversight procedures as far as allowing an institution to operate within its borders. An institution within California can obtain a license very easily.”

A state law passed in 2009 was meant to make it easier to crack down on diploma mills. It created the California Bureau for Private Postsecondary Education, an agency that was expected to step up regulation of unconventional colleges.

But it was the federal government that provided the muscle behind the crackdown on Corinthian Colleges. Meanwhile, an online survey shows several recent examples of the deception cited by GetEducated.com in which colleges depict the state of California’s approval of their operations as tantamount to state accreditation.

One example can be seen in the Anza Valley Outlook, which covers a remote corner of Riverside County. Its Oct. 29 story about the Anza campus of Olivet University described Olivet as offering “degrees and certificates accredited by the State of California Bureau for Private Postsecondary Education.”

Photo credit: usnews.com

While California students mustered to lead a nationwide movement for college debt relief, policymakers and innovators grappled with the issue in ways of their own.

Students in the UC system — particularly the Berkeley campus — have taken a central role in pushing the co-called Million Student March. Protest organizers have announced a sweeping agenda including “a $15 minimum wage for student employees on college campuses, free tuition at public universities, and the abolition of student debt,” according to Time. “The Million Student March was an idea that started with a remark made by U.S. Senator Bernie Sanders, stating elected officials wouldn’t care about supporting higher education until a million students were out marching,” as UCSA President Kevin Sabo told the Daily Californian.

An uncertain path

The latest elements of student debt policy emanating from Washington have been a mixed bag. The new revisions to the federal Pay As You Earn program “will let all borrowers with federal direct student loans who are not in default cap their monthly payments at 10 percent of discretionary income, no matter when they borrowed or their debt-to-income ratio,” as the San Francisco Chronicle reported.

Meanwhile, a twist in federal robocall law has raised the specter of heightened fraud risks for targeted students. “Under the new provision, robocalls could only be directed at people with student loans backed by the federal government,” noted KOMO Channel 4 News. “For many, that’s just one more opportunity for scammers and deceptive marketers to expand their operations. State and federal regulators already have their hands full with illegal companies that make unsolicited calls claiming they can help consumers consolidate student loan debt or get loan modifications  for a large and illegal up-front free.”

Tuition politics

Californians have actually fared better than others as the debt crisis continues its upward spiral. “Students graduating from California colleges had just $21,382 in loans, fourth-lowest among the states,” the Institute for College Access and Success noted in its tenth annual report on student debt, according to the Chronicle.

“The state’s Cal Grant program pays up to the full cost of systemwide tuition and fees at University of California and California State University campuses, and up to a certain dollar amount ($9,084 in 2014-15) at qualifying private colleges. These grants, available to California residents from low- and moderate-income families, have helped defray soaring tuition.”

ICAS research director Debbie Cochrane told the Chronicle that “tuition at UC and CSU campuses rose 128 percent, but the average debt for public-college graduates rose only 43 percent” over the past 10 years.

But some Golden State politicos have sought to frame state education as a crisis in need of broad new government support. Along with UC Regent Eloy Ortiz, Lt. Gov. Gavin Newsom announced his support for an initiative called California College Promise, “a bold effort to offer two tuition-free years of community college for responsible students,” as they argued in the San Jose Mercury News. “This promise is true to California’s tradition of advancing our educational system at critical junctures to present future generations with better opportunities to succeed,” they wrote.

Disrupting debt

At the same time, student debt has attracted the attention of California’s startup scene. One new highly selective startup school, Make School, offers a two-year curriculum in tech — “billed as ‘debt-free education,'” as the Mercury News reported. “Ashu Desai, the 23-year-old cofounder of Make School, said widespread concerns about student debt and abuses in the for-profit college sector influenced his decision not to charge tuition up front. Instead, the school charges a percentage of graduates’ wages — or, alternatively, an investment in their startup — instead of a flat fee.”

Everest was operated by the now-shuttered Corinthian Colleges chain. Some feel fleeced students should have their loans forgiven.

The state talks a big game about policing the for-profit college industry, with legislative proposals to ease student debt and a massive lawsuit against the now-defunct Corinthian Colleges.

But an $8 million bureaucracy the state launched five years ago has done little to improve the accreditation process that allowed the schools to operate in the first place, an attorney representing former students of the schools said.

The Bureau for Private Postsecondary Education opened in 2010 after it was discovered that California was home to hundreds of for-profits in which students took out student loans in exchange for dubious results.

The bureau, though, has been “worthless,” said Harry Shulman, a San Francisco lawyer who has represented students in cases against the for-profit colleges.

“It’s not just them, though, it’s this whole constellation of groups that have been set up to try and monitor the schools,” Shulman said.

He also argues that the accreditation process itself doesn’t work. “Once a school gets that, then it can get [student loans], and that’s a big deal because once it gets those, it is sucking at the government teat.”

Nationally, the federal student debt taken on by Corinthian students since 2010 is estimated at $3.2 billion.

Oversight of Accreditation Process

The trouble began with for-profit operators attracting students by touting impressive job placement statistics, which actually included fast-food jobs and other low-wage employment unrelated to student’s majors.

The state was recognized as one of the worst with regard to the soft-handed regulation of an industry that is allowed access to hundreds of millions in federal money through student loans.

“In California, the combination of relatively weak oversight – including virtually no oversight for a few recent years – and an unusually generous state grant program have made the state an attractive place for for-profit colleges to do business,” Debbie Cochrane, program director of the Institute for College Access & Success, told a legislative committee in 2013.

The same year, a legislative analysis found that the bureau was duplicating the work of regional and national accreditors who review schools subject to the for-profit regulation.

And that was three years after the bureau to protect students and keep the bad guys out of the field was created.

According to the bureau’s website, an “annual report is due by September 1 of each year, and is required to include specific information related to the educational programs offered by the institution in the reporting period.”

The bureau hasn’t published an annual report since 2013 and warns that information is self-reported by the schools and “has not been independently verified.”

The staffing level has grown from 50 in 2011 to 86, and spending on salaries increased 84 percent in that time to $4 million. Still, consumers sometimes have trouble getting anyone at the bureau to answer the phone.

The annual report for 2014 comes out in early 2016.

“We have to go through all the data and that takes a lot of time,” a clerk answering the phone said.

Here is the link, still open, for the schools to enter data such as the number of degrees awarded and job placement rates.

Approved Colleges

To its credit, the bureau maintains an up-to-date list of complaints and actions the bureau has taken.

It has also compiled a database for consumers to check out what colleges are approved by the state’s vetting process.

That includes a roster of some of the most troubled college systems in the U.S., including Kaplan College, Bridgepoint Education, ITT and the Educational Management LLC, which have spent hundreds of thousands of dollars on lobbying in Sacramento. Among the bills Bridgepoint has targeted, for example, is a failed measure last session requiring the bureau to post more information regarding an institution’s performance. It also lobbied regarding a successful bill that moved toward more performance metrics for colleges.

And when the bill giving the bureau some heavy regulatory powers was being discussed after its passage at one of the first meetings of the bureau, minutes show that there was plenty of opposition – 16 comments against the measure.

Assistance Offered to Indebted Students

Education Management and Kaplan have lost certifications in other states, forcing them to shutter some schools. Other lesser-known institutions have closed and left students holding tens of thousands of dollars in student loan debt. For that, there is a proposed solution in Sacramento.

“The closing of Corinthian this past April showed that there are holes in the oversight of for profit colleges,” state Assemblyman Jose Medina, D-Riverside, told a legislative committee in July. His answer?  A bill that would provide financial assistance to anyone impacted by the closure of Corinthian’s three schools in California and ensure that their debt from those schools does not count against them in applying for state education assistance.

The measure, Assembly Bill 573, is in keeping with an essay written by Rohit Chopra, ombudsman for the federal Consumer Financial Protection Bureau, which explained how students fleeced by for-profits might escape their student loan debt.  

“Some states may have programs that assist students with private student loans in the event of a school closure,” Chopra writes in the May article. “In addition, some private student lenders may offer options to assist certain borrowers in this situation.”

Many for-profit schools are represented nationally by trade group Association of Private Sector Colleges and Universities. Noah Black, vice president of public affairs for the group, did not return a call. In California, a lot of them are represented by the California Association of Private Postsecondary Schools. Its executive director, Robert Johnson, did not respond to an email seeking an interview.

By Katy Grimes

SACRAMENTO — In 2006, a major rewrite of the federal bankruptcy law allowed for federal student loans to be dischargeable. Prior to 2006, student loans, along with taxes, were always required to be paid back in bankruptcy court.

Now, Assemblyman Bob Wieckowski, D-Fremont, also a Bankruptcy lawyer, wants private student loans to also be dischargeable in bankruptcy. Assembly Joint Resolution 11 would urge the President and Congress to allow the discharge of private student loan debt in bankruptcy.

At a hearing on Tuesday in the Assembly Banking and Finance Committee, Wieckowski admitted his bill, AJR 11, was largely a political decision, but not all Democrats were in agreement.

“Why would I go for this?” asked Assemblywoman Shirley Weber, D-Lemon Grove. “It creates an inequity between one institution or another.”

“Most students know these loans are not dischargeable… makes them think twice before spending,” Weber added. “Students are pretty smart sometimes.”

But it became clear that one target of the resolution is private technical and vocational schools. “Technical schools are ripping people off,” said Assemblyman Bob Blumenfield, D-Los Angeles. “This may be a good thing.”

Some lawmakers have tried for several years to kill off private vocational schools, which do not hire union teachers. Granted, some of these technical and vocational schools have predatory lending practices, most are very good and serve a valuable purpose.

But the primary issue is the growing student loan debt in America. According to the bill analysis, of the 20 million who attend college each year, close to 12 million, or 60 percent, take out student loans to cover the cost. And, there are 37 million student loan borrowers with outstanding student loans today.

Committee Chairman, Assemblyman Roger Dickinson, D-Sacramento, added: “People who take out a loan in good faith should not be asked to carry the debt for the rest of their lives.”

But taking out a loan in good faith means you will pay the loan back. Otherwise lenders would not be lenders — they’d be philanthropists.

By Joseph Perkins

College is overrated. That’s the ineluctable conclusion to be drawn from a new study published by the Center for College Affordability and Productivity.

The study’s co-authors, Richard Vedder, Jonathan Robe and Christopher Denhart, examined employment data from the U.S. Bureau of Labor Statistics. They found that nearly half of college grads in 2010 held jobs that didn’t even require a college diploma.

The center’s findings jibe with U.S. Census data, released last November on recent college grads here in California. Some 260,000 of the Golden State’s supposed best and brightest were working food service, retail, clerical, personals services or other menial jobs the last two years or so.

Now, the prevailing wisdom is that the underemployment of recent college grads, those still in their twenties, is attributable to the Great Recession, which lasted from 2007 to 2009.

But researchers Vedder, Robe and Denhart note that the trend has been underway since at least the 1970s.

Indeed, their study looked at six occupations for which skills have not changed appreciably over the past 40 years, including taxi drivers, shipping and receiving clerks, salesmen and retailers, firefighters, carpenters and bank tellers.

In 1970, only 1 percent of taxi drivers were college grads, compared to 15 percent in 2010. Fewer than 5 percent of firefighters boasted college diplomas in 1970, versus 18 percent today.

Vedder, Robe and Denhart argue, persuasively, that the country has an oversupply of college graduates. As a result, employers are increasingly filling with overqualified college grads jobs that used to go to those who needed only a high school diploma or G.E.D.

Those findings have tremendous implications for California. It suggests that roughly half the $43 billion the state will spend on higher education in 2013-14, as proposed by Gov. Jerry Brown’s budget, is a waste of money.

Indeed, by operating on the egalitarian notion that any and every California high school student should go on to college and should obtain a degree, the state actually has devalued higher education.

At the same time, it has marginalized many, if not most, of the state’s high school grads, who really don’t want to go to college — or don’t need to go to college — for the jobs and careers in which they are interested, or for which they are suited.

Realities

If Brown and the Legislature weren’t beholden to the higher education establishment — the University of California Board of Regents, the California State University Board of Trustees, the California Community Colleges’ Board of Governors — they would reinvent post-secondary education to reflect the realities of the population the state is supposed to be serving.

California doesn’t need 10 UC campuses, 23 CSU campuses and 112 community colleges. It probably could make do with half as many of each.

Indeed, all one has to look at is how much UC and CSU schools have lowered admissions standards over the years to enroll so many students who otherwise would not qualify. Or how many community college students drop out before completing their studies.

By diverting resources to vocational education that now go exclusively to higher education, California can better match up the state’s high schoolers with their interests and skill sets.

Collegians could concentrate themselves on careers that actually require an expensive four-year degree — such engineering, investment banking, software development or financial analysis.

Meanwhile, those who opted for vocational education could pursue careers in rewarding fields that don’t require college, such as automotive services, computers and information technology, hotel and restaurant management, events planning and sports and entertainment.

By investing more on vocational ed and less on higher ed, state education spending would be far more cost-effective, saving California taxpayers billions of dollars each year.

And there would be far fewer overqualified, underemployed UC, CSU and community college grads waiting tables to pay off their student loans.

This cartoon is by Bill Williams: