For-profit colleges: closed campuses and unused student loans
BY SYLVIA KOHL
A growing number of colleges are experiencing revenue struggles and continue to close.
Although the number of colleges across the country has started growing since the early 1990s, it seems that now this trend is changing. The latest news shared on News Breakapp has confirmed that over 5% of colleges in the United States were closed or didn’t meet the criteria to take federal aid in 2016. Without any doubt, this is a radical change compared to previous years. These numbers are clearly showing that the college business sector (colleges that make a profit) is declining. These figures were revealed by the Institute of Education Sciences/ US Department of Education.
The problem is that small for-profit colleges are often tuition dependent, meaning they face challenges when student enrollment declines or even remain stable. Revenue decline often leads to low investments in academic programs and student life which in turn prevents colleges from meeting student needs. Consequently, colleges either lose students to other institutions or are not able to cover expenses.
Another problem is that a huge number of schools were practically forced to close their programs as the result of the threat of the previous administration’s gainful employment concept. This set of rules stopped the financial aid from for-profit college programs that have students who had high debt rates and low earnings.
More than 10% of these for-profit colleges (there are around 365 of them across the USA) were denied financial aid or they decided to close their doors for new students in 2016. Some of them, like the popular for-profit college, known as ITT Technical Institute, was forced to stop their activities right away and the students studying there were left on their own.
The worst part is that a huge number of these schools and colleges are on the brink of closure in 2017. For instance, dozens of colleges managed by EDMC are at risk. EDMC was one of the US largest for-profit college corporations not while ago. This company owns famous chains like Argosy Universities, Art Institute, and Brown Mackie College – these educational institutions are present in almost every US state. Today, EDMC has revealed that they are planning on closing dozens of campuses and sell most of the others.
The point is that most of the colleges in the United States get federal financial aid in order to stay open. While the large colleges can continue raising prices and finding big donations, small for-profit colleges that cannot meet the student’s desires – financial aid, access to student activities and job markets, – face financial pressures that can lead to low-enrollment of students.
Such a pressure that for-profit colleges face is a part of the nationwide budget cut. Almost all of the US colleges and universities suffered dramatic budget cuts after the 2008 recession.
However, the last thing a school wants to do is shut down. That’s why struggling for-profit schools are more likely to merge in future into a larger institution than close, partly because of the difficulty of closing a publicly funded institution. In the meantime, private colleges are more likely to close.
What Options Do Students Have?
Closures can impact thousands of students who are not left with many options and stuck with student loans to pay off and have not received a diploma. The good news is that their federal loans can be forgiven.
Any student can qualify for a Closed School Discharge if your school closes while you are still enrolled or the school you are attending closes within 120 days after you withdrew from their program.
To do so, first of all, contact with your student loan servicer and find out how to apply for the cancellation. You’ll likely need to submit a copy of your academic transcript. Unfortunately, it does not apply to private loans. In this case, you can try to contact your bank and ask for a debt relief.
Sylvia Kohl is an IT teacher with more than 8 years of professional experience. Her main spheres of interest are e-education and she convinced that learning process doesn’t stop after years in school and university.