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Red Jahncke

Make Colleges Pay Loans If Their Graduates Can't

Universities would change for the better if they were on the hook for 5 percent of federal loans.
So long and thanks for all the debt.

So long and thanks for all the debt.

Photographer: Michael Okoniewski/Bloomberg

When the U.S. Education Department shut down ITT Technical Institute at the beginning of the fall semester, some people saw it as just desserts for the for-profit college. Given ITT’s relatively low graduation rates, alleged use of deceptive job placement figures in its recruiting efforts, and high numbers of loan defaults and delinquencies, the government may have seemed justified in refusing to fund more loans to ITT students.

Yet, now, 35,000 students are suddenly without a school and 8,000 faculty and staff are unemployed, and the entire episode shows that the government remains fixated on problems in the for-profit sector while virtually ignoring that all of U.S. higher education has long been guilty of what, in another business, might be called price gouging.