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Schools or scams?

By Vicksburg Evening PostVicksburg, Miss / July 11, 1994



NEED another example of congressional inability to reduce spending? On June 29, [United States House of Representatives] members who voted two years ago to stop providing federal student-aid dollars to some proprietary schools found time to approve a one-year delay.

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Absent the action, many of the schools would have lost student-loan eligibility June 30.

What are proprietary schools?

Well, some of them are probably legitimate, but most are simply scams created to bilk the student-loan program. The owners rent a storefront, lure students with promises of degrees and specialized training, borrow money in the students' names, and the students get little, if anything, in return.

Few of the establishments are licensed or registered. They prey on young adults here, elsewhere in rural states, or in inner cities, many of whom have no idea that thousands of dollars are being paid directly to the schools conditioned on the students paying the money back. It's no wonder that students at proprietary schools account for 76 percent of all defaults in federal student-loan programs....

The rule ... would have barred schools from participating in federal student-aid programs if more than 85 percent of their revenue came from those programs - a level considered over-dependence on government money. At least 15 percent of a school's funds would have to come from other sources ...

But supporters of the delay ... [said] the rule would have hurt inner-city students who could have seen their trade schools close and been left with no other option for training ...

In truth, as needed as the limitations were, the 85-15 rule would hardly scratch the surface in putting an end to the thievery that abounds.

But even that was too much for our ever-so-generous lawmakers.