For years, Donald Trump lent his name to Trump University, a scheme that used his brand to peddle seminars to individuals interested in real estate investment careers. Now, two separate lawsuits allege that the group committed fraud.
It’s often called a for-profit school, but it’s not even clear if the “university” was technically a school. One of the lawsuits, filed in New York, stated that Trump University isn’t actually a university—it does not meet state criteria for those kinds of educational organizations, nor does it have the state charter it would need to function as an actual university. It is now clear, given the testimony provided by one of Trump University’s former salespeople, that the organization was nothing more than a get-rich-quick, bait-and-switch scheme, its sole purpose to “separate” people “from their money.” Trump U sales staff also specifically sought out the elderly and people on fixed incomes.
The lawsuits against Trump University have had one good effect: They have brought the problems with for-profit colleges into the national spotlight. Even when they’re not run under the Trump brand, for-profit colleges are often bad for the people who pay to take their courses. For one thing, they’re expensive: In the 2015–16 academic year, in-state resident tuition averaged $9,400 at public colleges, while it was slightly more than $15,000 at for-profit colleges. This is why for-profit college students have debt burdens higher than their peers at public or private nonprofit colleges—96 percent of for-profit college students take out loans, and their average student debt is $40,000 each.
For its return on investment, attending Trump University is about as good as just setting fire to money. Photo via Creative Commons.
For-profit college students struggle to graduate. Even after six years of study, only a minority of for-profit students finish their degree programs. One study put the number at 22 percent. Of course, this means that millions of students take on significant debt without earning degrees to help pay that debt off, which contributes to the very high default percentage on those student loans. For-profit colleges have contributed significantly to the $1 trillion in student loan debt now held across the country, says the Brookings Institution. At the same time, the companies that run these schools receive millions of dollars in public funding in the form of students’ federal loans and grants.
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For-profit colleges hurt vulnerable and marginalized students disproportionately—they actively seek out students who need to attend college part time, like single parents, individuals who can’t afford to attend school full time, students who did not place into selective nonprofit colleges, older students who head households, students of color, and first-generation college students. A public policy report released earlier this month, entitled Pinklining, addressed a host of predatory Wall Street products aimed at women and people of color, and it included some sobering statistics about for-profit colleges.
According to the study, women are disproportionately represented at these predatory institutions, making up 65 percent of students. People are color are also disproportionately represented: 28 percent of African Americans attending college go to for-profit schools, compared to only 10 percent of white students.
Private, for-profit colleges like Trump University are financed with federal funds, but leave students in debt. Photo by Gage Skidmore (CC)
It looks like the for-profit college boom is waning, but the deceptive schools continue to draw huge numbers of students even as enrollment overall has declined, especially at community colleges. Experts think it is because for-profit schools have well-tested marketing strategies and clear messages that appeal to their customer base. It’s certainly part of what drew people to Trump University.
Conservative proponents of privatization often say they want to run the government like a business. This presumes that prioritizing profit never gets in the way of delivering services and goods. But we have many examples where it does, including private prisons that have wasted taxpayer money while failing to protect prisoners, private charter schools that fail to meet educational expectations, and even for-profit parking meters that cost the city of Chicago billions of dollars because of a poorly structured contract. If Donald Trump were to win the presidential election and shift government programs to for-profit organizations, we could expect a national rollout of all the problems they bring. But if he opted to Trumpize that rollout in the manner of Trump University, perhaps Americans would be facing an even greater calamity: paying taxes for services never rendered. Scary thought.
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