City Wages War on Scam For-Profits

Warning signs

Unlicensed schools are always a moving target, often closing shop under one name and popping up under another. Within the past decade in New York, well more than 100 schools have either been fined or have had their licenses revoked for infractions including false advertising, unapproved enrollment agreements, or failure to provide disclosure material to students.

Gittens, for example, attended the then-licensed Katharine Gibbs School, which he had discovered one lazy afternoon while watching the Maury show. A commercial came on assuring him of a career in graphic design after only two years. Signing up was a cinch.

School representatives, he says, showed him a list of reputable companies where he would be set up with a job after graduation (he wasn't). They promised a grand graduation in Madison Square Garden (it wasn't). They said his credits were transferable should he want to pursue a bachelor's degree after getting his associate's (they weren't).

Garvin Gittens went from 
design-school debt victim to subway poster boy.
Garvin Gittens went from design-school debt victim to subway poster boy.

Most harmful, though, was how easy they made the financial-aid process. As graduation approached in the winter of 2006, letters reminding him that his repayments were due back soon started rolling in from Gittens's lenders. Ultimately, with no job, he saw no choice other than to default. (A 2011 study published by the National Bureau of Economic Research found that average default rates for students in for-profit institutions are more than double the rates of students in public or private nonprofit ones.)

Gittens could have received additional financial aid to start from scratch at the Borough of Manhattan Community College or the School of Visual Arts—a well-regarded for-profit—even though they wouldn't accept his credits. But defaulting on the Katharine Gibbs loans prevented him from tapping into any future funds.

"That's when things started to go downhill," Gittens recalls. With no job, no hope of getting the education he wanted, and $25,000 in debt, he was stuck.

Until he went grocery shopping. On a trip to Super Foodtown in Bedford-Stuyvesant, Gittens walked past one of the city's Financial Empowerment Centers. He found out that he couldn't file for bankruptcy to escape his student loans, but he could get out of default through the federal income-based repayment plan—a solution that would allow him to apply for more financial aid to return to school. He is waiting to hear whether he has been accepted to the graphic design program at the New York City College of Technology for the fall.

In the meantime, Gittens's ads have helped prod some 300 New Yorkers to dial 311 and submit online complaints to alert the city about their own experiences. At the same time, local officials who supported Know Before You Enroll have advocated alongside state senator Kenneth LaValle and state assemblymember Deborah Glick to push for the passage of a state bill to increase regulation of licensed schools, make it more challenging to receive licensure, and improve databases that track proprietary schools' information.

Kevin Smith, deputy commissioner of the state's Adult Career and Continuing Education Services, says complaints forwarded to the state under the new program have helped one New Yorker get a tuition refund, helped another negotiate an agreement to return to school, and tipped off state agencies about some unlicensed operations. But with a lean staff of 21 overseeing the state's 500 career schools, there's only so much they can do.

"Yes, we have bad actors. Yes, things go wrong," Smith conceded. However, he said, "These schools are taking folks who are destined for one bad track and putting them on a very good and productive track. The sector is important."

Based on national data, for-profits enroll higher numbers of older students, minority students, and low-income students than other colleges. Some career schools even welcome students without high school diplomas. (Students without GED's can take an "ability to benefit" test instead, though a new law prohibits them from receiving federal financial aid.)

It is precisely because some for-profits are targeting this demographic that Mintz sees such urgency in this cause.

"[These students] are doing exactly what it is that we as a society want them to do, which is they are seeking better skills in order to better their circumstances," Mintz says. "So the idea that when they are doing that they are being taken advantage of, or not getting value but instead getting debt as they make this incredible effort, is really just unacceptable."

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