Taking Aim at Trade Schools

By Ezra Bowen

Virginia Hernandez of Phoenix was a high school freshman struggling through her classes two years ago, when she met a pitchman for the Arizona Career College. With promises of a dazzling career, he persuaded her to drop out and enroll in a $5,000 "computer communications" course. She would qualify for a federally guaranteed student loan, she was told, if she would fake her age upward a year to 17. Though her school guidance counselor warned that she lacked the skills for such a program, Hernandez enrolled, only to quit when the going got too rough. Now receiving bills for $4,400 in outstanding loans, she baby-sits for a precarious living. "I just wasted my time," she says. "I didn't learn nothing" -- except a tough lesson about trade schools.

Hernandez has plenty of company. Last week Secretary of Education William Bennett released a study blasting the worst of the nation's 7,000 for-profit trade schools for deceitful practices that prey on vulnerable and often semiliterate students. The report lays nearly half the Government's $1.6 billion student-loan default burden on the doorsteps of such institutions. Many of the schools, which currently enroll 1.3 million students, have dropout rates in excess of 50% and loan-default rates to match. "The kids are left without an education and with no job," says Bennett, "and the taxpayer ends up holding the bag for a kid who gets cheated."

According to the study, a number of schools seem to be less in the business of education than that of processing federal loan money. Some were found to recruit students from unemployment and welfare offices, waive them through token entrance exams and then sign them up for courses whose costs often just happen to equal the maximum available federally guaranteed loans. In many cases, the study found, students do not even realize they are signing loan applications. Trade schools were also found to lie to students about their job-placement rates and make false claims about the qualifications of their graduates. The U.S.A. Training Academy of Newark, Del., for instance, advertises itself as, of all things, a correspondence school in truck driving. But completing the program does not necessarily help students get licenses.

In an effort to crack down, Bennett proposed in December to make institutions with default rates that are consistently over 20% ineligible for federally backed student loans. Last week he called on Congress to tighten standards for organizations that accredit trade schools, and ban loans to students who lack high school diplomas or equivalency degrees.

Most educators welcome a closer eye on accreditation and a toughening of the Government's lax rules on student loans. But many point out that Bennett's proposal could cut off job-training opportunities for the nation's legions of high school dropouts. "A diploma is nice, but you shouldn't turn these other kids away from becoming auto mechanics or secretaries," says Mark Williams, who investigates trade-school abuses for New York State. Reputable organizations like New York's Technical Career Institutes have successfully trained a large number of dropouts. Says California's superintendent of public instruction, William Honig: "It would be a mistake to blast the whole industry."

With reporting by Martha Smilgis/New York, with other bureaus