For-profit colleges target minority areas across America, study argues
Black and Latino communities are more likely to be surrounded by predatory for-profit institutions, according to a new investigation by a consumer advocacy group.
The Student Borrower Protection Center (SBPC) analyzed where for-profit postsecondary institutions located themselves and found patterns suggesting that for-profit schools target neighborhoods composed mostly of people of color.
“Nationally, and in city after city, we found that for-profit schools cluster in and around Black and Latino neighborhoods, a stark contrast to their relatively thin presence in predominantly white neighborhoods,” the report stated. “These findings make clear that the disproportionate enrollment of people of color at for-profit colleges is likely a consequence of these firms’ intentional targeting of Black and Latino neighborhoods.”
The researchers analyzed census tract-level demographic data, locations of Title IV schools from the Education Department (ED), and data from Department of Veterans Affairs to map the locations of the schools and the surrounding communities.
Black and Latino students are generally more likely to borrow to attend college, more likely to struggle repaying their student debt, and are more likely to eventually default on their loans.
Those trends are exacerbated if predatory for-profit colleges, some of which have been found to have engaged in fraud or other deceptive practices, target those populations.
The SBPC report noted that “for-profit schools have been relatively free to proliferate in communities across the country and regulators have been playing catch-up when abuses come to light.”
In the wake of the report, the advocacy group called for increased oversight into how for-profit schools positioned themselves geographically to mitigate communities of color from attending these schools based on proximity and convenience despite a relatively poor repayment outcomes.
“In other areas of consumer finance — such as payday lending, check cashing, or other credit products — there is precedent for aggressive and expansive federal, state, and local action against those that specifically target communities of color,” the authors stated. “Yet with student loans and predatory colleges, we have historically relied on the construction of imperfect higher education accountability measures.”
'Striking' number of for-profit schools in certain minority areas
At the national level, the report found that neighborhoods that are majority Black or Latino are over 75% more likely to have at least one for-profit school when compared to communities that are not predominately Black or Latino.
In Chicago, the report noted, “the sheer density of for-profit programs” across the city “is striking."
While densely white communities in Chicago only have three for-profit colleges, densely Latino communities have 33, and densely Black communities have 28 for-profit schools in their neighborhood.
Looking at one of the for-profit college chains based in Chicago, the University of Phoenix-Illinois, the authors estimated that the student body was 51% Black, 12% Latino. The median level of debt at repayment was around $18,500. An estimated 73% of students attending the school came from low-income families and couldn't afford to pay back the loans after graduation.
In Cleveland, for-profit schools are “overwhelmingly present” in neighborhoods with the “densest population of Black and Latino residents.”
Of the 10% of zip codes where Black residents are concentrated the most, 23 have for-profit colleges. The zip codes with a high concentration of white residents, meanwhile, only have two for-profit schools.
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Aarthi is a reporter for Yahoo Finance. She can be reached at aarthi@yahoofinance.com. Follow her on Twitter @aarthiswami.
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