Skip to main content
Press Press Releases New Report Finds For-Profit Schools Targeting Black and Latino Communities

New Report Finds For-Profit Schools Targeting Black and Latino Communities

First-of-its-Kind Map of For-Profit Schools in Midwestern Cities Reveals Extreme Racial Disparities

July 28, 2021 | WASHINGTON, DC — Predatory for-profit schools are disproportionately targeting communities of color according to a new report issued today by the Student Borrower Protection Center. The report plots the location of for-profit schools in cities across the Midwest, showing how these institutions often cluster in certain areas to exploit borrowers of color by offering programs of dubious value financed by expensive and hard to repay student debt. Further, new data analysis reveals that, at the national level, for-profit schools are roughly twice as likely to set up in majority Latino or majority Black zip codes as compared to majority white zip codes.

“In many Black and Latino communities, there is an overabundance of predatory institutions that recruit students with promises of higher education or job training but leave them trapped in debt and with limited opportunities for economic mobility,” said SBPC Executive Director Seth Frotman. “The way these institutions target communities of color is exacerbating racial inequality and needs to be forcefully addressed on the city, state, and national levels.”

Read the Report: Mapping Exploitation: Examining For-Profit Colleges as Financial Predators in Black and Latino Communities

Much like payday lenders, title lenders, check cashers, and other predatory financing companies that set up shop to target Black and Latino communities, the new report found a similar, disturbing pattern with for-profit schools. This is particularly concerning as enrollment in these schools has surged during the pandemic.

“We must hold for-profit colleges accountable for their exploitative practices as we would other predatory enterprises that target and extract wealth from communities of color,” said SBPC Director of Advocacy Kat Welbeck. “For far too long, for-profit colleges’ abuses against Black and Latino consumers have gone unchecked. It is time for more robust consumer protection to curb these harmful practices.” 

Findings
To highlight the extent to which for-profit colleges are targeting communities of color, the SBPC examined patterns in the geographic distribution of these institutions in five major Midwestern U.S. cities: Chicago, Cleveland, Detroit, Indianapolis, and Milwaukee. The SBPC combined data on school location from the Department of Education’s College scorecard with data from the Veterans Administration on the distribution of for-profit vocational training programs eligible for GI Bill benefits and zip code-level demographic information from the U.S. Census Bureau’s American Community Survey.

Key findings of the SBPC’s analysis:

  • For-Profit Schools Cluster Around Communities of Color: Compared to the relatively thin presence of for-profit institutions in predominantly white neighborhoods, the report found neighborhoods that are majority Latino or majority Black are far more likely to have a for-profit school. Nationally, majority Black zip codes are over 75 percent more likely to have a for-profit college than zip codes that are not majority Black, and majority Latino zip codes are over 110 percent more likely to have a for-profit college than zip codes that are not majority Latino. These national trends lead to stark contrasts at the local level. For example, in Cleveland, the areas with the densest Black populations have 11.5 times more for-profit colleges than the areas with the densest white populations.

  • Predatory Products are Targeted at Communities of Color: Data from the Department of Education’s College Scorecard show how for-profit institutions that overwhelmingly enroll Black, Latino, or female students frequently offer programs of questionable quality while saddling students with high amounts of debt. The result is low wages for students upon completion that prevent borrowers from repaying any principal on their loan, and force them to enroll in costly forbearance, become delinquent or default. For example, the report highlights Bryant & Stratton College in Cleveland, which enrolls a student body that is 81 percent Black and 82 percent female. This school leaves the typical student with over $10,000 of federal student loans while over 60 percent of students are still in jobs earning less than $25,000 annually six years after entry. Fewer than twenty cents of every dollar that this school spends is on teaching, and over 70 percent of borrowers who attend the school are making no progress paying down their loans.

The report hones in on communities in the Upper Midwest as existing research indicates that the most segregated cities in the country are disproportionately located in the Midwest. The SBPC identified city neighborhoods with the greatest proportions of Black, Latino, and white residents and plotted the location of for-profit schools.

A set of exhibits from the report can be found here.

City-specific findings include:

  • Chicago: In Chicago, the ten percent of zip codes with the densest Latino populations have 11 times more for-profit colleges than the ten percent of zip codes with the densest white populations. In particular, the areas with the densest Latino populations have 33 for-profit colleges, while the whitest communities have only three for-profit colleges. Meanwhile, the ten percent of zip codes with the densest Black populations have 28 for-profit colleges.

  • Cleveland: In Cleveland, the ten percent of zip codes with the densest Black populations have 11.5 times more for-profit colleges than the ten percent of zip codes with the densest white populations. In particular, the areas with the densest Black populations have 23 for-profit colleges, while the whitest communities have only two for-profit colleges. Meanwhile, the ten percent of zip codes with the densest Latino populations have 11 for-profit colleges.

  • Detroit: In Detroit, the ten percent of zip codes with the densest Black populations have 13.5 times more for-profit colleges than the ten percent of zip codes with the densest white populations. In particular, the areas with the densest Black populations have 27 for-profit colleges, while the whitest communities have only two for-profit colleges. Meanwhile, the ten percent of zip codes with the densest Latino populations have 19 for-profit colleges.

  • Indianapolis: In Indianapolis, the ten percent of zip codes with the densest Latino populations have 21 times more for-profit colleges than the ten percent of zip codes with the densest white populations. In particular, the areas with the densest Latino populations have 42 for-profit colleges, while the whitest communities have only two for-profit colleges. Meanwhile, the ten percent of zip codes with the densest Black populations have 33 for-profit colleges.

  • Milwaukee: In Milwaukee, the ten percent of zip codes with the densest Latino populations have 9 times more for-profit colleges than the ten percent of zip codes with the densest white populations. In particular, the areas with the densest Latino populations have nine for-profit colleges, while the whitest communities have only one for-profit college. Meanwhile, the ten percent of zip codes with the densest Black populations have four for-profit colleges.

Recommendations
Based on these findings, the report offers recommendations for how federal, state, and municipal officials can take action to curb these predatory practices and protect borrowers:

  • The Consumer Financial Protection Bureau must hold for-profit schools accountable for discrimination and fair lending violations. Reverse redlining and discrimination by for-profit schools should result in more robust scrutiny and enforcement by the Bureau using its authorities under fair lending and consumer protection law.

  • State officials must enforce and supervise against the reverse redlining tactics that for-profit schools employ. In addition to utilizing enforcement authorities, it’s critical that policymakers coordinate across agencies including state boards of higher education, state authorizing agencies, and workforce agencies, to halt abuses, cut off state funding, and shut down the predatory schools and programs that set up shop in Black and Latino neighborhoods and enroll large numbers of students of color and women.

  • Cities must use all of their enforcement authorities to hold for-profit schools accountable for predatory practices. Similar to municipal action to curb predatory payday lending, cities should use their enforcement, regulatory, and other consumer protection authorities to curb predatory for-profit abuses.

  • The Department of Education’s Office of Civil Rights should mandate enhanced reporting requirements for Title IV schools. By publishing more robust enrollment and outcomes data to create greater transparency for students, and by conducting more rigorous compliance reviews of for-profits with a focus on addressing racial disparities, the Office of Civil Rights can provide a critical foundation for policymakers, enforcement officials, and regulators to curb abuses while also acting independently to protect students of color.

  • Policymakers should create an interagency, intergovernmental working group on student loans and fair lending. Ongoing interagency collaboration across every level of government would allow officials to benefit from the expertise of their peers and help align insights and interests across agencies such as the Department of Education, the Department of Justice, Consumer Financial Protection Bureau, state banking departments, state boards of higher education, and/or state attorneys general.

###

The Student Borrower Protection Center is a nonprofit organization focused on alleviating the burden of student debt for millions of Americans. SBPC engages in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance economic opportunity for the next generation of students.

Join our mailing list Stay informed on the fight to protect Americans with student debt

  • This field is for validation purposes and should be left unchanged.