This holiday season about 3,000 former Star Academy students from Philadelphia, New Jersey, and New York are in shock because their school abruptly shut down, leaving them with a mountain debt and no chance to finish their certificates.
The school had been struggling since at least last year when a court ordered it to pay $9.2 million to 1,000 students of its surgical technology program for violating New Jersey's Consumer Fraud Act. Plaintiffs charged the school misrepresented its accreditation, making it hard for them to find jobs after spending about $20,000 for certificates.
The school was appealing the decision but that loss was an indicator that Star was headed down the fiscal drain. Unfortunately, no one was obligated to tell current and prospective students that Star was troubled so students could decide to go somewhere else.
President Obama recently signed an executive order requiring for-profit schools to warn students of government legal actions but that doesn't extend to civil suits like the one which seems to have taken out Star Academy. Now the students are scrambling to transfer to other schools so they can finish their certifications and pay off student loans.
The November failure of Star, headquartered in Cherry Hill, is just the latest in a string of heart-wrenching disappointments for students of for-profit post secondary schools.
In late summer, ITT Technical Schools shut down abruptly after feeding on billions in federal student grants and loans, money that taxpayers paid and students were responsible to pay off. After a Senate investigation and Department of Education evaluations, the federal government banned students from getting federal aid for the school and told ITT to budget for future losses. But it was too late. ITT left more than 40,000 students in the same painful and confusing limbo now shared with the Star Academy students.
In 2015, yet another for-profit school chain, Corinthian College, declared bankruptcy leaving students scrambling.
A group of senators led by Sen. Bob Menendez (D., N.J.) are trying to get Star student loans forgiven and the potential cost to taxpayers nears $20 million. The collapses of ITT and Corinthian hold even larger price tags.
Helping these students is an act of compassion but protecting them from failing for-profit schools has to be much higher on the Department of Education's agenda. Financially troubled schools, those which don't graduate students into the quality jobs they promise and other misrepresentations ought to disqualify them from federal aid and student loans. This business model at the taxpayers' and students' expenses is wasteful and cruel.
There's not much hope President-elect Donald Trump will be very sensitive to for-profit schools which don't keep their promises. He just settled a fraud suit against Trump University for $25 million. The school closed in 2010 amid allegations of misleading marketing practices and aggressive sales tactics.