For-profit colleges (like University of Phoenix, Corinthian Colleges, and Strayer University) and for-profit training schools (like ITT Technical Institute and Education Management Corporation) are some of the biggest culprits of student debt abuse. These organizations accounted for about 40% of all student loan defaults while only representing about 11% of all loans. According to a 2014 report by The Institute for College Access and Success, a student is three times as likely to default at a for-profit school than at a 4-year public or non-profit college; further, they are almost four times as likely to default than at a community college (see reports on ticas.org). One-third of college students drop out entirely. More than half of the students enrolled in college take more than 6 years to graduate.
For-profit colleges have abysmal graduation rates. Sixty-seven percent of students at not-for-profits have graduated after six years, while the same is true for only 23% of students at for-profit schools. Dropouts are then saddled with student debt but still stuck at the same salary level as before going to college. Because these schools are motivated by profit, they admit less qualified students and offer less support. Beginning in the 1980s, government student loans led to a massive expansion of for-profit educational institutions. However, the Obama administration cracked down on for-profit schools with the worst graduation rates, denying them the ability to qualify for federal student loans. As a result, their revenue declined precipitously. For example, the University of Phoenix revenue declined 70%, and Corinthian College declared bankruptcy.