Gov. Walker Conducts Photo-Op at For-Profit College Chain Under Investigation by Attorneys General

MADISON, Wis. — Gov. Scott Walker, who has opposed efforts to allow Wisconsin’s more than 900,000 student loan borrowers the chance to refinance their loans at a lower rate, is instead conducting a photo opportunity today at a predatory for-profit college chain under investigation by multiple attorneys general, as well as the federal Consumer Financial Protection Bureau (CFPB) for deceptive and abusive practices against students.

“Gov. Walker is one of the few people out there who doesn’t think predatory for-profit colleges are in part to blame for the $1.2 trillion student loan crisis,” said One Wisconsin Now Executive Director Scot Ross. “Or worse, Gov. Walker doesn’t care that there are predatory for-profit colleges out there ripping off students with false promises that lead not to good-paying jobs, but crippling student loan debt.”

Gov. Walker is visiting a branch of ITT Tech which operates 145 campuses in 35 states and is one of four for-profit colleges under investigation by multiple attorneys general across the country. The ITT Tech chain is also under investigation in a separate inquiry by CFPB for “predatory student lending,” “that ITT exploited its students and pushed them into high-cost private student loans that were very likely to end in default,” and “ITT used high-pressure tactics to push many consumers into expensive loans destined to default.” The CFPB is attempting “to get restitution for victims, a civil fine, and an injunction against the company.”

Further, ITT Tech focused intently on luring returning soldiers from the Iraq and Afghanistan wars into signing up. A comprehensive 2012 report authored by the U.S. Senate Committee on Health, Education, Labor & Pensions Committee, Sen. Tom Harking (D-Iowa) concluded ITT: “Documents also demonstrate a focus on recruiting students eligible for military benefits. ITT is the second highest recipient of post-9/11 GI bill funds, taking in $178 million between 2009 and 2011. In 2009, ITT initiated a military marketing plan with the goal of increasing military enrollments by 20 percent at 42 selected campuses.” [Page 530]

Walker has not called for Attorney General JB Van Hollen to join the suit, despite the plight facing students and he helped disband a committee that was directed to look into the for-profit college industry after several closed abruptly in Milwaukee. The Wisconsin Educational Approval Board estimates there are 26,000 students in Wisconsin paying for-profit colleges a total annual tuition of more than $150 million.

During the 2012-13 school year, ITT Tech collected $827 million in federal student aid funds, including $586 million in student loans and $242 million in Pell Grants.

“It is indefensible that Gov. Walker would use this scandalous industry as a backdrop while they exploit students and taxpayers,” said Ross. “Gov. Walker personally knows what it’s like to not finish a college degree and giving his seal of approval to an industry that locks students into decades of debt, while delivering enormous drop out rates or useless ‘degrees,’ is all the evidence one needs to see he simply doesn’t care about the statewide student loan debt crisis and the victims of the for-profit cartel.”

Original research on student loan debt conducted by One Wisconsin Institute found that students with technical college or two-year degrees reported taking an average of 16.8 years to pay off their student loans. Overall student loan debt had a significant negative impact on the state economy. Borrowers were much more likely to rent versus own their home and buy a used versus new vehicle. Over $200 million in new vehicle sales are lost annually in Wisconsin, directly attributable to student loan debt.

In October 2013, Rep. Cory Mason (D-Racine) and Sen. Dave Hansen (D-Green Bay) introduced common sense reforms including refinancing and a tax break for borrowers in their historic Higher Ed, Lower Debt Act. Despite having 54 co-sponsors, Walker’s Republican allies killed the bill. Democratic gubernatorial candidate Mary Burke included these proposals in her comprehensive jobs and economic development blueprint for the state.