College Inc.

Borrower beware. This is the lesson Christina Burris and others like her have learned when it comes to for-profit schools. Burris earned a paralegal certificate—but discovered after the fact that her program was not certified by the American Bar Association.

“The only time it ever did anything for me,” she said of her credential, “was get me an extra 50 cents an hour more than someone who was actually in law school, because I had the paper in hand.”

“[But] the ‘degree,’ a.k.a. certificate, is pretty much a joke,” she said.

Burris’ experience is at the heart of new federal rules designed to hold for-profit schools more accountable. With taxpayers on the hook for billions of dollars in loan defaults, the government has pushed for these regulations and is set to adopt them by mid-2011.

Also known as career colleges or trade schools, for-profit institutions have boomed in recent years through aggressive marketing tactics and surging enrollment lubricated by access to federal financial aid.

The schools, which by definition aim to make money, provide educational opportunities, often to nontraditional students, through flexible schedules and online courses. Critics, however, counter that for-profit colleges are overly expensive and leave many students with a lot of debt and poor prospects.

A November report from Washington, D.C., think tank Education Trust likened for-profit practices to the subprime-mortgage crisis, with growth fueled by federal subsidies for students who end up with the little to show from the experience. The report also found that enrollment at for-profit schools had grown by 236 percent in the last 10 years. “[For-profit] stockholders are literally making out like bandits,” the report read, “while their students—many of whom are low-income and minority—generally find little academic success.”

One such student, Serenity Collier, attended Universal Technical Institute and said she was mixed about her experience. “It wasn’t everything they cracked it up to be,” Collier explained. “Not terrible, but not quite that great, either.

“The job-placement system is a joke,” she added.

Loan-default rates and job placement are considered key barometers of how well a program prepares students to begin earning the needed income to pay back loans.

In the Sacramento area, data from 2009 shows that local schools have a range of repayment rates, with private and public schools ranking higher than career colleges and trades schools. The student repayment rate at for-profit Bryan College, for instance, was 31 percent. Repayment was 28 percent at Kaplan College’s Sacramento campus and 41 percent at Carrington College, formerly Western Career College.

The University of the Pacific in Stockton had a 73 percent repayment rate, the public Sacramento State a 59 percent repayment rate and 36 percent at Sacramento City College, a public two-year school.

“No school can promise a student a job,” cautioned Jeff Akens, president of Carrington College. He added that his school’s default rate is similar to other like-minded two-year open-enrollment institutions, such as American River College, a public community college, and the for-profit Kaplan College. (There are differences in price, however. According to the College Board, Carrington’s annual cost is $14,000 to $17,000, compared to about $812 for in-state students and $7,052 for out-of-state students at American River College, depending on the program.)

Akens also said Carrington recently expanded its efforts to educate students about financial obligations and has hired a full-time job-placement firm.

Such efforts will be increasingly crucial, since under a proposed gainful-employment rule, scheduled to take effect in 2012, programs would be ineligible for federal financial aid if 35 percent or less of former students are repaying their federal loans and their graduates have a high amount of debt compared to their income.

As part of that effort, and to better protect students, the Obama administration plans to crack down on recruiters who mislead or otherwise dupe potential applicants. The new regulation also aims to ban paying recruiters based on the number of students they sign up, restoring a 1992 law.

“They use all kinds of tricks,” said Stuart Talley, a Sacramento attorney who has represented 150 students in class-action lawsuits against for-profit schools. “Some schools have enrollment counselors, but they are in fact salespeople who will say anything to get a student in the door.”

One big problem, Talley added, is schools that are accredited but offer unaccredited programs. “This is particularly true with programs like ultrasound technology; we have represented 49 [former ultrasound students] so far,” he said.

In a consumer-action alert, Talley’s firm, Kershaw, Cutter & Ratinoff, also recommended potential students be wary of such things as insufficient equipment for in-class training, lack of program accreditation (in addition to the school’s accreditation), an insufficient number of clinical hours and poor advice about actual job prospects.

Military veterans should also exercise caution. The Chronicle of Higher Education reported last week that for-profit colleges in particular have benefited from a 2008 change to the GI Bill, a Veterans Affairs Department program that pays education costs for former members of the military. The newspaper found that in the first year of the changed GI Bill, a disproportionate share of funds, $640 million, or 36 percent, went to for-profit schools. At the same time, the Chronicle said such schools account for less than 10 percent of all students nationally.

Carrington’s Akens, meanwhile, stressed that students have to be responsible, too. “It is important to note that colleges do not have control over the total amount borrowed by students to attend school,” he explained. “Although we counsel students to minimize their debt levels, the majority of Carrington’s students borrow money above and beyond tuition charges, which are used for living expenses.”

For borrowers like Burris, her experience has been more of a cautionary tale rather than one of academic success. On the plus side, she said her paralegal program was super fast. On the other hand, “If you go [to a school], at least find one that is state accredited.”