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The Tories’ plan to wreck our education, US-style

This article is over 10 years, 2 months old
Student debt in the US stands at $1 trillion as for-profit universities grab ever higher fees. Now, writes Dave Sewell, the Tories are proposing the same system for Britain
Issue 2277

Sherry Haferkamp has student debt of $200,000—and a degree that is worth nothing.

Recruiters from the University of Argosy in Dallas convinced her to take a doctorate in psychology.

“The guy I talked to was personable,” she says. “He seemed like he really wanted to get to know me. We had a really good conversation.

“And then he said, ‘You know, instead of applying for the masters programme, go ahead and apply for the doctorate programme.’”

It was only after she’d paid the money that she found out the course was completely unaccredited, and she couldn’t get a job with it.

The University of Argosy is not a public university. It is run by the private Education Management Corporation (EDMC)—which is 40 percent owned by investment bank Goldman Sachs.

Sherry is drowning in student debt—with soaring interest. “The student loans are going to keep mounting and mounting,” she says.

Sherry is just one of the many victims of for-profit universities in the US. And now that system is coming to Britain.

The Tories are pushing for for private firms to set up, and even take over, universities (see right).

Higher education minister David Willetts met EDMC and other private education firms at least 12 times while he was cooking up the plan.

Another firm Willetts met was the Apollo Group, which runs the largest private university in the US, the University of Phoenix.

It now enrols more students than the entire private university sector did two decades ago.

The largest “campus” at Phoenix is its online service, which offers courses entirely over the internet to the equivalent of 175,000 full-time students. Only 5 percent of its students successfully graduate within six years.

But this doesn’t stop some for-profit universities offering massive loans, on top of the loans students get from the US government.


Corinthian Colleges Inc assumes half its students will default on their loans. These include students who pay up to $30,000 for a 12-month nursing course where they never set foot in a hospital.

But the firms have nothing to lose. Under US law, even people who declare bankruptcy cannot get rid of their student debts. Those who fail to make their payments find them subtracted from their wages and their tax refunds.

They are even barred from getting government jobs.

Former students in this situation have been at the centre of the Occupy Wall Street protests. And they have a lot to be angry about.

Today, total student debt in the US stands at nearly $1 trillion—more than the country’s total credit card debt.

Now the firms have their eye on the British market.

Apollo’s British subsidiary BPP already operates one university in Britain. And it says it is in talks with ten more universities about outsourcing their “back office” services.

Willetts even met US private equity firm Warburg Pincus, who are believed to be seeking to buy a university in Britain.

The American nightmare of sub-prime education could be just a warm up for the Tories’ plans.

Dial, dial, dial!

For-profit universities in the US have more than tripled their intake in the last decade. They have used an aggressive strategy of recruitment and marketing.

One former recruiter revealed to US broadcaster PBS that guidelines in their call centres include “Create a sense of urgency”, “Don’t let the student off the phone” and “Dial, dial, dial!”

The private firms often spend more on marketing than on the actual lectures.

The University of Phoenix spent $130 million on advertising in just one year. It kept costs low by putting all teaching staff on temporary contracts.

Double debt

Anne Cobb was living on less than $8,000 a year when she was signed up by the private University of Phoenix.

“It was just such an incredibly simple process,” she says. “I mean, it was, ‘Sign a few places here.’

“I said, ‘Well, I’m not sure. I have a lot of bills. Is it still going to be OK?’” They told her not to worry.

Anne graduated with over $30,000 debts. A decade on, after deferments, penalties and a 14 percent interest rate, it has doubled to over $60,000.

“You don’t hear these horror stories,” she says.


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