Theresa Sweet’s parents gave her a 35-millimeter camera when she was in the third grade. She fondly recalls saving her allowance to develop film as she became the family photographer. It was a gift that would change her life forever, setting her on a path into the world of for-profit colleges.
Sweet followed her passion for photography in 2003 from her home in the South Bay to the Brooks Institute, a for-profit college in Southern California. She graduated in 2006 with a bachelor’s degree in photography and six-figures in both federal and private loans.
Sweet has found a job in photography only twice. The income and job opportunities promised to her by admissions counselors at the Brooks Institute, which was shuttered in 2016, never appeared. She struggled to make payments and eventually defaulted on her loans. Over the past 13 years, what she owes has nearly tripled due to interest and penalty charges.
“I can’t finance a car, much less a home, and it is unlikely that I would ever be able to start a family or get married because I would condemn my family to a lifetime of poverty,” Sweet told a panel of California legislators earlier this year.
In a national collaboration with NBC stations around the country, the NBC Bay Area Investigative Unit has been looking into federal student loans, the nation’s fastest growing form of consumer debt. With 42.8 million borrowers owing $1.5 trillion, it’s second-only in size to home mortgages, and California is struggling to fill in the gap as federal regulations designed to protect students from predatory colleges wane.
An analysis of federal student loan data shows that, not surprisingly, California ranks first in the country with 3.7 million people owing $128 billion. Roughly one fifth live here in the Bay Area.
“We've seen a lot of problems in for-profit education with colleges that do not have the student's best interest at heart,” said Robert Shireman, director of Higher Education Excellence at the Century Foundation, a national think tank. “Because of the financial incentives at a for-profit entity, where the owner of a school can pocket as much of the money as they want, there are these very strong incentives not to provide enough of the education that students are actually paying for.”
That’s one of the reasons California Assemblyman David Chiu, representing San Francisco, proposed a bill earlier this year designed to replace a now-repealed Obama-era regulation known as the gainful employment rule, which compared the debt-to-earnings ratio of college graduates and allowed the Department of Education to revoke a school’s access to federal loans if that number went too high.
“There are too many stories of for-profit schools that are requiring students to take out tens of thousands of dollars of debt, and when the students graduate from these programs, they don't make more than the minimum wage,” said Chiu, adding that 250 for-profit schools in California failed to meet the Obama-era standards, accounting for 60,000 students owing approximately $1 billion in debt.
In the Bay Area, the Investigative Unit identified 228 for-profit colleges and trade schools, only 40 of which report information on student loans. That means more than 80% are not accredited or have chosen not to participate in the federal aid program. Of those 40 that do report, 15 are above the median default rate, 12.1%, which is the percentage of students who default on their loans within three years of graduating.
NBC Bay Area reached out to several of the larger for-profit colleges and trade schools; all declined to be interviewed. The leading state and national industry associations did not respond to requests for comment.
After strong industry opposition and concerns raised by other California legislators, Chiu’s bill, which will go into effect on Jan. 1, now only requires the schools to report the debt-to-earnings ratio of their graduates to the California Bureau of Private Postsecondary Education, information already required of public institutions.
Still, that’s information that Sweet says she thinks prospective students need to know, adding that if such a resource existed when she was looking at colleges, Brooks never would have been an option. Sweet works as a nursing assistant now, a job she is quick to point out does not even require a high school diploma. Photography has become a personal hobby for her.
“The simple fact is that this type of fraud isn’t different than any other type of fraud, and it’s important that people realize that. If someone sells a product they know to be faulty, there should be repercussions,” she said. “And, to me, it doesn’t matter if that product is education or anything else.”