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marmar Donating Member (1000+ posts) Send PM | Profile | Ignore Sun May-30-10 08:57 AM
Original message
The For-Profit College Bubble?
from Mother Jones:




Steve Eisman's Next Big Short: For-Profit Colleges

By Andy Kroll
| Thu May. 27, 2010 4:55 AM PDT


Steve Eisman, the outspoken investor whose huge wager against the subprime mortgage market was chronicled by author Michael Lewis in his bestselling book The Big Short, has set sights on a new target: for-profit colleges of the kind of you might see advertised on daytime TV and at bus stops. Think ITT Educational Services, Corinthian Colleges, or Education Management Corporation.

In a speech titled "Subprime Goes to College," delivered Wednesday at the Ira Sohn Investment Research Conference, Eisman blasted the for-profit education industry, likening these companies to the seamy mortgage brokers who peddled explosive subprime loans over the past two decades. "Until recently, I thought that there would never again be an opportunity to be involved with an industry as socially destructive and morally bankrupt as the subprime mortgage industry. I was wrong," Eisman said. "The for-profit education industry has proven equal to the task." (All of Eisman's remarks here come from a copy of his prepared remarks obtained by Mother Jones.)

Eisman, a blunt, no-frills portfolio manager at FrontPoint Financial Services Fund, a Morgan Stanley subsidiary, became an overnight sensation as one of the main characters in Lewis' latest. After witnessing the first wave of subprime madness in the 1990s, Eisman grew skeptical of the industry as a whole, Lewis writes. Then, when subprime surged again in the 2000s, he put his knowledge to work. Needless to say, he's a lot richer than he was two years ago.

The for-profit education sector has soared over the past decade, making companies like ITT and Apollo Group into heavyweights. Driving much of the growth, Eisman explained, was the sector's easy access to federally guaranteed debt through Title IV student loans. In 2009, he said, for-profit educators raked in almost one-quarter of the $89 billion in available Title IV loans and grants, despite having only 10 percent of the nation's postsecondary students. ..........(more)

The complete piece is at: http://motherjones.com/mojo/2010/05/steve-eisman-big-sh...



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Gormy Cuss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun May-30-10 09:02 AM
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1. "Eisman attributes the industry's success to a Bush administration that stripped away regulations "
What a surprise!


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patrice Donating Member (1000+ posts) Send PM | Profile | Ignore Sun May-30-10 09:11 AM
Response to Original message
2. I have reason to believe, on average, they're selling substandard curriculum and GPAs.
Edited on Sun May-30-10 09:12 AM by patrice
IOW, these are truly crappy degrees.
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Traveling_Home Donating Member (1000+ posts) Send PM | Profile | Ignore Sun May-30-10 09:18 AM
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3. I'm so glad we have experts to tell us what to do. I feel so much better.
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hunter Donating Member (1000+ posts) Send PM | Profile | Ignore Sun May-30-10 09:32 AM
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4. It's not just the "for profit" colleges, it's all of them.
Lot's of people bought very nice homes for incredible amounts of money during the housing bubble.

Most of these homes are still nice.

Fortunately there's no way to foreclose on the knowledge in your head if you can't repay your student loans. Unfortunately the Internal Revenue Service will be involved in the collection.

The collapse of the student lending bubble and college tuitions is going to be interesting.

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msongs Donating Member (1000+ posts) Send PM | Profile | Ignore Sun May-30-10 09:51 AM
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5. some of these schools are great, expecially tech trades..doubt the "law" ones are so hot tho nt
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bvar22 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun May-30-10 10:51 AM
Response to Original message
6. In the 60s and 70s,
...it WAS possible to attend a good State University and graduate debt free if one was willing to work an easy part time job.
This was The Norm...not the exception.

This would be possible again....IF we had a Political Party that represented Americans who Work for a Living.


"If we don't fight hard enough for the things we stand for,
at some point we have to recognize that we don't really stand for them."

--- Paul Wellstone


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jody Donating Member (1000+ posts) Send PM | Profile | Ignore Sun May-30-10 11:03 AM
Response to Original message
7. A "real" reporter could win a Pulitzer by interviewing human resource managers & reporting whether
they accept or summarily reject resumes from such schools including specific so-called degrees, e.g career in medicine or law.
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patrice Donating Member (1000+ posts) Send PM | Profile | Ignore Sun May-30-10 12:45 PM
Response to Reply #7
8. I looked for work for 4 years after my first layoff in 2001: HR managers!! Man oh man, what a can of
worms THAT is.

Sure seemed to me that there were an awful lot of jobs that weren't actually there.
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