For the last 30 years, a group of schools have targeted America's most vulnerable students, saddling them with mountains of debt and a poor education, all for the sake of profit. Mike DiGiacomo fell victim to two of these schools. For a transcript of this episode: https://bit.ly/campusfiles-transcripts To learn more about listener data and our privacy practices visit: https://www.audacyinc.com/privacy-policy Learn more about your ad choices. Visit https://podcastchoices.com/adchoices
Chapter 1: What is the problem with for-profit colleges in America?
That's Evan. You heard from him a few weeks ago when he shared his experience with USC's online social work program. What Evan and his classmates didn't know at the time was that the program wasn't actually being run by USC. It was being run by a for-profit company called 2U.
As we were doing research for that episode, it became clear that Evan's story was just one part of a much larger issue, for-profit education. It's a topic that we wanted to take a closer look at.
These schools, they're notorious. Federal legislators have known about these shady behaviors for decades, decades.
For over 30 years, a network of colleges and universities has preyed on America's most vulnerable students, luring them into taking out loans that they'll likely never be able to repay. Anytime you have a program that's the size of the federal student aid program, it's going to attract people who see it as a way to make money.
While these schools rake in billions of dollars, it's the students who are left saddled with debt.
And so I put together this very extensive Google form and we got just under 500 borrowers to fill it out. And we were collectively $70 million in debt.
Normally on Campus Files, we bring you a new story every week, but this topic is too big to cover in just one episode. So, over the next few weeks, we're bringing you a three-part story about for-profit colleges and universities in America. The series will be written and narrated by my colleague, Ian Montt.
I'm Ian Mont. This week on Campus Files, for-profit part one, The Pain Funnel. This story begins outside the classroom, in the fantasy world of a video game.
Long ago, a lone sorcerer saved the last of his kind from an unstoppable invasion.
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Chapter 2: Who is Mike DiGiacomo and what is his background?
The Empyrean left this world to a race of insects, the Ulthoi.
I had a character that was good with swords and a bow. He went on these little adventures and it was pretty fun.
That's Mike DiGiacomo. Back in 2002, he was a supply and logistics specialist for the US Army, stationed in Alaska. By day, he jumped out of planes and tracked equipment. But off-duty, his world revolved around a video game called Asheron's Call.
It was actually referred to me by some people that played from the barracks. It was very popular amongst the other soldiers that were playing. They always updated it and everybody would rush to try to complete the update to see who could do stuff first or just like hang out with friends or, you know, it was a community thing, so it was fun.
When Mike's time in the military was up, he was ready to leave his job, but not Asheron's call. He was so hooked on the game that he actually set his sights on working for the company that produced it. But there was just one problem. The military, of course, does not train its soldiers on animation or game development.
So when Mike left the Army in 2002, he had a pretty good sense of what he wanted to do next. He wanted to be on the team that made Asheron's Call.
It was owned by Microsoft, but ran by a company called Turbine, which was in Westwood, Mass. at the time.
Mike grew up in Massachusetts, just outside Boston, practically next door to the offices of Turbine, the developers behind Asheron's Call.
It was actually made near my house, not even probably two miles from my house. So it was kind of like one of those like full circle things. And I was like, oh, well, that'd be cool.
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Chapter 3: Why did Mike choose Gibbs College for animation studies?
Financial Aid said, you know, we have financial aid through Sally Mae, our preferred federal lender, which seemed to be a term used a lot back then.
Sally Mae, short for the Student Loan Marketing Association, was initially a government entity created to act as a middleman for federal student loans. But right around the time Mike was starting school, they cut ties with the federal government and began offering private loans. The problem with that is that many people still associated Sallie Mae with federal aid.
Few knew about the shift, or the fact that these private loans had far fewer protections and a much higher interest rate. Mike didn't know any of this when he was applying. And why would he? Almost nobody pays attention to the fine print of student loans. Plus, Mike had the friendly staff in the financial aid office to walk him through it.
Well, how much is this going to cost or everything? Oh, no, we have financial aid and it'll only be like 100 to 200 bucks a month for financial aid once you're done.
It was no small monthly bill, but if Mike got a job at Turbine or got his foot in the door in the industry, it would be worth it. Plus, as a veteran, Mike had extra GI Bill funding, which could help pay for school without requiring him to take out as many loans. So after some reflection, Mike made the decision to sign up.
He registered for classes and stopped by the financial aid office to get set up with support. He signed a simple promissory note, basically just a legal document agreeing to pay back money in the future. And just like that, he was set up for aid from Sallie Mae. Mike started his first semester, but almost immediately something felt off.
You know, you're doing the basic classes like it kind of felt to me a little bit like I was starting at the bottom again. And I'm noticing a lot of the people that are in there with me are not as experienced or not even focused, so to speak. I remember there was one kid, he would bring stuff to school to sell like electronics or auto parts, which was wacky.
Beyond the subpar classes and beginner level students, yet another red flag appeared. Toward the end of his first semester, Mike was abruptly pulled out of class.
So basically, they would go to you when you're in class. They would pull you out of class and say, hey, you need to sign up for this. You need to fill out, you know, apply to Sallie Mae or you can't go back to class.
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Chapter 4: What challenges did Mike face during his time at Gibbs College?
Mike was still trying to sort out the demo reel by the time he reached the end of his curriculum. At this point, Gibbs required an internship as a way to get real on-the-ground experience.
The internship teacher, he was all about like, yeah, we're going to get you a paid internship at a TV studio, which sounded incredible to me. Well, come to find out, when I showed up, it was a wedding videographer. And he said, oh yeah, and I have this equipment in the truck. Help me unload the truck. So I'm going around doing these errands for him and he's nowhere around me.
I'm just doing errands. I get back and I guess he had gone mountain biking with his girlfriend at the time or something. And then the equipment, I know it was basically just cardboard boxes. There was laundry in them. So I was moving around his laundry.
At this point, Mike was pretty fed up with Gibbs. He'd been placed in the wrong courses, his internship was a farce. When he asked for the promised help making a demo reel, he was told to do it on his own time. When he inquired about job placement support, they suggested he apply at Staples.
And to top it all off, when it came time for graduation, he was told his degree was in graphic design, not animation.
I remember towards the end there, I was actually working in a supermarket. When I found out it was going to be graphic design, I skipped the graduation and mopped floors.
Mike had walked away with a diploma, but no real skills in animation, no industry connections, and no clear path to his dream job. None of what he was directly promised. But soon, an unexpected opportunity would come along and change everything.
Imagine if you could ask someone anything you wanted about their finances. How much do you make? Who paid for that fancy dinner? What did your house actually cost? On every episode of What We Spend, a different guest opens up their wallets, opens up their lives, really, and tells us all about their finances. For one week, they tell us everything they spend their money on.
My son slammed like $6 worth of blueberries in five minutes.
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Chapter 5: How did Mike’s internship experience at Gibbs College affect him?
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Mike DiGiacomo graduated from Gibbs in 2005. He was disillusioned by the whole experience, but he figured he had just been dealt a bad hand. I felt like that was an isolated school, like it was just one bad school I picked. So when a friend mentioned another school that might be a better fit, Mike was intrigued. The school was called the New England Institute of Art.
The name alone sounded prestigious because it kind of borrowed from mass art, which was prestigious, which I had originally looked into.
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Chapter 6: What was the outcome of Mike’s education at Gibbs College?
So Mike gave it another shot. He reached out to the Art Institute and landed an admissions interview. Right from the start, the school felt much more professional than Gibbs.
I got called in and it walked through like a gallery. They had like student work. I think there was success stories on the wall as well.
And the more he learned about the program, the more it stood apart from Gibbs.
Speaking with the representative, I had asked, you know, about the animation program. He had told me, hey, the program director there actually invented the way hair works in animation, you know, invented that technology.
Finally, some real animation credentials. But Mike was still on guard after his experience at Gibbs.
I was nervous about the job placement situation because my experience at Gibbs, you know, I want to make sure I was good to go. When I said my goal, which was working for Turbine, he said, oh, yeah, not only do we have job placement at Turbine, we have job placement at Pixar, you know, and many other companies like that.
Another reassuring difference was the interview itself. Looking back, the Gibbs admissions officers had almost felt too eager, too accommodating, almost like they'd take anyone. But this interview was tough, and while Mike doesn't remember the exact admissions numbers they cited, he does remember they told him it was highly competitive.
When I heard I was accepted, I was over the moon and happy. Like, oh, I'm going to be able to turn my bad experience into an even better one. It was like a huge campus. It felt collegey, if that makes any sense. Gibbs felt like an office building that they just kind of moved into.
But once he got inside the classroom, it turned out the schools had more in common than he expected.
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Chapter 7: Why did Mike decide to attend the New England Institute of Art next?
Let's start by defining what for-profit schools even are, and why that distinction matters. Stick with me for a second, because we have to talk about legal responsibility, which I promise is a key part of this story. In the U.S., there are generally three types of schools. First, we have public state schools. Take the University of California system, for example.
Home of the University of California. One of the largest and finest universities in the country.
The UC system is legally accountable to the people of California. Its primary job is to provide an education as a public service. The electromechanical differential... The second type is a non-profit school. Take NYU or MIT, for example.
At the Massachusetts Institute of Technology, perforated tape introduces the data...
Nonprofits are legally responsible for addressing a specific social cause. All money taken in is reinvested into the organization, all to serve the nonprofit's mission, which in this case is education. Finally, there are for-profit schools.
Ever think you could be part of this? With the right training, you can.
Unlike the other two cases, for-profit schools have owners that they exist exclusively to serve. This could be a wealthy family, an investment company, or shareholders on the stock exchange. This distinction of responsibility and ownership is key.
While state and non-profit schools must, of course, remain financially stable and they set their tuition accordingly, their primary purpose is to serve a public good, not to make money. Every major and minor decision they make should be guided by what is best for the educational mission. A for-profit school, on the other hand, has the opposite responsibility.
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Chapter 8: How did the New England Institute of Art compare to Gibbs College?
Their only legal obligation is to generate as much money as possible for their owners, and to make more and more money every year. Every major and minor decision they make is driven by profit. Education is secondary.
They have a pressure constantly from investors to report higher earnings. And that gives them a pressure to enroll as many students as they can. So that is bad for students when someone has to keep going to Wall Street every quarter and explaining profits are up, profits are down. It makes them want desperately to bring in new students.
This is David Halperin. He spent most of his career in Washington, holding impressive positions like Special Assistant to the President for National Security Affairs or Presidential Speechwriter for Bill Clinton. He's become an expert on for-profit colleges.
Not much money is spent on education. A lot of the money goes to advertising and recruiting, quite a bit, to paying for TV ads, to paying for internet ads, to paying third-party lead generators, to hire armies of recruiters, to hire lawyers to get them out of trouble when they get in trouble for recruiting, and lobbyists to try to prevent more strict rules that would make it harder to recruit.
David first encountered the problem of for-profit schools sometime around 2009, just after Mike decided to leave the Art Institute. At that time, David was at the Center for American Progress, a think tank in DC.
Around the beginning of the Obama administration in 2009 and 10, I started to learn about the issue of for-profit higher education.
And what immediately stood out to David was just how massive, yet mostly invisible, this industry was.
But what I learned was that this industry had gone crazy. It was getting about 10% of all U.S. college students, 25% of all the federal financial aid, which amounted to $30 billion a year.
The for-profit education industry wasn't always this big. It's basically been around since federal funding for education was introduced in 1965. But there were always legal guardrails in place to limit the potential for profit. That was until the George W. Bush administration, when lobbyists made major strides in rolling back regulations.
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