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-short-michael-lewis

What a surprise!

IOW, these are truly crappy degrees.

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.

...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

they accept or summarily reject resumes from such schools including specific so-called degrees, e.g career in medicine or law.

worms THAT is.

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