Hyper-Deregulation and the College Meltdown

In March 2025, Studio Enterprise—the online program manager behind South University—published an article titled “A New Era for Higher Education: Embracing Deregulation Amid the DOE’s Transformation.” Written in anticipation of a shifting political landscape, the article framed coming deregulation as an “opportunity” for flexibility and innovation. Studio Enterprise CEO Bryan Newman presented the moment as a chance for institutions and their contractors to do more with fewer federal constraints, implying that regulatory retreat would improve student choice and institutional agility.

What was framed as a strategic easing of oversight has instead arrived as a form of collapse. By late 2025, the U.S. Department of Education has become, in functional terms, a zombie agency—still existing on paper, but stripped of its capacity to regulate, enforce, or even communicate. Consumer protection, accreditation monitoring, program review, financial oversight, and FOIA responses have slowed or stopped entirely. The agency is walking, but no longer awake.

This vacuum has emboldened not only online program managers like Studio Enterprise and giants like 2U, but also a wide array of entities that rely on federal inaction to profit from students. The University of Phoenix—long emblematic of regulatory cat-and-mouse games in the for-profit sector—now faces minimal scrutiny, continuing to recruit aggressively while the federal watchdog sleeps. Elite universities contracting with 2U continue to launch expensive online degrees and certificates whose marketing and outcomes would once have been examined more closely.

Student loan servicers and private lenders have also moved quickly to capitalize on the chaos. Companies like Aidvantage (Maximus), Nelnet, and MOHELA now operate in an environment where enforcement actions, compliance reviews, and borrower complaint investigations have slowed to a near standstill. Servicers once accused of steering borrowers into costly forbearances or mishandling IDR accounts now face fewer barriers and far less public oversight. The dismantling of the Department has also disrupted the small channels borrowers once had for correcting servicing errors or disputing inaccurate records.

Private lenders—including Sallie Mae, Navient, and a growing constellation of fintech-style student loan companies—have seized the opportunity to expand high-interest refinance and private loan products. Without active federal oversight, marketing claims, credit evaluation practices, and default-related consequences have become increasingly opaque. Borrowers with limited financial literacy or unstable incomes are again being targeted with products that resemble the subprime boom of the early 2010s, but with even fewer regulatory guardrails.

Hyper-deregulation has also destabilized the federal loan system itself. Processing backlogs have grown. Borrower defense and closed-school discharge petitions sit in limbo. Decisions are delayed, reversed, or ignored. Automated notices go out while human review has hollowed out entirely. Students struggling with servicer errors find there is no functioning authority to appeal to—not even the already stretched ombudsman’s office, which is now overwhelmed and under-directed.

Across the sector, the same pattern is visible: institutions and corporations functioning without meaningful oversight. OPMs determine academic structures that universities should control. Lead generators push deceptive marketing campaigns with impunity. Universities desperate for enrollment sign long-term revenue-sharing deals without public transparency. Servicers mismanage accounts and communications while borrowers bear the consequences. Private lenders accelerate their expansion into communities least able to withstand financial harm.

Students feel the effect first and most painfully. They face rising costs, misleading claims, aggressive recruitment, and a federal loan system that can no longer assure accuracy or fairness. The collapse of oversight is not theoretical. It manifests in missed payments, lost paperwork, incorrect balances, unresolved appeals, and ballooning debt. For many, there is now no reliable path to recourse.

Studio Enterprise saw deregulation coming. What it left unsaid is that removing federal guardrails does not produce innovation. It produces confusion, predation, and unequal power. Hyper-deregulation rewards those who operate in the shadows—OPMs, for-profit chains, high-fee servicers, and private lenders—while those seeking education and mobility carry the burden.

This moment is not an evolution. It is an abandonment. Higher education is drifting into an environment where profit extraction flourishes while public protection evaporates. Unless new sources of oversight emerge—federal, state, journalistic, or civic—the most vulnerable students will continue to pay the highest price for the disappearance of the referee.

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Sources

Studio Enterprise, A New Era for Higher Education: Embracing Deregulation Amid the DOE’s Transformation (March 2025).
HEI archives on OPMs, for-profit colleges, and regulatory capture (2010–2025).
Public reporting and advocacy analyses on student loan servicers, including Navient, MOHELA, Nelnet, Aidvantage/Maximus, and Sallie Mae (2015–2025).
FOIA request logs, non-responses, and stalled borrower relief cases documented by HEI and partner organizations (2024–2025).
Federal higher education enforcement trends, 2023–2025.

The Working-Class Recession: How the Educated Underclass is Already in Crisis

For millions of Americans with college degrees, the headlines about a “possible recession” feel like a cruel joke. While official statistics lag, the lived reality for the educated underclass—those with bachelor’s or advanced degrees who are struggling to maintain stability—is nothing short of an economic depression. Rising costs of living, stagnating wages, and dwindling job security have already reshaped daily life, and many are barely hanging on.

Unemployment figures tell only part of the story. College graduates now make up a record 25% of the unemployed, with white-collar layoffs in tech, finance, and even healthcare rising. Those who are employed are often underemployed, working multiple part-time jobs or in positions that barely require a degree. The promise that a college credential ensures upward mobility is eroding rapidly, leaving a generation of highly educated Americans questioning the value of the very investment that was supposed to secure their future.

Housing costs are skyrocketing, especially in urban centers where jobs are concentrated. Even modest apartments demand incomes far above what many professional graduates earn. Student loan debt compounds the pressure, forcing difficult trade-offs between basic living expenses and debt repayment. For many, “making it” now means moving back in with parents or sharing crowded apartments with friends—situations reminiscent of a pre-adult adolescence prolonged indefinitely.

Meanwhile, inflation eats away at savings. Food prices, healthcare, and transportation costs continue to climb, leaving little room for discretionary spending or emergency funds. The safety net that the previous generation relied on—a stable job, homeownership, a modest retirement plan—is increasingly inaccessible. For the educated underclass, financial precarity has become normalized, even invisible to those who still enjoy some buffer in the broader economy.

The psychological toll is real. Anxiety, depression, and burnout are rampant among highly educated professionals facing underemployment or precarious work conditions. The “American Dream” has shifted from upward mobility to merely surviving, with little room for long-term planning or security.

Policymakers continue to debate whether a recession is coming, but for many, the recession has already arrived. It’s not marked by dramatic market crashes or bold headlines—it is quiet, slow, and insidious, felt in empty savings accounts, missed rent payments, and jobs that fail to match education and ambition. Recognizing this reality is the first step toward meaningful change. Until then, the educated underclass is living through an economic depression, one degree at a time.

The Link Between Greed and Efficiency

In the mythology of American capitalism, “efficiency” is the magic word that justifies austerity for workers, rising tuition for students, and ever-expanding wealth for administrators, financiers, and institutional elites. It is framed as neutral, technocratic, and rational. In reality, efficiency in higher education has become inseparable from greed, functioning as a mask for extraction and consolidation.

Universities and their sprawling medical centers have become some of the largest landowners and employers in the cities they inhabit. As Devarian Baldwin has shown, these institutions operate as urban empires, expanding aggressively into surrounding neighborhoods, raising housing costs, displacing long-time residents, and reshaping cities to suit institutional priorities. University medical centers, nominally nonprofit, consolidate smaller hospitals, close services deemed unprofitable, and charge some of the highest healthcare prices in the nation. These operations are justified as efficiency or economic development, yet they often destabilize the communities they claim to serve.

Endowments, some exceeding fifty billion dollars at elite institutions, have become central to this dynamic. Managed like hedge funds, these pools of capital are heavily invested in private equity, venture capital, real estate, and derivatives. The financial logic of endowment management now shapes university priorities, shifting focus from public service and learning to capital accumulation, investor returns, and risk management. Efficiency is defined not by educational outcomes but by the growth of financial assets.

This culture of extraction has been amplified by decades of government austerity. Public funding for higher education has steadily declined since the 1980s, forcing institutions to behave like corporations. At the same time, the aging Baby Boomer generation is creating unprecedented financial pressures on Social Security, Medicare, and healthcare systems, leaving public coffers stretched thin and reinforcing a winner-take-all national mentality. In this environment, universities compete fiercely for students, research dollars, donors, and prestige, producing conditions ripe for exploitation.

Outsourcing has become a standard method to achieve “efficiency.” Universities frequently contract out food service, custodial work, IT, housing management, and security. Workers employed by these contractors often face lower wages, fewer benefits, and higher turnover, while administrators present these arrangements as cost-saving measures. Meanwhile, administrative layers within institutions continue to expand, creating a managerial class that oversees growth and strategy while teaching budgets shrink. As Marc Bousquet has argued, the corporate-style management model displaces faculty governance and treats students and staff as revenue streams rather than participants in a shared educational mission.

The adjunctification of the faculty exemplifies efficiency as exploitation. Contingent instructors now teach the majority of classes in American higher education, earning poverty-level wages without benefits while juggling multiple teaching sites. Institutions call this “flexibility” and “cost containment,” but in reality it transfers value from instruction to administrative overhead, athletics, real estate, and financial operations, all while reducing the quality of education and undermining academic continuity.

The rise of Online Program Managers, or OPMs, further illustrates the fusion of greed and efficiency. These companies design, manage, and market entire online degree programs, often taking forty to seventy percent of tuition revenue. While presented as efficiency partners, OPMs aggressively recruit students, inflate costs, and minimize academic oversight. Their business model mirrors the exploitative strategies of for-profit colleges, which pioneered high-cost, low-quality instruction combined with heavy marketing to capture federal loan dollars. The collapse of chains such as Corinthian, ITT, and EDMC left millions of borrowers with debt and no degree, yet the model persists inside nonprofit universities through OPMs and algorithm-driven online programs.

“Robocolleges” represent the latest evolution of this trend. AI-driven instruction, predictive analytics, automated grading, and digital tutoring promise unprecedented efficiency, but they often replace human educators, reduce pedagogical oversight, exploit student data, and prioritize enrollment growth over educational quality. Efficiency here serves the financial bottom line rather than the learning or well-being of students.

The result of these extractive practices is a national crisis of student debt, now exceeding one trillion dollars. Students borrow to cover skyrocketing tuition, outsourced services, underpaid instruction, and the costs of programs shaped by OPMs or automated platforms. Debt is not an accident of the system; it is the intended outcome, a mechanism for transferring public resources and student labor into private profit.

The broader social context intensifies the problem. Higher education exists in a winner-take-all, financialized society, where resources flow upward and the majority of people are told to compete harder, work longer, and borrow more. Universities have internalized this ideology, acting as both symbols and engines of extraction. Efficiency, under this paradigm, is defined not by the effectiveness of teaching or research but by the expansion of institutional power, wealth, and influence.

True efficiency would look very different. It would invest in educators rather than contractors, stabilize academic labor rather than exploit it, serve surrounding communities rather than displace them, expand learning opportunities rather than debt, and prioritize democratic governance over corporate-style hierarchy. Efficiency should measure how well institutions serve the public good, not how well they protect endowment returns, OPM profits, or administrative salaries.

Until such a redefinition occurs, efficiency will remain one of the most powerful tools of extraction in American higher education, a rhetorical justification for greed disguised as rational management.

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Sources

Devarian Baldwin, In the Shadow of the Ivory Tower
Marc Bousquet, How the University Works
Tressie McMillan Cottom, Lower Ed
Christopher Newfield, The Great Mistake
Sara Goldrick-Rab, Paying the Price
Government reports on for-profit colleges, student debt, and OPMs
Research on higher education financialization, outsourcing, and austerity policies

Same Predators, New Logo: PXED — A $22 Billion Student‑Debt Gamble Investors Should Beware

Warning to Investors: Phoenix Education Partners (PXED) may present itself as a cutting‑edge solution in career-focused higher education, but it’s built on the same extractive infrastructure that powered the University of Phoenix. With nearly a million students still owing an estimated $22 billion in federal loans, backing PXED isn’t just a financial bet — it’s a moral and reputational risk.

PXED’s leadership includes powerful private-equity players: Martin H. Nesbitt (Co‑CEO of Vistria, PXED trustee, and friend of Barak Obama), Adnan Nisar (Vistria), and Theodore Kwon and Itai Wallach (Apollo Global Management). Also in the mix is Chris Lynne, PXED’s president and a former Phoenix CFO intimately familiar with UOP’s controversial enrollment and marketing strategies. These are not educational reformers — they are dealmakers aiming to extract value from a student-debt pipeline.

[Image: Power Player Marty Nesbitt]

Higher Education Inquirer’s College Meltdown Index highlights how PXED fits into a broader financialization of higher education. Rather than reforming the University of Phoenix, its backers have resurrected it under a new brand — one that continues to enroll vulnerable adult learners, harvest federal aid, and operate with considerably less public oversight. 

Whistleblowers previously documented that Phoenix pressured recruitment staff to falsify student credentials, enrolling people who wouldn’t otherwise qualify for federal aid. Courses were allegedly kept deliberately easy — not to teach, but to keep students “active” enough to trigger aid disbursements. Internal marketing also exaggerated job prospects and corporate partnerships (e.g., with Microsoft and AT&T) to entice students. 

PXED may lean on a three‑year default rate (often cited around 12–13%), but that number is deeply misleading. Many UOP students stay stuck in deferment, forbearance, or income-driven repayment, masking the real long-term risk of non-payment. This is not just a short-term liability — it’s a potentially massive, multiyear financial exposure for PXED’s backers.

There was a significant FTC settlement that canceled $141 million in student debt and refunded $50 million to some students. But the scale of harm far exceeds that payout. Untold numbers of borrowers still have unresolved Borrower Defense claims, and the reputational risk remains profound.

Beyond financial concerns, there’s a major ethical dimension. HEI’s Divestment from Predatory Education argument makes a compelling case that investing in companies like PXED — or in loan servicers that profit from student debt — is not just risky, but morally indefensible. According to HEI, institutional investors (including university endowments, pension funds, and foundations) are complicit in a system that monetizes students’ aspirations and perpetuates financial harm. 

For investors, the message is clear: Phoenix is not merely an education play — it’s a high-stakes, ethically fraught extraction machine built on a legacy of indebtedness and regulatory vulnerability.

Unless PXED commits to real transparency, independent reporting on student outcomes, and accountability mechanisms — including reparations or debt relief — it should be approached not as a social-growth story, but as a dangerous gamble.

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Sources

• HEI. “Divestment from Predatory Education Stocks: A Moral Imperative.” Higher Education Inquirer

• HEI. “The College Meltdown Index: Profiting from the Wreckage of American Higher Education.” Higher Education Inquirer

• HEI. “What Do the University of Phoenix and Risepoint Have in Common? The Answer Is a Compelling Story of Greed and Politics.” Higher Education Inquirer

• HEI. “University of Phoenix Uses ‘Sandwich Moms’ to Sell a Debt Trap.” Higher Education Inquirer

• HEI. “New Data Show Nearly a Million University of Phoenix Debtors Owe $21.6 Billion.” Higher Education

Generation Z and the Fractured American Dream: Class Divide, Debt, and the Search for a Future

For Generation Z, the old story of social mobility—study hard, go to college, work your way up—has lost its certainty. The class divide that once seemed bridgeable through education now feels entrenched, as debt, precarious work, and economic volatility blur the promise of progress.

The new economy—dominated by artificial intelligence, speculative assets like cryptocurrency, and inflated housing markets—has not delivered stability for most. Instead, it’s widened gaps between those who own and those who owe. Many young Americans feel locked out of wealth-building entirely. Some have turned to riskier bets—digital assets, gig work, or start-ups powered by AI tools—to chase opportunities that traditional institutions no longer provide. Others have succumbed to despair. Suicide rates among young adults have climbed sharply in recent years, correlating with financial stress, debt, and social isolation.

And echoing through this uncertain landscape is a song that first rose from the coalfields of Kentucky during the Great Depression—Florence Reece’s 1931 protest hymn, “Which Side Are You On?”

Come all you good workers,
Good news to you I’ll tell,
Of how the good old union
Has come in here to dwell.

Which side are you on?
Which side are you on?

Nearly a century later, those verses feel newly urgent—because Gen Z is again being forced to pick a side: between solidarity and survival, between reforming a broken system or resigning themselves to it.

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The Class Divide and the Broken Ladder
Despite record levels of education, Gen Z faces limited social mobility. College remains a class marker, not an equalizer. Students from affluent families attend better-funded universities, graduate on time, and often receive help with housing or job placement. Working-class and first-generation students, meanwhile, navigate under-resourced campuses, heavier debt, and weaker professional networks.

The Pew Research Center found that first-generation college graduates have nearly $100,000 less in median wealth than peers whose parents also hold degrees. For many, the degree no longer guarantees a secure foothold in the middle class—it simply delays financial independence.

They say in Harlan County,
There are no neutrals there,
You’ll either be a union man,
Or a thug for J. H. Blair.

The metaphor still fits: there are no neutrals in the modern class struggle over debt, housing, and automation.

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Debt, Doubt, and the New Normal
Gen Z borrowers owe an average of around $23,000 in student loans, a figure growing faster than any other generation’s debt load. Over half regret taking on those loans. Many delay buying homes, having children, or even seeking medical care. Those who drop out without degrees are burdened with debt and little to show for it.

The debt-based model has become a defining feature of American life—especially for the working class. The price of entry to a better future is borrowing against one’s own.

Don’t scab for the bosses,
Don’t listen to their lies,
Us poor folks haven’t got a chance
Unless we organize.

If Reece’s song once called miners to unionize against coal barons, its spirit now calls borrowers, renters, adjuncts, and gig workers to collective resistance against financial systems that profit from their precarity.

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AI and the Erosion of Work
Artificial intelligence promises efficiency, but it also threatens to hollow out the entry-level job market Gen Z depends on. Automation in journalism, design, law, and customer service cuts off rungs of the career ladder just as young workers reach for them.

While elite graduates may move into roles that supervise or profit from AI, working-class Gen Zers are more likely to face displacement. AI amplifies the class divide: it rewards those who already have capital, coding skills, or connections—and sidelines those who don’t.

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Crypto Dreams and Financial Desperation
Locked out of traditional wealth paths, many young people turned to cryptocurrency during the pandemic. Platforms like Robinhood and Coinbase promised quick gains and independence from the “rigged” economy. But when crypto markets crashed in 2022, billions in speculative wealth evaporated. Some who had borrowed or used student loan refunds to invest lost everything.

Online forums chronicled not only the financial losses but also the psychological fallout—stories of panic, shame, and in some tragic cases, suicide. The new “digital gold rush” became another mechanism for transferring wealth upward.

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The Real Estate Wall
While digital markets rise and fall, real estate remains the ultimate symbol of exclusion. Home prices have climbed over 40 percent since 2020, while mortgage rates hover near 8 percent. For most of Gen Z, ownership is out of reach.

Older generations built equity through housing; Gen Z rents indefinitely, enriching landlords and institutional investors. Without intergenerational help, the “starter home” has become a myth. In America’s new class order, those who inherit property inherit mobility.

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Despair and the Silent Crisis
Behind the data lies a mental health emergency. The CDC reports that suicide among Americans aged 10–24 has risen nearly 60 percent in the past decade. Economic precarity, debt, housing insecurity, and climate anxiety all contribute.

Therapists describe “financial trauma” as a defining condition for Gen Z—chronic anxiety rooted in systemic instability. Universities respond with mindfulness workshops, but few confront the deeper issue: a society that privatized risk and monetized hope.

They say in Harlan County,
There are no neutrals there—
Which side are you on, my people,
Which side are you on?

The question lingers like a challenge to policymakers, educators, and investors alike.

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A Two-Tier Future
Today’s economy is splitting into two distinct realities:

• The secure class, buffered by family wealth, education, AI-driven income, and real estate assets.

• The precarious class, burdened by loans, high rents, unstable work, and psychological strain.

The supposed democratization of opportunity through technology and education has in practice entrenched a new feudalism—one coded in algorithms and contracts instead of coal and steel.

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Repairing the System, Not the Student
For Generation Z, the American Dream has become a high-interest loan. Education, technology, and financial innovation—once tools of liberation—now function as instruments of control.

Reforming higher education is necessary, but not sufficient. The deeper work lies in redistributing power: capping predatory interest rates, investing in affordable housing, curbing speculative bubbles, ensuring that AI’s gains benefit labor as well as capital, and confronting the mental health crisis that shadows all of it.

Florence Reece’s song endures because its question has never been answered—only updated. As Gen Z stands at the intersection of debt and digital capitalism, that question rings louder than ever:

Which side are you on?

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Sources

• Florence Reece, “Which Side Are You On?” (1931).

• Pew Research Center, “First-Generation College Graduates Lag Behind Their Peers on Key Economic Outcomes,” 2021.

• Dēmos, The Debt Divide: How Student Debt Impacts Opportunities for Black and White Borrowers, 2016.

• EducationData.org, “Student Loan Debt by Generation,” 2024.

• Federal Reserve Bank of St. Louis, Gen Z Student Debt and Wealth Data Brief, 2022.

• CNBC, “Gen Z vs. Their Parents: How the Generations Stack Up Financially,” 2024.

• WUSF, “Generation Z’s Net Worth Is Being Undercut by College Debt,” 2024.

• Newsweek, “Student Loan Update: Gen Z Hit with Highest Payments,” 2024.

• The Kaplan Group, “How Student Debt Is Locking Millennials and Gen Z Out of Homeownership,” 2024.

• CDC, Suicide Mortality in the United States, 2001–2022, National Center for Health Statistics, 2023.

• Brookings Institution, “The Impact of AI on Labor Markets: Inequality and Automation,” 2024.

• CNBC, “Crypto Crash Wipes Out Billions in Investor Wealth, Gen Z Most Exposed,” 2023.

• Zillow, “U.S. Housing Affordability Reaches Lowest Point Since 1989,” 2024.

Examining the Debt and Earnings of “Professional” Programs (Robert Kelchen)

 [Editor's note: This article first appeared in the Robert Kelchen Blog.] 

Robert Kelchen Read on blog or Reader Examining the Debt and Earnings of “Professional” Programs By Robert on November 10, 2025 Negotiated rulemaking, in which the federal government convenes representatives of affected parties before implementing major policy changes, is one of the wonkier topics in higher education. (I cannot recommend enough Rebecca Natow’s book on the topic.) Negotiated rulemaking has been in the news quite a bit lately as the Department of Education works to implement changes to federal student loan borrowing limits passed in this summer’s budget reconciliation law. Since 2006, students attending graduate and professional programs have been able to borrow up to the cost of attendance. But the reconciliation law limited graduate programs to $100,000 and professional programs to $200,000, setting off negotiations on which programs counted as “professional” (and thus received higher loan limits). The Department of Education started with ten programs and the list eventually went to eleven with the addition of clinical psychology. In this short post, I take a look at the debt and earnings of these programs that meet ED’s definition of “professional,” along with a few other programs that could be considered professional but were not. Data and Methods I used program-level College Scorecard data, focusing on debt data from 2019 and five-year earnings data from 2020. (These are the most recent data points available, as the Scorecard has not been meaningfully updated during the second Trump administration. Five-year earnings get students in health fields beyond medical residencies. I pulled all doctoral/first professional fields from the data by four-digit Classification of Instructional Programs codes, as well as master’s degrees in theology to meet the listed criteria. Nine of the eleven programs had enough graduates with debt and earnings to report data; osteopathic medicine and podiatry did not. There were five other fields of study with at least 14 programs reporting data: education, educational administration, rehabilitation, nursing, and business administration. All of these clearly prepare people for employment in a profession, but are not currently recognized as “professional.” Key takeaways Below is a summary table of debt and earnings for professional programs, including the number of programs above the $100,000 (graduate) and $200,000 (professional) thresholds. Dentistry, pharmacy, and medicine have a sizable share of programs above the $100,000 threshold, while law (the largest field) has only four of 195 programs over $200,000. Theology is the only one of the nine “professional” programs with sufficient data that has higher five-year earnings than debt, suggesting that students in other programs may have a hard time accessing the private market to fill the gap between $200,000 and the full cost of attendance. On the other hand, four of the five programs not included as “professional” have higher earnings than debt, with nursing and educational administration being the only programs with sufficient data that had debt levels below 60% of earnings. More than one-third of rehabilitation programs had debt over the new $100,000 cap, while few programs in other fields had that high of a debt level. (Education looks pretty good now, doesn’t it?) I expect the debate over what counts as “professional” to end up in courts and to possibly make its way into a future budget reconciliation bill (about the only way Congress passes legislation at this point). Until then, I will be hoping for newer and more granular data about affected programs.

Divestment from Predatory Education Stocks: A Moral Imperative

Calls for divestment from exploitative industries have long been part of movements for social and economic justice—whether opposing apartheid, fossil fuels, or private prisons. Today, another sector demands moral scrutiny: the network of for-profit education corporations and student loan servicers that have turned higher learning into a site of mass indebtedness and despair. From predatory colleges to the companies that profit from collecting on student debt, the system functions as a pipeline of extraction. For those who believe education should serve the public good, the issue is not merely financial—it is moral.

The Human Cost of Predatory Education

For decades, for-profit college chains such as Corinthian Colleges, ITT Tech, the University of Phoenix, DeVry, and Capella targeted low-income students, veterans, single parents, and people of color with high-pressure marketing and promises of career advancement. These institutions, funded primarily through federal student aid, often charged premium tuition for substandard programs that left graduates worse off than when they began.

When Corinthian and ITT Tech collapsed, they left hundreds of thousands of students with worthless credits and mountains of debt. But the collapse did not end the exploitation—it simply shifted it. The business model has re-emerged in online form through education technology and “online program management” (OPM) firms such as 2U, Coursera, and Academic Partnerships. These firms, in partnership with elite universities like Harvard, Yale, and USC, replicate the same dynamics of inflated costs, opaque contracts, and limited accountability.

The Servicing of Debt as a Business Model

Beyond the schools themselves, student loan servicers and collectors—Maximus, Sallie Mae, and Navient among them—have built immense profits from managing and pursuing student debt. Sallie Mae, once a government-sponsored enterprise, was privatized in the 2000s and evolved into a powerful lender and loan securitizer. Navient, its spinoff, became notorious for deceptive practices and aggressive collections that trapped borrowers in cycles of delinquency.

Maximus, a major federal contractor, now services defaulted student loans on behalf of the U.S. Department of Education. These companies profit directly from the misery of borrowers—many of whom are victims of predatory schools or structural inequality. Their incentive is not to liberate students from debt, but to sustain and expand it.

The Role of Institutional Investors

The complicity of institutional investors cannot be ignored. Pension funds, endowments, and major asset managers have consistently financed both for-profit colleges and loan servicers, even after repeated scandals and lawsuits. Public sector pension funds—ironically funded by educators—have held stock in Navient, Maximus, and large for-profit college operators. Endowments that pride themselves on ethical or ESG investing have too often overlooked education profiteering.

Investment firms like BlackRock, Vanguard, and State Street collectively hold billions of dollars in these companies, stabilizing an industry that thrives on the financial vulnerability of students. To profit from predatory education is to participate, however indirectly, in the commodification of aspiration.

Divestment as a Moral and Educational Act

Divesting from predatory education companies and loan servicers is not just an act of conscience—it is an educational statement in itself. It affirms that learning should be a vehicle for liberation, not a mechanism of debt servitude. When universities, pension boards, and faith-based investors divest from corporations like Maximus, Navient, and 2U, they are reclaiming education’s moral purpose.

The divestment movement offers a broader civic lesson: that profit and progress are not synonymous, and that investment must align with justice. Faith communities, student debt activists, and labor unions have made similar stands before—against apartheid, tobacco, and fossil fuels. The same principle applies here. An enterprise that depends on deception, coercion, and financial harm has no place in a socially responsible portfolio.

A Call to Action

Transparency is essential. Pension boards, university endowments, and foundations must disclose their holdings in for-profit education and student loan servicing companies. Independent investigations should assess the human consequences of these investments, particularly their disproportionate impact on women, veterans, and people of color.

The next step is moral divestment. Educational institutions, public pension systems, and religious organizations should commit to withdrawing investments from predatory education stocks and debt servicers. Funds should be redirected to debt relief, community college programs, and initiatives that restore trust in education as a public good.

The corporate education complex—spanning recruitment, instruction, lending, and collection—has monetized both hope and hardship. The time has come to sever public and institutional complicity in this cycle. Education should empower, not impoverish. Divestment is not merely symbolic—it is a declaration of values, a demand for accountability, and a reaffirmation of education’s original promise: to serve humanity rather than exploit it.

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Sources:

• U.S. Department of Education, Borrower Defense to Repayment Reports

• Senate HELP Committee, For Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success (2012)

• Consumer Financial Protection Bureau (CFPB) enforcement actions against Navient and Sallie Mae

• The Century Foundation, Online Program Managers and the Public Interest

• Student Borrower Protection Center, Profiting from Pain: The Financialization of the Student Debt Crisis

• Higher Education Inquirer archives

US Senate Reopens the Government—But Leaves the Working Class Behind

The U.S. Senate’s vote to reopen the federal government on Sunday will likely end a painful 40-day shutdown, but it does so at a cost that goes far beyond missed paychecks and delayed services. The deal, driven by pressure to restore “normalcy,” comes with an implicit betrayal: millions of Americans who rely on Affordable Care Act (ACA) subsidies are being left in limbo.

Those subsidies—lifelines for low- and middle-income Americans—are now set to expire at the end of the year. The so-called “continuing resolution” passed the Senate with bipartisan relief, but no guarantee that these critical supports will continue. In practical terms, Congress chose to reopen the government by walking away from those who most need its help.

A Shutdown Ends, but the Austerity Logic Continues

The 2025 shutdown was the longest in modern U.S. history, the result of partisan fights over spending and political maneuvering around health care. During that time, millions of Americans faced uncertainty: furloughed workers, delayed SNAP benefits, shuttered Head Start centers, and frozen federal contracts.

Now that the government is back in business, the same austerity logic remains intact. While defense spending and tax breaks for the wealthy are protected, basic supports like subsidized health insurance are treated as optional. It’s a familiar story—one that echoes through higher education, housing, and labor markets.

The End of ACA Subsidies Means a New Working-Class Squeeze

The ACA subsidies that expanded during the pandemic allowed millions of Americans—often those working multiple jobs without employer coverage—to afford health care for the first time. With their expiration looming, premiums are expected to skyrocket. For some, costs could double or triple.

This isn’t just about “health care.” It’s about how the American system continually shifts burdens downward. Families will make impossible choices: health coverage or rent, insulin or food, doctor visits or student loan payments.

At the same time, Senate Republicans have embraced Donald Trump’s renewed call to “replace Obamacare”—a move that could dismantle what’s left of the safety net altogether. 

The Broader Pattern: Abandoning the Working Class

The Senate’s actions fit a larger pattern of bipartisan neglect. Each “deal” that avoids short-term crisis seems to deepen long-term inequity.

• In health care: subsidies expire, Medicaid rolls shrink, and hospital mergers raise costs.

• In higher education: student debtors are promised relief but face new barriers, while for-profit and “online program management” companies continue to profit.

• In housing: low-income tenants are told to prove future earnings or risk eviction, even as rent outpaces inflation.

• In labor: wage stagnation persists, union power declines, and automation and AI make employment more precarious.

For Generation Z and millennials—already burdened with debt, low job security, and unaffordable housing—the message is consistent: you’re on your own.

Health and Education: Two Fronts of the Same Struggle

Health and education are supposed to be public goods, but both have become profit centers managed by corporate intermediaries and politicians chasing donors.

In health care, private insurers dominate ACA marketplaces. In higher ed, the same dynamic exists: online program managers (OPMs) and corporate lenders extract money while students shoulder debt. The government’s role becomes one of stabilizing markets—not stabilizing lives.

And when the working class pushes back—through union drives, debt strikes, or demands for universal health care—they’re met with the same refrain: “We can’t afford it.”

Austerity in a Time of Plenty

What’s striking is that this “fiscal responsibility” always targets the vulnerable. There’s no serious debate about clawing back corporate tax breaks or limiting Pentagon contracts. But when it comes to healthcare subsidies or student loan forgiveness, the belt suddenly tightens.

The working class subsidizes the rich, while being told that government aid is an indulgence. This political economy of scarcity has consequences—measured in bankruptcies, untreated illness, and despair.

Which Side Are You On?

When Woody Guthrie’s generation faced inequality, they had a rallying cry:

“Which side are you on, boys, which side are you on?”

That question remains as urgent as ever. The Senate’s decision to reopen government while discarding health care protections for millions tells us whose side Washington is on—and it’s not the side of the working class.

Until policymakers see health, housing, and education as human rights rather than bargaining chips, “reopening government” will be little more than a hollow ritual of restoration—for a system that keeps leaving its people behind.

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Sources:

• Time: “What to Know About the Deal to End the Shutdown” (Nov. 2025)

• Al Jazeera: “US Senate nears vote on bill to end 40-day government shutdown” (Nov. 2025)

• Financial Times: “Senators take first step to end US government shutdown” (Nov. 2025)

• The Guardian: “Senate Republicans embrace Trump’s call to replace Obamacare” (Nov. 2025)

• Detroit Free Press: “Michigan's U.S. senators reject deal to end shutdown” (Nov. 2025)

Growing Up Later, Paying Longer: How Extended Adolescence Deepens the Student Loan Crisis

Recent neuroscience is challenging everything we thought we knew about adulthood. A landmark study from the University of Cambridge finds that our brains remain in an “adolescent” phase until around age 32. During this extended period, the brain undergoes major structural rewiring, improving connectivity, executive function, and decision-making. In other words, young adults in their 20s and early 30s are still biologically refining the very skills society expects them to rely on for financial independence.

Yet economic realities tell a different story. In the United States, the average college graduate carries over $30,000 in student loan debt, with repayment often starting immediately after graduation. For students pursuing graduate or professional school — law, medicine, business, or PhDs — debt often doubles or triples, and repayment is further delayed, sometimes beginning in the late 20s or early 30s. This period coincides precisely with the brain’s extended adolescent development phase, when executive function, risk assessment, and long-term planning are still maturing.

For many working-class students, this biological-economic mismatch is compounded by trauma and systemic inequality. Students from lower-income families may enter college already carrying family debt, needing to work multiple jobs, or facing housing insecurity. Borrowing to attend graduate school can trigger stress responses in the brain, affecting decision-making, emotional regulation, and risk assessment at a time when these very circuits are still developing. Early-life adversity, including exposure to poverty, unstable housing, or family stress, can alter brain development and magnify the challenges of managing debt during the extended adolescent phase. The combination of prolonged brain maturation, massive student debt, and class-based stressors can increase anxiety, depression, and burnout, especially for first-generation and working-class students who may lack generational financial knowledge.

Graduate education intensifies these pressures. Graduate students often juggle heavy workloads, research obligations, and living costs while navigating large financial obligations at a developmental stage where executive functions are still stabilizing. High debt and extended schooling push milestones such as homeownership, family formation, and career stability into the early-to-mid 30s, overlapping with the final phase of brain maturation. For working-class students, who often have fewer safety nets, financial missteps or delayed income can be more consequential and stressful, amplifying the inequities embedded in higher education financing.

Addressing student loan burdens requires policies that recognize both neurodevelopmental science and socioeconomic realities. Repayment programs that delay full payments until the late 20s or early 30s would reduce stress during a critical brain development window. Income-contingent or progressive repayment plans can scale obligations with early-career earnings, particularly for graduate students carrying high debt burdens. Financial literacy and counseling programs must also integrate trauma-informed support, teaching budgeting and debt management while recognizing the emotional impacts of financial stress. Mental health resources should be accessible for students navigating the combined pressures of debt, class-based disadvantage, and developmental transitions. Systemic reform in higher education financing, including expanded grants, debt-free programs, fellowships, and living stipends, would reduce structural disadvantages for working-class students and support more equitable access to higher education.

Prolonged adolescence reframes the student debt crisis, particularly for graduate students and working-class borrowers. Our brains continue to mature into the early 30s, yet financial systems demand fully developed decision-making skills much earlier. For students from lower-income families, this gap is widened by trauma, structural inequality, and fewer safety nets. To support healthy, resilient, and economically secure generations, policymakers must recognize that growing up biologically and psychologically takes longer than society allows, and that debt obligations should not compound trauma or class disadvantage. Aligning financial policy with developmental science and social equity is not just fair — it is essential.
Sources


University of Cambridge. “Five Lifespan Phases of Brain Development Revealed by MRI Study.” Nature Communications, 2025. https://www.cam.ac.uk/stories/five-ages-human-brain


MSN / Independent. “Adolescence Lasts into Your 30s, Major New Study Finds.” 2025. https://www.msn.com/en-us/health/other/adolescence-lasts-into-your-30s-major-new-study-on-brain-finds/ar-AA1R9uhF


Arslan, S., et al. “Modular Segregation of Structural Brain Networks Supports Executive Function in Youth.” NeuroImage, 2016. https://arxiv.org/abs/1608.03619


Bethlehem, R.A.I., et al. “Preferential Detachment During Human Brain Development: Age- and Sex-Specific Structural Connectivity in DTI Data.” 2014. https://arxiv.org/abs/1404.0240


Aljazeera. “Does Adolescence Last Until 32? Scientists Unlock Brain’s Five Eras.” 2025. https://www.aljazeera.com/news/2025/11/26/does-adolescence-last-until-32-scientists-unlock-brains-five-eras


U.S. Federal Reserve. “Report on the Economic Well-Being of U.S. Households: 2025.” https://www.federalreserve.gov/publications/2025-economic-well-being-of-us-households.html

South University Faces $35.4 Million Balloon Payment Amid Limited Oversight

[Editor's note: On October 29, 2025, the Higher Education Inquirer emailed South University for a status update. South University did not respond. On November 1, 2025, Benjamin DeGweck replaced Steven Yoho as CEO and Chancellor.]

South University, a former for-profit college network now operating under nonprofit ownership, is facing a $35 million balloon payment this month on a loan obtained through the Federal Reserve’s Main Street Lending Program. The looming debt and the school’s status on Heightened Cash Monitoring (HCM) raise questions about financial stability and the adequacy of regulatory oversight in the nonprofit higher education sector.

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A Heavy Loan Load

According to publicly available financial statements, South University carries more than $35 million in long-term debt maturing this month, part of a $50 million Main Street loan issued during the COVID-19 pandemic. The approaching balloon payment represents a major financial test for an institution already under federal scrutiny and struggling with declining enrollment.

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Heightened Cash Monitoring—But Limited Oversight

South University is currently listed under Heightened Cash Monitoring (HCM) by the U.S. Department of Education, a status that requires extra documentation before federal aid funds are released. While the designation signals potential financial or compliance issues, it does not necessarily result in strong day-to-day oversight.

The school remains accredited by the Southern Association of Colleges and Schools Commission on Colleges (SACSCOC)—an accreditor known for minimal intervention in institutional finances unless there is clear evidence of collapse. This means that despite the HCM flag, South University continues to operate with significant autonomy, even as federal and student aid dollars flow through additional administrative checks.

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A Complicated Legacy

South University’s story is deeply tied to the rise and fall of the for-profit college industry. Once part of Education Management Corporation (EDMC), the school was sold in 2017 to the ill-fated Dream Center Education Holdings (DCEH). When DCEH collapsed in 2019, the Education Principle Foundation (EPF)—a nonprofit—took over South University and The Art Institutes. South University is now an independent non-profit enterprise.  

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A Pattern of Fragile Conversions

South University’s precarious position reflects a larger trend: the conversion of failing for-profit schools into nominal nonprofits that rely on tuition, federal aid, and private service contracts to survive. These conversions often preserve the same management structures and business practices while benefiting from the public trust and tax advantages of nonprofit status.

The $35 million balloon payment highlights the risks of these financial engineering strategies—especially when public money is involved but public accountability is weak.

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What Comes Next

With the 2025 deadline approaching, South University faces a pivotal decision: refinance the Main Street loan, restructure operations, or seek new capital through other partners.

If the institution falters, students could once again be caught in the aftermath of a sector-wide collapse—echoing the failures of EDMC, DCEH, and the Art Institutes.

For now, South University continues to operate with limited transparency, under a light-touch accreditor, and with a multimillion-dollar federal debt hanging over its future.

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Sources:

• U.S. Department of Education, Heightened Cash Monitoring List (October 2025)

• Federal Reserve, Main Street Lending Program Overview

• South University financial statements (publicly available data)

• U.S. Department of Education, College Scorecard

• Wikipedia, South University (accessed October 2025)

BORROWERS AGAINST APOLLO EVENT, FRIDAY NOVEMBER 7TH, NEW YORK CITY (HELU, AAUP, AFT)

[Editor's Note: Readers can sign up for the event at BORROWERS AGAINST APOLLO.  Ensure that you click on "Switch account" to submit the form from your Google account.]

BORROWERS AGAINST APOLLO

WHO:  American Association of University Professors (AAUP), NYU AAUP, Higher Ed Labor Union (HELU), The Professional Staff Congress-  City University of New York (PSC-CUNY), NY Metro Coalition for Higher Ed,  Sunrise Movement,  Hands Off  NYC,  American Federation of Teachers (AFT) union, and student loan borrowers. 

WHEN: Friday - November 7 at 11AM

LOCATION: Apollo Global Headquarters - 9 West 57th Street, New York, NY 10019

QUESTIONS? ApolloAction25@gmail.com 

Higher Ed Unions, Student Unions, and For-Profit College Borrowers Unite Against Trump’s “Higher Education Compact”

Several higher education unions, student unions, and former students of for-profit colleges are organizing in opposition to the Trump administration’s proposed “higher education compact”—a plan heavily shaped and promoted by private-equity billionaire Marc Rowan.

Rowan, the CEO of Apollo Global Management, has played a central role in advancing this proposal. Apollo owns several predatory for-profit institutions, including the University of Phoenix, one of the most notorious offenders in the industry.

In a recent New York Times op-ed, Rowan took public credit for the compact, writing:

“The evidence is overwhelming: outrageous costs and prolonged indebtedness for students; poor outcomes, with too many students left unable to find meaningful work after graduating…”

Yet, under Rowan’s leadership, the University of Phoenix has become the largest source of Borrower Defense claims of any for-profit school, with more than 100,000 pending applications as of July 2025. Borrower Defense is a federal protection that allows students to seek loan forgiveness if their school misled them or violated state or federal law.

The University of Phoenix has faced multiple law enforcement investigations for deceptive recruiting tactics that targeted veterans, service members, and working adults nationwide. The school’s misconduct led to a $191 million settlement with the Federal Trade Commission for falsely claiming partnerships with major employers. More recently, the university attempted to portray itself as a public institution while seeking to sell to two states—both of which ultimately rejected the deal after public backlash.

While Rowan’s personal fortune exceeds $7 billion, borrowers continue to shoulder crushing debt from degrees that delivered little to no value. His leadership has fueled a system that profits from student harm—and now, through this compact, he is setting his sights on reshaping major public universities.

We refuse to stay silent. Borrowers, students, and educators are standing together to demand accountability and defend higher education from predatory perpetrators.

JOIN THE FIGHT AGAINST FOR-PROFIT COLLEGE GREED – NOVEMBER 7

The for-profit college industry has harmed countless students — and it’s time they hear directly from us. Join us outside Apollo Global Management Headquarters on Friday, November 7 at 11:00 a.m. to make your voice heard and demand accountability.

We’re calling on borrowers from for-profit schools who were misled or left in debt by this predatory system. Travel support may be available for anyone within train distance of New York City. We’ll provide shirts, posters, and everything you need to show up strong. (Apollo’s offices are about 20 minutes from Penn Station by subway.)

We’re also looking for University of Phoenix borrowers willing to speak publicly or to the press about their experiences. Additional travel assistance can be arranged for those coming from outside the NYC area.

If you’re ready to share your story and take a stand, reach out today. Together, we can show Apollo — and the entire for-profit college industry — that borrowers are not backing down.

CAN’T MAKE IT BUT WANT TO GET INVOLVED?

We’re always looking to connect with borrowers and allies. There are many ways to take part in this fight — from sharing your story and supporting organizing efforts to helping spread the word. Reach out to learn how you can get involved and join the movement for justice in higher education.