Beyond beauty schools - federal aid to student loans

Washington Monthly, March, 1991 by Katherine Boo

Katherine Boo is an editor of The Washington Monthly

There are lots of things the government should train the poor to do. Sculpting nails isn't one of them.

Tommy Wayne Downs spent the eighties in the ghettoes of Nashville, selling permanent waves as the path to the American dream. With just six months' training at his school of hair design, Downs cajoled, erstwhile welfare moms could earn $30,000 a year as stylists in Nashville's tonier salons.

If Downs had a talent for this rags-to-riches spiel, it was probably because their rags were his riches: for every poor student he lured in, he reaped thousands of dollars in federal student aid. Guaranteed student aid, intended by Congress to ensure all students an affordable education, whether at Harvard or Downs's school of hair design.

Before long, though, Downs discovered an easier way than ghetto-combing to drum up federal student loans: eliminate the middleman-the student. One March day, he simply made up a name, an address, and a social security number and applied for a guaranteed federal loan on the imaginary student's behalf. To his astonishment, it worked. So he tried again and again. By the time his secretary inadvertently tipped off the feds a few years later, his ghost graduates had reaped hundreds of thousands of dollars in government loans. Why'd he do it? To an entrepreneur like Downs, that's a pretty stupid question. "I mean, you are talking about the ability to steal unfathomable amounts of money."

In 1989, Downs was sentenced to 11 years if prison for criminal fraud and ordered to repay $175,000; to the Department of Education, this case is closed. But in their own way, the feds too forgot the middlemen-the thousands of real students who mistook Downs's entrepreneurial zeal for a genuine educational opportunity. Today many of the men and women who viewed his federally sanctioned trade school as a ticket out of poverty are still holed up in the Nashville projects. Only now, they owe thousands in loans.

Yes, Downs may have sacrificed students while reaping a fortune in federal aid. But in the crazy world of government-subsidized vocational education, that offense is unindictable.

During the eighties, countless Hirsches and Blooms stepped forward to deplore the quality of elite education. Yet few discussed the trade school training available to the 50 percent of Americans who will never go to college at all. "Noncollege youth," sociologists call them, defining them by what they don't have. That's not just an accident of semantics. Although 82 million U.S. jobs don't require a college degree, our education system has long been geared to train the white-collar class.

That's never been more true than now, as basic academics reclaim high school classrooms, and vocational training falls by the wayside. In itself, mind you, that's a pretty smart move: deciding which 14-year-old gets Wordsworth and which gets welding is simply too dangerous a responsibility for a school system as marred by racism and classism as ours. Besides, research consistently shows that solid reading and math skills are more fundamental to workplace success than the minutiae of some ever-changing technology. Yet, as the public schools retrench, more of America's blue- and pink-collar workforce now spawns in private institutions-which spawns the likes of Tommy Wayne Downs.

Today, more than 2 million U.S. students attend 4,000 accredited private trade schools, the ugly stepchild of American higher education. With their six- to twelve-month courses for incipient truckers, computer repairmen, secretaries, and beauticians those schools consume early 30 percent of the federal government's rants and guaranteed loans for higher education. That's not an inexpensive phenomenon. Thanks to an annual $2 billion federal liability or defaulted school loans-a disproportionate percentage of it from trade schools-the federal student aid program now teeters, in the words of Senator Sam Nunn, "on the brink of disaster."

But while sensational default costs earn headlines and congressional hearings, they're a symptom of more subtle, basic flaws: the quality and kind of training we eagerly subsidize for millions of noncollege youth. Over the past five years, more than $50 million in federal loans and grants went to the following federally approved institutions:

* The Culinary School of Washington, whose students paid $6,900 for the privilege of frying eggs and flipping burgers-without pay-in the cafeteria of a local sewage treatment plant.

* A Miami respiratory therapist training school with broken equipment and a notable entrance: a hole blasted in the drywall of an X-rated record and tape store.

* A Chicago trucking school that enrolled students too physically disabled to turn the steering wheel or reach the gears.

* An Ohio heating and ventilation repair school housed in a fruit stand, whose students scavenged garbage dumps for broken equipment to work on.

Finding glaring educational failures in the federal student loan program is like hunting in a wildlife preserve-there are almost too many easy targets. But federally accredited fruit stands are less amusing when you consider that trade schools like these produce more than a third of America's front-line work force. And you don't have to look at the stagnant GNP to realize it's a spotty front line. According to the National Alliance of Business, 75 percent of CEOs observe declining skills in their entry-level workforce; Industry Week notes that two-thirds of American personnel officers report difficulty finding workers with adequate technical skills.