For-Profit College Predatory Lending: The Boomer-Era Scam That’s Coming Back

For-profit college predatory lending is the practice of recruiting low-income, first-generation, and minority students into expensive, federally-funded degree programs that deliver worthless credentials, produce astronomical dropout rates, and generate billions in profit while leaving students buried in debt they legally cannot escape. It is not an accident. It is a business model — one that Boomer-era deregulation made possible, that taxpayers funded, and that regulators repeatedly failed to stop.

Key Takeaways:

• For-profit colleges enroll just ~10% of U.S. college students but account for over one-third of all student loan defaults.
• The U.S. government has discharged over $9.8 billion in federal loans for students defrauded by Corinthian Colleges and ITT Tech alone.
• The 90/10 Rule — which limits for-profits to 90% federal revenue — has been under continuous attack; the GOP’s reconciliation bill sought to gut it entirely.
• The Gainful Employment Rule has been passed, killed, revived, and threatened to be killed again in a three-decade regulatory ping-pong match.
• Predatory for-profit colleges disproportionately target Black students, veterans, and single parents — the exact people who can least afford to lose.
• This wasn’t an industry that emerged in a vacuum — it was built on the deregulation frameworks of the 1980s and 1990s that Boomers in Congress championed.

What Is For-Profit College Predatory Lending?

The term for-profit college predatory lending describes a multi-decade ecosystem in which investor-owned universities weaponized the federal student loan system against the students it was designed to help. The mechanism is elegantly cynical: a company opens a “college,” enrolls students who qualify for federal Title IV grants and loans, collects the cash, graduates students with credentials employers won’t recognize, and watches as those students — many of whom never finished — default on loans they can’t discharge in bankruptcy.

The industry at its peak enrolled about 3.5 million students annually. At its worst, it was a federally subsidized debt trap. And it didn’t come from nowhere — it came from the deliberate dismantling of higher education oversight that happened between the 1980s and early 2000s, when deregulation was the bipartisan religion of Congress and Wall Street was hungry for a new sector to financialize. If you want to understand why the student loan default crisis is catastrophic, the for-profit college industry is one of its engines.

A Government Accountability Office investigation found that 74% of fraud and abuse in higher education occurred at for-profit institutions, whose students accounted for 77% of all loan defaults. These aren’t rounding errors — they’re a structural indictment of an industry that was never in the education business. It was always in the loan extraction business.

The full scale of the damage is staggering. Total federal student loan debt in the U.S. now stands at $1.833 trillion. For-profit college students represent a wildly outsized share of defaults — despite enrolling roughly 10% of students, they account for over a third of all defaults. Compare that to the Pell Grant program that was originally designed to open college access: instead of democratizing higher education, Boomer-era deregulation turned that access infrastructure into a funnel for extracting money from the people it was supposed to help.

How Did the For-Profit College Industry Get So Big?

The modern for-profit college industry was built in three deregulatory phases — each one championed by the generation that had already locked up their own affordable college degrees and pulled the ladder up behind them.

Phase 1 — The GI Bill Gold Rush (1944–1970s): The original sin. Post-WWII, the GI Bill opened federal education funding to private vocational schools. Congressional investigations in the 1950s and 1970s found widespread fraud — the same pattern that would repeat for the next 70 years: misleading advertising, fake job placement claims, high dropout rates. The Senate held hearings. Nothing fundamental changed.

Phase 2 — Reagan-Era Deregulation (1980s): The Reagan administration stripped back oversight of proprietary schools receiving federal student aid. For-profits were explicitly welcomed into the Title IV federal student loan system with minimal accountability. This is also when the financialization logic took hold — Wall Street saw that federal loan dollars flowing through educational institutions could be harvested at scale. The same deregulatory ideology that eventually crashed the banking system was being applied to education a decade earlier.

Phase 3 — The 1990s Deregulation Boom: Congress loosened the 90/10 Rule (originally 85/15 in 1992, weakened to 90/10 in 1998) — the provision requiring for-profit colleges to generate at least 10% of revenue from non-federal sources. In theory, this guardrail prevented 100% federal dependency. In practice, it was a speed bump. During the 2000s enrollment boom, some for-profit chains derived 85–90% of revenue from Title IV funds. At Corinthian Colleges’ peak, roughly 90% of its revenue came directly from federal student loans and Pell Grants — meaning U.S. taxpayers were essentially funding a fraud operation. This mirrors the logic behind why college tuition increased broadly — when students can borrow limitlessly, institutions have no price pressure whatsoever.

The combination of loosened accreditation standards, aggressive lobbying by for-profit chains, and a Congress that believed “market forces” would self-regulate education created the conditions for industrialized predation. By the mid-2000s, companies like Corinthian Colleges, ITT Tech, DeVry, and the University of Phoenix were publicly traded. Shareholders, not students, were the primary constituency. The Pell Grant system that was supposed to give low-income students a pathway to college was being systematically looted.

Who Were the Biggest Predators? Corinthian, ITT, DeVry and Beyond

The for-profit college predatory lending hall of shame has a few headliners — but the broader industry operated on the same fundamental logic.

Corinthian Colleges collapsed in 2015 after the Department of Education cut off its federal funding following evidence of systematic fraud — falsified job placement rates, misleading program descriptions, and aggressive targeting of low-income students. The DOE ultimately forgave $5.8 billion in federal student loans for approximately 560,000 former students. Corinthian operated Everest, Heald, and WyoTech campuses. Its internal strategy documents showed it deliberately sought out “isolated,” “overwhelmed,” and “experience[d] failure” individuals — not because it wanted to help them, but because those students had less capacity to resist high-pressure sales tactics and were more likely to accept loan terms without scrutiny.

ITT Technical Institute ran the same playbook for decades. A 1974 Senate investigation found misleading advertising, deceptive sales forces, dismal job placement records, and high dropout rates. Forty-two years later, the same findings caused the school to collapse in 2016. The Department of Education wiped out $4 billion in federal loans for 208,000 borrowers. The arc of that story — Senate hearing, no action, repeat fraud, Senate hearing, no action, collapse — is a perfect encapsulation of how Boomer-era political dysfunction operates. The system identified the problem, then chose profits over students for four decades.

DeVry University settled with the FTC for $100 million in 2016 after it claimed 90% of its graduates got jobs in their field within six months — a figure that was, to put it politely, fantasy. The Department of Education later moved to forgive $71.7 million for approximately 16,000 defrauded borrowers. The FTC found DeVry had been running those false employment claims in ads for at least 14 years before being stopped.

The combined total of federal student loan discharges tied to fraudulent for-profit colleges now exceeds $195 billion across all programs since 2021. To frame that: this isn’t government largesse — this is the government clawing back money that was fraudulently extracted from students who trusted institutions that had no intention of delivering on their promises. The same financial class that lobbied for deregulation also profited from these institutions as shareholders and creditors. Taxpayers cleaned up the mess.

The Gainful Employment Rule: Protect, Gut, Repeat

The Gainful Employment Rule is the regulatory version of a zombie — killed multiple times, keeps coming back, and is now facing execution again. Its story perfectly illustrates why for-profit college predatory lending has proven nearly impossible to stop.

The rule’s core premise is simple: if a career education program leaves graduates with debt they can never repay given the jobs it prepares them for, that program should lose access to federal student aid. If that sounds like a low bar, that’s because it is. It’s the bare minimum definition of an educational institution earning its federal subsidy.

Obama Administration (2014): Issued the first serious Gainful Employment regulation, tying federal funding eligibility to graduate earnings outcomes. For-profit colleges immediately sued and lobbied furiously to kill it.

Trump/DeVos (2018–2019): Education Secretary Betsy DeVos — whose family had financial ties to the student lending industry — froze the rule in 2018 and issued a final repeal in July 2019. The rule was never fully in effect before being killed. The Brookings Institution noted that most analysts expected DeVos to scale back the rule, not eliminate it entirely. She did the full demolition. This left an estimated 700,000+ students per year without that protection.

Biden Administration (2023–2024): Revived and strengthened the Gainful Employment Rule, publishing the final rule in October 2023 effective July 1, 2024. The Biden version expanded coverage beyond just for-profits to include public and nonprofit career programs, protecting approximately 703,000 students annually.

Trump Second Term (2025–2026): The rule is under threat again. In February 2026, a Congressional negotiating committee unanimously agreed to repeal the Gainful Employment Rule as part of broader higher education legislation. The House’s reconciliation bill also sought to eliminate the 90/10 Rule entirely — which would allow for-profit colleges to derive 100% of their revenue from taxpayers with zero accountability. This is the same playbook as the Glass-Steagall repeal: deregulate until the crash, then demand the public pay for cleanup, then deregulate again. The cycle is not a bug. It’s the feature.

Who Gets Targeted by For-Profit College Predatory Lending?

For-profit college predatory lending isn’t random. Its victims are selected with precision. The targeting is so consistent across institutions and decades that it constitutes a deliberate strategy, not a coincidence.

Black students are enrolled at for-profit colleges at dramatically higher rates than their white peers. In Illinois, Black students attended for-profit institutions at roughly twice the rate of white students. Black borrowers already carry nearly $13,000 more in student debt than white borrowers on average — and for-profit college attendance is a major driver of that disparity. Women carry roughly $3,000 more in student debt than men, and for-profit enrollment is disproportionately female.

Veterans are another primary target. Here’s the dark irony of the 90/10 Rule: military education benefits (GI Bill, Tuition Assistance) were classified as non-federal revenue, meaning for-profits could count them toward their 10% non-federal requirement while simultaneously filling their student rolls with veterans. Some institutions derived effectively 100% of revenue from government sources while technically complying. The University of Phoenix aggressively recruited on military bases. A RAND Corporation study documented the pattern extensively.

Single parents and low-income adults are the third core target. Corinthian’s internal documents literally instructed recruiters to seek out individuals who were “isolated,” “overwhelmed,” and had “experienced failure.” The flexibility of online and evening programs was a genuine draw for working parents — but the cost-to-credential ratio made the investment catastrophic. These students frequently couldn’t finish, left without a degree, and carried full debt loads. The result fed directly into a student loan default crisis that falls disproportionately on the most economically vulnerable borrowers — and compounds the already-dire retirement savings gap for the generation being squeezed by these debts.

The demographics of for-profit college victims aren’t a side note — they’re the point. These institutions chose their markets based on vulnerability, not aspiration. And they did so with the full knowledge that the federal government would fund the transaction and bankruptcy law would make the debt practically uncancelable.

Is the For-Profit College Industry Actually Dead?

The high-profile collapses of Corinthian and ITT created a media narrative that the predatory for-profit college industry had been defeated. It hadn’t. It had just reorganized.

For-profit college enrollment did fall sharply after 2010 — two-year for-profit enrollment dropped 59% between 2010 and 2022, four-year for-profit enrollment fell 54%. That looks like an industry in terminal decline. But that reading ignores two critical realities.

First, the surviving for-profit institutions — Grand Canyon University, Purdue Global (formerly Kaplan), Liberty University, and others — absorbed the enrollment that fled the collapsed chains. Some nominally “converted” to nonprofit status while maintaining the same management structures and financial incentives. The University of Phoenix was acquired by the University of Arizona and rebranded — a maneuver critics called a “nonprofit conversion” that preserved the for-profit culture under a nonprofit shell.

Second, and more importantly: the regulatory infrastructure that kept the worst abuses in check during 2015–2025 is now being systematically dismantled. With the Gainful Employment Rule facing repeal, the 90/10 Rule under attack, the Department of Education being hollowed out by the current administration, and the Borrower Defense to Repayment program under active hostility, the conditions for a new generation of predatory for-profit expansion are being recreated. The Roosevelt Institute noted in early 2026 that the “fall of the Department of Education” creates a direct pathway to “the rise of for-profit colleges.”

For a generation already saddled with catastrophic retirement savings gaps and underwater on student debt they cannot escape, a resurgent predatory for-profit sector isn’t a historical footnote. It’s an active threat. The playbook hasn’t changed. Only the branding has. And as with every other Boomer-era deregulatory project — from banking to housing to trade — it’s the youngest and most economically precarious Americans who will absorb the losses while someone else captures the gains.

The counter-argument: Defenders of for-profit colleges argue they serve populations that traditional colleges ignore — working adults, rural students, career changers who need flexible schedules that community colleges don’t offer. There’s a kernel of truth here. Community college capacity is genuinely inadequate in many regions. But the argument collapses against outcomes data: the same students attending community colleges consistently show better debt-to-income ratios than those at for-profits, even controlling for program type. The problem isn’t that for-profits serve non-traditional students. The problem is that they charge them three to five times more for credentials that don’t deliver comparable employment outcomes. “Access” isn’t a defense when the product destroys the buyer.

Frequently Asked Questions

Can I get my student loans forgiven if I attended a for-profit college?

Potentially, yes — through the Borrower Defense to Repayment program. If your school misled you about job placement rates, program outcomes, or used other deceptive practices, you may qualify for a full or partial discharge. However, the current Trump administration has significantly restricted borrower defense approvals, so success is not guaranteed. Former Corinthian and ITT Tech students have the strongest cases, as the government has already issued automatic discharges to those groups.

What is the 90/10 Rule and why does it matter?

The 90/10 Rule requires for-profit colleges to derive at least 10% of their revenue from non-federal sources — meaning they can’t get more than 90% of their revenue from federal student loans and Pell Grants. The rule was designed to ensure some market accountability. Congressional Republicans have repeatedly sought to weaken or eliminate it. Critics counter that eliminating it would turn for-profit colleges into 100% taxpayer-funded enterprises with zero price accountability — essentially nationalizing the losses while privatizing the profits.

Are all for-profit colleges predatory?

No. Trade schools, cosmetology programs, culinary institutes, and many vocational programs operate under the for-profit model legitimately. The problem is concentrated in degree-granting institutions that charge university-level tuition for credentials that don’t carry university-level labor market value. A $12,000 electrician’s training program that produces licensed electricians is not the same animal as a $60,000 “Bachelor of Business Administration” from an institution with a 15% graduation rate and a 40% default rate.

How does for-profit college debt affect retirement savings?

Directly and severely. Borrowers carrying high student debt — especially from programs that didn’t improve their earning power — delay or entirely forgo retirement saving. This compounds the already catastrophic retirement savings gap for Millennials and Gen Z. For-profit college debt disproportionately affects the same demographic groups (Black borrowers, low-income households) who already have the least retirement savings, creating a compounding disadvantage that extends decades beyond the original loan.

Sources & Methodology

This article draws on federal government data, independent academic research, and investigative reporting. Key sources include: U.S. Department of Education official loan discharge data and borrower defense records; GAO investigative report on for-profit college fraud (GAO-10-948T); NPR and New York Times reporting on Corinthian Colleges and ITT Tech collapses; Project on Predatory Student Lending litigation records; RAND Corporation research on veterans and for-profit enrollment; Urban Institute analysis of the Gainful Employment Rule; Roosevelt Institute 2026 analysis of deregulation and for-profit college resurgence; Congressional Research Service reports on the 90/10 Rule; Institute for College Access & Success policy documents; Brookings Institution analysis of DeVos era deregulation; Education Data Initiative student debt statistics; Federal Reserve’s 2024 Economic Well-Being of U.S. Households report.