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[Fred Nelson] Right out of high school, I wasn't quite sure what I wanted to do,

but I knew that you were supposed to go to college.

That's what everyone tells you to do.

If you go to college then you're able to,

you know, make more money, provide for yourself,

get a car, get a house, you know, all that type of stuff.

[Fred Nelson] My brother and I we kind of grew up on our own.

My parents weren't there. So I didn't really have any guidance.

I didn't have any parental guidance.

[electronic music]

[Fred Nelson] I used to be on the computer all day just trying to figure out how it worked.

So I figured that would be a good avenue for me to take just to do IT.

[Luis Tayahua] My grandfather worked for the railroad all his life.

My dad worked construction.

Education wasn't a big thing in my house, so I started working at State Farm.

[Luis Tayahua] And at first when you get out of high school,

the guys that go to college, they're not making money, you know what I mean?

So you're like, oh, college is for suckers.

But then they get out of college, they start getting good jobs.

Man, I'm like maybe college is for me, maybe I do need to go to college

if I ever want to, you know, do something.

[electronic music]

[narrator] A college education wasn't always so important.

For most of the 20th century, high school was enough.

Then in the 1980s, the economy started to change.

And ever since, people without a college degree have fallen further and further behind.

At the same time, college became more and more expensive.

For most Americans today, college is the only path to a middle class life.

But it's increasingly out of reach.

People who grow up in the top quarter of the income spectrum,

nearly all of them go to college.

And the vast majority by age 24 graduate with a college degree.

That's increased dramatically from the 1970s.

But if you look at everyone else, the improvements since the 1970s are really poor.

[narrator] Poor students have just a 1 in 10 chance of graduating.

And that divide is becoming wider and wider

and more and more cemented into place.

[narrator] And thanks to crushing student loan debt and predatory schools,

millions of students are leaving college worse off than before they enrolled.

In many ways, higher education is functioning like a caste system,

that takes in students from different places in the socio economic spectrum

and can churn them out more unequal than they were at the start.

[narrator] America's higher education system is broken.

But with hundreds of billions of dollars on the line,

there are some in the higher education industry

fighting to keep it this way.

[President George W. Bush] For those of you who received honors awards

and distinctions, I say well done.

And to the C-students, you too can be president of the United States.

[Conan O'Brien] When I got the call two months ago to be your speaker,

I decided to prepare with the same intensity many of you have devoted

to an important term paper.

So, late last night I began.

I drank two cans of red bull, snorted some Adderall.

Played a few hours of Call of Duty and then opened my browser.

[applause]

The amount of delinquencies

on student debt is now higher than credit card debt.

$1.2 trillion, how about that, that's a big number.

My hat's off to you, my hat's off to you.

I just received the email that school's going to be closing.

It's something that I wanted to do, I planned to graduate.

[JK Rowling] I have decided to talk to you about failure.

The fact that you are graduating from Harvard suggests

that you are not very well acquainted with failure.

[Shepard Smith] Court documents filled with former Trump University staffers

calling it a scheme and a fraud and a quote "total lie".

We're fortunate, that Betsy DeVos is

the nominee for US Education Secretary.

[reporter] What do you think makes a good commencement speech?

I think the most important thing is that you can be anybody you want to be,

it's just a matter of how much effort you want to put into it. You're in America.

[reporter] UC Davis students protested on campus today.

Raise tuition and we'll raise hell.

[electronic music]

[Suzanne Mettler] As recently as 1940, only 1 in 20 young Americans had

a four year college degree, so on the eve of World War II,

it was still very rare to go to college. And then everything changed.

[archive news] The 84,000 ton liner "Queen Elizabeth"

enters New York Harbor carrying almost 15,000 soldiers.

Arousing welcome awaits the returning soldiers.

[Gail Mellow] We had a generation come back from World War II and America said:

"What are we going to do?"

[news] When a man gets out of the Army or Navy or Marines,

he's worried most about a job, an education and a home.

Not all higher education was in favor of putting them in college,

in fact Robert Maynard Hutchins at the University of Chicago said

that we would turn our universities into "hobo jungles".

But what happened after we made that investment.

We saw the biggest economic boom this country has ever seen.

[electronic music]

The idea of opportunity really came to fruition

with the Higher Education Act of 1965.

[narrator] The higher education act was created to open access to college for all Americans.

Its programs included student loans backed by the federal government, work-study,

and grants sent to institutions to give out to students in need.

[President Lyndon B. Johnson] It is not enough

just to open the gates of opportunity.

All our citizens must have the ability to walk through those gates.

[narrator] These federal policies inspired states to follow suit.

States made large investments in their public college systems.

[news reporter] A national news magazine described

the University of California as probably the most successful public institution

of higher learning the world has ever known.

We're trying to train people to solve problems

that are still only dimly seen.

[narrator] During this time, public colleges opened at a rate of 1 or more per week.

Virtually every state had public institutions that provided education

at little or no cost to students.

[Suzanne Mettler] It transformed who we are as a nation.

We went from just 1 in 20 young Americans having a college degree in 1940,

to 1 in 4 in 1977.

[Ted Kennedy] Thank you very much.

It is a great honor and a high privilege for me

to join with you in commemorating

the 107th anniversary of this great university.

The traditions and accomplishments and the graduates

of the University of California

have made this occasion one of the most prestigious forums in America.

As a matter of fact at a luncheon I attended here on campus this noontime,

one of your professors asked me where I had gone to college.

And I replied Harvard.

And he said, "Oh yes, the Berkeley of the East."

[laughter, applause]

[narrator] But as public higher education flourished,

private colleges and universities began to panic.

Private higher education saw themselves not getting students,

students picking lower cost institutions.

[narrator] Even Ivy League schools said they were struggling to compete.

So in the early 1970s, as Congress considered a massive expansion in financial aid

for low income students, private colleges reshaped the debate.

They turned to the federal government and said,

"This isn't simply about access for students,

this is about saving America's private higher education system."

[narrator] Now Congress had to figure out how to help low income students

and private colleges.

So in the 1972 Higher Education Act,

lawmakers made a change to the system that would have enormous implications.

[narrator] Instead of sending aid money to institutions, it would go directly to students.

The chief proponent for this new approach was Democratic Senator Claiborne Pell.

But direct student aid found support on both sides of the aisle.

They argued that if you really want to enhance student's choices,

you should give the student the money so that they could figure out what was best for them.

That's the voucher model.

[narrator] Supporters of this market-based approach argued

that giving grants and loans directly to students

would even the playing field between publics and higher cost privates.

They believed direct student aid would open the doors

of even the most elite private colleges to all Americans.

This created the system we have today.

Students can take Pell grants and student loans to the institution of their choice,

public,

private,

or for-profit.

[school ad] Can a phone call change your life? This one quite possibly could.

I was elected to the California State Assembly back in 1976.

My district included a number of housing projects.

The work that I was doing at that time really focused on trying to deal with poverty,

trying to help get young people trained for jobs,

diverting young people from gang activity.

It brought me in contact with

a lot of young people who were just hanging out.

People were looking for jobs, looking for

any kind of resources to help support their families,

and I learned a lot about how they were being approached by these recruiters.

They would come into the public housing projects

and they would tell people they could learn how to become a dental assistant,

and they would even bring uniforms to show them the kind of uniforms they would have

if they completed their coursework.

And then I learned some of them that had gone to these schools had discovered

that they didn't have teachers in some of the so-called classrooms,

some of the computer training, they didn't even have computers.

There's some 7,000 profit-making vocational schools

in the United States, many of them making false claims of

better, higher paying jobs for their graduates.

It's a meat factory. They just want to fill up the classroom,

they just want their money, they don't care how.

They don't care what they promise you, they're not interested in you

on any level or in education or in anything.

[congresswoman Maxine Waters] It became very obvious that very few, if any,

had realized real training or an education that would help them to get a job,

but these schools were getting taxpayers' dollars.

[news reporter] The federal government is a major supporter of vocational schools

including those run by such corporate giants as ITT, Bell & Howell, CBS and Control Data.

When students don't get jobs and default on their loans, it is government money that's wasted.

When I came to the Congress of the United States,

not only was this still going on, but we had some members who were, you know,

helping to advance the cause of these private postsecondary schools.

My first job in Washington DC in 1989, I was working for Senator Paul Simon,

a liberal senator from Illinois. I would staff him on meetings,

some of them were traditional colleges and universities,

some of them were for-profit colleges.

A stable career with the chance for promotions.

The colleges were different than what we see today

but the argument they were making was very similar.

Are you tired of barely making it in a dead-end job?

Do you want to make more money?

-Where do I go from here? -Nowhere.

That they were out there finding the low income students

who were not being well served by the public or nonprofit institutions

and they focus on a job, train them for that job. And that was a good, great message,

and was something that a liberal senator would want to support,

and at that time, my boss was supportive of them.

The Democrats had been big proponents of the for-profits.

They felt that traditional higher education wasn't doing a good job

of serving low income students, and here were these other entities serving them.

[congresswoman Maxine Waters] You would hear people say, "If we bring down these schools,

there are a lot of young people who won't have any place to go.

They need to have an alternative to the institutions that they're not welcome in."

All kinds of excuses, and we had a big fight.

Then we started seeing a lot of defaults.

The biggest problem is high risk loans to trade school students.

[news reporter] A third of all trade school students

are now defaulting on their loans.

That's costing the taxpayers a billion dollars a year.

[Bob Shireman] Secretary of education at the time William Bennett, Republican, was

outraged and talked about how these for-profits are fleecing taxpayers and hurting students

and we needed to do something about it.

Leaders who were most disturbed by them then tended to be conservatives,

both Republicans, some of them in the Reagan Administration,

and conservative southern Democrats like Sam Nunn

who had many hearings on the for-profits in 1990.

When we launched this investigation late last year, neither I nor I suspect

other members of the subcommittee believed that we would find problems

as extensive and as severe as those that have surfaced

during the course of these hearings.

You've had this explosion of new proprietary schools. Why?

Because they had access to the US Treasury, with no risk!

A lot of the stories were about Mom and Pop shops that had sprung up

only to collect the student aid money and then shut down.

So we used a lot of phrases like "fly by night schools".

[narrator] Some of the schools didn't even have a real campus.

Instead, students would get their education strictly through correspondence classes.

[news reporter] To test how easy it often is to get accredited,

the Missouri Attorney General actually invented the bogus trade school.

This was the whole school library, a few books on the shelf.

The faculty brochure listed the name of one Professor Peelsburi Dobouy.

Eastern Missouri Business College was approved in just 3 weeks.

There was an incident with the Culinary School of Washington.

My boss had helped this school with a little regulatory problem

and it turned out that this school was telling people that they were training them

to be gourmet chefs, and they were training them to be gourmet chefs by having them work

in the cafeteria at a sewage treatment plant.

And they were using student loans to do this.

They were borrowing money so they could work at a cafeteria.

Lobbyists representing the trade and technical schools

refused to discuss the problem.

I'm telling you I'm tired of

my community being ripped off

and communities like mine all over this country.

I intend to be before this Congress on this issue year in and year out

until I stop the hemorrhaging of taxpayer dollars in these rip-off schools

that's doing nothing for anybody.

[narrator] After the Nunn hearings, the government shut-down

over one thousand for-profit schools.

[narrator] And in 1992, Republican President George Bush signed into law

three new regulations designed to prevent further abuses.

[narrator] The 85-15 rule, later changed to 90-10,

said that for-profit schools had to get at least 10% of their revenue

from sources other than federal student aid.

The incentive compensation rule made it illegal for schools

to pay recruiters a bonus for enrolling students.

And to crack down on fraudulent correspondence schools,

the 50-50 rule required that at least 50% of a school's students had to be

at a "brick and mortar" campus.

The schools that survived were effectively put on notice.

California's budget problems have been a blow to college students

at state supported schools.

Education is a right. No more cuts.

[narrator] The 1972 decision to turn to a voucher model

didn't just create an abusive for-profit sector,

it also sowed the seeds for a crisis in public higher education.

The federal government in 1972 made a determination

that states would handle public higher education.

Well, that was a big miscalculation.

[narrator] Almost immediately after the 1972 decision

to move away from institutional aid,

states started pulling back funding from public higher ed.

Not just one state, it's every state.

Because it's one of the few things left that they can cut,

higher education is often one of the first things that they do cut.

That is the number one reason why tuition keeps going up throughout the United States.

[Suzanne Mettler] Medicaid, K-12 education, incarceration, these are mandatory policies.

By contrast, higher education spending is the largest discretionary item

in most state's budgets.

[F. King Alexander] The states and our state legislatures have an easy out.

When I was at Murray State, a high ranking state legislator said: "King, I can't raise taxes

and get reelected, so I'm not going to raise taxes. I'm going to let you

raise tuition and you go to the federal government and get your money."

[narrator] But in the 1980s, the federal government started cutting back too.

[news reporter] The Reagan Administration wants to cut $1 billion

from the higher education aid budget by 1982.

The underlying philosophy is that the responsibility for putting children through college

shifted in the '70s from parents and their children to the government,

and that that responsibility should be returned to the family.

These cuts are very foolish because in the long-haul

they're going to make our nation a less rich nation

determined by the sum total of the education of the people.

[Suzanne Mettler] At first early in the 1980s,

Democrats and Republicans were somewhat at an impasse about what to do

about federal student aid.

What was much easier for them was to say:

"Let's allow more students to borrow more money",

and that's what happened.

[Suzanne Mettler] In the 1970s, a low-income student would

have about 50% of their tuition,

fees, room and board covered by the average Pell Grant.

Now, that same Pell Grant will cover just 30%.

[Sara Goldrick-Rab] When the federal government created the federal financial aid program,

college students looked a certain way.

Over time, the visual of the college student changed.

We have a process for four-year college students

who are 18 to 20 years old.

We don't live in that reality anymore.

[Deanne Loonin] The majority of college students are

what they call "non-traditional students".

I think we should actually change the language

because "traditional" is no longer typical.

Only about 15% of all undergraduate students actually live on campus now.

A lot of the students are older than 25.

[Gail Mellow] Millions of American students are going part time.

[Sara Goldrick-Rab] They leave work to come to the college class, they take that class,

they go back to work, then they go home to feed their children.

[Gail Mellow] I think that there's a very elitist view that

the problem with American college students today is that

"they're not prepared for college, and then so maybe they shouldn't all be in college."

In fact, we find students drop out because of financial reasons.

[Marquette Bascom] One of my dreams was, I was gonna finish high school

and I was gonna go to college and unfortunately it didn't work out that way.

Getting pregnant and having my son at the age of 17, was very young.

My whole world seemed like it was crushed.

My son was young and I had to work, I had to pay rent, I had to pay bills.

I was just thinking of how I'm going to survive.

Once I had him, then I kind of put my dreams on hold.

[Marquette Bascom] When my sons were 18 and 6,

I decided this was a great time to go back to school.

And I enrolled at LaGuardia Community College.

I had sat down and I told my sons, I was like, "This is what I'm going to do.

It's going to be rough, we have to have cutbacks.

You're not going to be able to go to the movies, you're not going to ask me for that,

you know that $5 or $10, because I can't do it right now for a while.

[Marquette Bascom] Although I received the financial aid,

it-- for a lot of the classes, it-- it wasn't enough.

I still had to pay for books and transportation, you know, food on the table.

They have programs, I believe, within the school that helped,

but um, some days unfortunately there wasn't enough food.

It was a really rough time not knowing how I was going to provide for my sons,

and how I'm going to do all of these things, you know, by myself. I had to do something.

So then that's when I decided I had to take out a loan.

[narrator] Since 1980, the federal government increased student loan lending

from $18 billion a year to nearly $100 billion a year.

And with all that money on the table, for-profit schools wanted back in the game.

[Steve Burd] Since 1995, I have followed the for-profits as a reporter

at the Chronicle of Higher Education.

There was this huge transformation in the industry

where we suddenly had these giant corporations.

[narrator] Infused with Wall Street money,

the industry became dominated

by massive publicly traded

and private equity backed companies.

[Steve Burd] And now you have these giant corporations coming in and buying up

these surviving schools and they started to get bigger and bigger.

You've got big hedge funds on Wall Street owning major interests

in some of these companies.

[narrator] These massive corporations pioneered online education.

Catering to working adults and nontraditional students.

[Steve Burd] It was the shiny, bright new thing.

It seemed much more flexible, much more innovative than traditional higher education.

[narrator] Enrollment and profits grew across the sector throughout the 1990s

and so did its political influence.

They started to have their voices heard much more effectively in Washington DC.

[President George Bush] Students are getting the money and we're making the program

a lot more efficient for the taxpayers.

America can be compassionate and responsible at the same time.

[Steve Burd] There was a new sheriff in town and it was one that wasn't interested in

policing the for-profit sector.

[narrator] In 2001, the Bush Administration put Sally Stroup in charge of higher ed policy

at the Department of Education.

Stroup had previously been the chief lobbyist for the University of Phoenix.

President Bush also installed Bill Hansen, a former lobbyist for the student loan industry,

as Deputy Secretary of Education.

Talk about a fox in the henhouse!

[Steve Burd] They really went on an attack against the regulations.

[narrator] Almost immediately, Bush's Department of Education began dismantling the safeguards

that Bush's father had put in place a decade earlier.

First, spearheaded by Bill Hansen, the department created loopholes

for incentive compensation, allowing for-profit colleges

to pay recruiters a bonus for enrolling students.

[speaker archival] The jobs of tomorrow are here.

[Laura Brozek] I had been seeing ITT Tech commercials

probably from the time I was, you know, 15 years old.

I turned 40 and I thought, you know what, I really want to do something for other people.

And I was looking for a job and I just saw ITT Tech.

They were looking for representatives.

So I went to a group interview

and there was a very, very dynamic

director of recruitment

basically selling the job.

She focused a lot on the compensation scale,

how you can start at a particular level and in a short period of time,

you are able to jump a number of levels.

And you obviously had increases in your income.

[narrator] As Wall Street infused more cash into the industry,

recruiting floors were expanded and the desire to grow became insatiable.

You added additional zeros to the amount of money that was taken in.

You added a sophistication to the pitching and marketing.

[woman archival] What will you be doing in 17 months? The "same old same old"

or starting a whole new career in a new field?

Like business, healthcare, justice, technology, or design.

At Westwood College, we have programs in five schools that can help prepare you...

Do you know with just one call you can change your life?

[man archival] He started with nothing and now he has everything.

[woman archival] Make a choice that can make a difference.

They were doing this big marketing on criminal justice programs.

It was all over the TV all the time. They had people in

like a crime laboratory doing CSI stuff.

It really looked professional.

[Mike Vasquez] The thing that I run into with so many for-profit students is

that they walk into a school and they assume it's a noble thing.

And that's a dangerous assumption.

I mean, imagine if I walked into a used car dealership

and thought that the salesman was my friend.

They would sell me 12 cars.

I'm waiting in the lobby, I'm all nervous, it's a college interview.

I didn't know what to expect.

The guy comes out, he was a bald guy, real sharp dressed,

nice suit, big watch, a ring probably.

Looked like the real deal or from what I would think would be the real deal.

He had pictures of his car, his wife, vacation pictures.

And he's like, "Why do you want to come to Westwood College?"

And I was like: "Oh, I saw your criminal justice program."

Then he takes out a list of all the places I can get a job,

starts talking about the criminal justice program, how fast it was.

I'm like well, how much is it? He says: "You know what?

you don't have to worry about the price

because there's student loans for all this stuff

so you don't have to really pay anything.

You get a job, you'll be making all this money.

What you're getting is worth gold.

You don't have to worry about the price."

You get into the classroom. It's all people like you, a lot of minorities.

We'd sit there with our books like: "Ah, cool we're college students."

You run into people like: "Yeah, I'm going back to school, I'm going to college now."

So, it gives you pride, you're like oh, puff up your chest.

I have seen young person after young person

who simply wanted to get trained for a trade or for a job, get ripped off.

Why hasn't anything been done?

Well, you know, these private

postsecondary schools actually have

members of Congress who protect them.

[narrator] In Congress, John Boehner became chairman of the House Education Committee.

And he, along with Buck McKeon and Mike Enzi introduced dozens of bills

to undo even more regulations.

The legislation makes minor, but meaningful changes to expand access to higher education

while maintaining the integrity of our financial assistance programs.

[narrator] From 2002 to 2006, these three lawmakers received one out of every five dollars

in campaign contributions made by the for-profit industry.

One lobbyist compared Boehner and McKeon to being "bag-men" for the mob.

So I said, OK, let's look at the campaign contributions.

And then I noticed that the money wasn't really going into their regular campaign accounts,

it was going into their leadership PACs.

They used that money to rise up the ranks in their parties by contributing to other lawmakers.

I, I'm humbled by the support of my colleagues

to be the new majority leader.

You had the Republicans kinda falling over themselves

to praise these schools

as being innovative and flexible.

The convenience of education is so important to people.

Business community has been a huge innovator

in changing the way we deliver higher education.

Once they got the leadership on board,

then the rank and file of the Republican Party fell in line.

[narrator] At the Department of Education, Sally Stroup's office authored three reports

to convince Congress to remove restrictions on online education.

Her target, the 50-50 rule.

And in 2006, John Boehner and Mike Enzi

slipped eight lines into a budget bill,

repealing the regulation.

[Senator Tom Harkin] No longer did 50% of your students have to be campus based,

they could be all online. You look back at that,

and after that, that's when the explosion took place.

Tonight: Online education, its popularity is soaring,

creating a $6.2 billion industry.

[news reporter] 3.5 million Americans are in college online.

That's almost 2 million more than 5 years ago.

Bridgepoint Education was a for-profit education company backed by Wall Street investors

that bought a small private liberal arts college in Iowa

just for the accreditation that it held.

It was run by nuns for years and years, it was accredited. They bought that school

and they get the accreditation, without doing anything.

The college had about 300 students when this company acquired it

and just three or four years later,

they had 80,000 students,

the majority of whom were learning online exclusively.

It's very inexpensive to operate these programs.

They weren't passing along that savings to the students.

The head of Bridgepoint made like $20 million in one year.

Online education just let these for-profits get to that "federal spigot"

without jumping through any hoops whatsoever.

[narrator] The total federal financial aid that went to for-profits

increased from $5 billion in 2001,

to $32 billion in 2010,

a quarter of all federal financial aid.

[Aaron Glantz] Here at Fort Campbell the University of Phoenix

is spending thousands of dollars to sponsor this concert.

It's one of dozens of events the for-profit school is sponsoring

on military bases across the country.

I'm a veteran of the Iraq War, I served in Iraq in 2003

as a military police officer guarding enemy prisoners of war

and doing security generally in southern Iraq.

A for-profit college cannot receive more than 90% of their funding

from the federal government. The idea behind the 90/10 law was to say:

"We don't want these institutions to be over reliant on federal funds."

There's one huge loophole in that though, service member benefits don't count

against the 90/10 rule.

The traditional expectation was to enroll nine students

every academic session every eight weeks.

But for our team, they had an astronomical expectation

of enrolling between 14 and 25.

If you didn't meet that target you would begin feeling the pressure immediately.

They would say, "Remember DOD doesn't pay your paycheck anymore, we do.

Get their ass in class."

I was the first one in my immediate family to graduate high school.

I wanted a better life. I knew that college was a way to, to get to the next level.

In 2000, I went to Plattsburgh State University

and I went there for microbiology.

I love the human body, the way it works, and I wanted to understand how it worked

and when it stopped working, how to get it back to working.

And then...

Oh, my God!

[Murray Hastie] September 11th happened during my second year.

It just affected me.

I didn't feel like I was doing anything important

or anything useful.

So, I signed up for... for the Marines.

I did two tours in Iraq.

Our unit was the 2nd Battalion 5th Marines.

We were what they called "the tip of the spear".

[voices on radio]

It was our units that were the first ones over.

Four years was enough for me.

I finished my enlistment

and then I just wanted to get back to a normal life

and go back to school.

I just did a computer search for colleges that accept GI Bills.

I think it was like an ad on the site that said:

"Do you want to go to college, do you have GI Bill credits?"

I put my email address in that advertisement and I got quite a few responses.

All of the students that were reached out to

were lead generated, so they came in through a lead database

and there are a variety of lead databases.

There's one particular company called QuinStreet

that has dozens of websites

that serve as lead generators for the for-profit college industry.

They also operated GIbill.com, and it masqueraded as a government website.

It looked like you could only use your benefits at for-profit colleges.

[Murray Hastie] I got a phone call. It was a representative for DeVry.

He said he was in the area and he'd be able to stop by my house.

And he ended up scheduling a meeting.

The representative was sitting to my right.

And he had the application in front of him.

Now, I just remember he was going so fast.

He assured me that the GI Bill would cover my cost of attendance.

In fact, he was certain that with the GI Bill,

I would get a return and get a stipend.

I questioned it, but he assured me.

I was just fresh out of the military,

my transition was terrible.

My biggest mistake is trusting too many people.

[Steve Burd] I was at lunch and the source hands me this packet of documents.

They were from the Los Angeles campus of Career Education

Corporation's American Intercontinental University.

[male voice] AIU the serious U.

They showed that the school was

routinely enrolling students

who hadn't graduated from high school or gotten a GED.

It really opened my eyes to the business model.

Growth at any cost.

[Mike Vasquez] Miami's fast train college is famous.

They would hire former exotic dancers as recruiters.

They would drive around bad neighborhoods and try to get men into the car.

It reads like some bad movie script, but it was real.

I had a librarian at Everest call me. She said,

I have a student here who's mentally disabled.

He came here saying he wanted to be a police officer.

He has absolutely no chance and everybody here knows it. But they want his money.

There was a management person who would refer to students as bottom feeders.

The conversation was: "Now that we've lowered the admission standards

how many more bottom feeders is this going to bring in?"

They will call you not once, not twice,

they will call you 20 times a day.

[voices on voice mail]

Lie about job placement rates.

Lie about how much debt you'll take on.

Whatever it took to close the sale.

[David Halperin] They can use the pain pitch,

poking your pain until you finally agree to sign up.

Somebody says to you, "Christmas is coming and I always hate Christmas

because it's always a struggle.

"Well, can you tell me a little more about that?

What have you done about that and did that work?"

You know that the answer is "no" otherwise they wouldn't be talking to you.

The pain funnel would be a way to get them talking about their feelings.

[Vince Martin] They're embarrassed because they can't support the kids,

they can't buy the Christmas presents.

You want to make them relive

that embarrassment, make them relive that pain.

What do you think you can do in order to not feel so terrible?

[Jen Wilson] I called and said I'm interested in attending your school.

And she asked me, "What field?"

And I said I am looking to go into criminal justice.

I was wanting to become a victim's advocate.

I could talk to families and let them know they aren't all alone in this.

I have been on that end of it.

She felt so horrible for me. It almost sounded like she was crying for me.

She asked me, how was she murdered?

She asked me, who, who murdered her.

When she was talking about it I was actually glad somebody actually cared enough

to be interested in wanting to know.

She, in that hour and a half, became my friend.

Then you could manipulate them to say, well, "How are you going to fix it?"

She kept informing me that this was the best decision I have ever made

and I could really help out all these people.

When I talked about, "Well, how much does it cost to go to college nowadays?"

She said, "Well, there are grants and loans and all sorts of stuff you can do,

but let's not talk about that right now.

I just need to hold your spot because the next session is starting soon."

I'm not entirely sure, I actually just started investigating this today

and she said, "No, no, no, I'll send you the paperwork.

This is strictly just to hold your spot.

Because your story touched me so much, I want to make sure you had your spot."

And I said, OK.

I didn't read it, and, I wish I had,

but I didn't because I, I trusted her.

That paper was not to hold my spot, that paper was to enroll me.

When I was, I want to say, eight years old,

my parents bought for me the old Nintendo Entertainment System

with the Mario Brothers and Duck Hunt cartridge.

That was really my first big introduction into gaming.

ITT Tech just got greedy. Because so many prospects played video games,

they came up with a program called "digital entertainment and game design".

But, how many people get jobs doing that?

One of our course goals was to open Photoshop.

[video instruction] File. New.

Course goals, not class goals.

We learned a lot of programming languages

that are just nonexistent today.

"COBOL" was a programming language. We spent hours. No one uses COBOL anymore.

[Zach Turner]Our instruction for the day was to navigate to YouTube,

pull up a specific YouTube video.

It was a well put together YouTube video, I'll give it that,

but, I could've done that from home.

This whole program is a joke.

I just felt like we weren't really learning the things

that I felt we would learn when I signed up.

I realized when I went to the first IT interview,

how deficient I was and how subpar the education was.

That's when the weight of it hit me and I realized that I had really made a horrible mistake.

Who's supposed to police quality, right,

in higher education? It's typically accreditors.

[narrator] When the federal government established the student aid program,

it needed a way to determine which colleges should be

eligible for federal student aid.

Instead of creating its own system for the task, Congress turned to a third party.

Accreditation actually goes all the way back to the 19th century.

Colleges essentially created clubs of colleges to decide what it means to be a college.

If accreditors don't revoke accreditation from poor performing programs

those programs can still access federal financial aid and still attract students.

[narrator] And for-profits, whose survival is dependent on students

with federal financial aid, have their own accrediting bodies.

Their accrediting agencies which were non-profit in name, often had

interlocking boards with the institutions that they were accrediting.

They are the gateway to the money and they get business by saying yes.

Where do you get your money?

The sustaining fees of our organization

come from the member institutions and from user fees.

-[Senator Harkin] From where? -User fees.

Those are fees that are paid to us when an institution applies for a new program

or a new branch campus, there's a fee that's associated with that application.

So, the institutions that you accredit, pay for you to do their accrediting.

That is correct.

A lot of things happened that made everybody think

you know what, we're getting had.

Someone wanted to go to another school and they wouldn't take their credits.

That's when a lot of us woke up and were like, "Wait a minute, something's wrong here."

How's a community college, you know, that's a small little college

not going to take this.. These credits from this big college downtown?

That's ridiculous.

I didn't even know what accreditation was.

It was a college, a college is a college.

And then I applied for a police department.

They said, "No, we're not going to take your credits."

What police departments will take it, you know I mean, or which ones won't?

Westwood would tell us: "We don't know if they're going to take you or not."

Well, what do you mean, you don't know?

Sometimes I say that community colleges are like the dark matter in the universe,

so there's the visible matter and then there's the dark matter,

and the universe would just blow apart if it wasn't for the dark matter,

and that's what community colleges are.

Community colleges educate more than half of all undergraduate students.

But it's sort of which half that really is important.

Students who are poor, first generation, immigrants,

students who are black, Latino, Asian,

the EMT paramedics, the nurses, the fire-fighters,

the police, that's our future.

We give second chances to the student who maybe had a spotty high school career.

We give second chances to someone who maybe didn't discover their passion

until they were 30 years old.

I would argue that we don't know who's smart until we give them a chance.

School was a whole new life for me.

I had to get used to, you know, studying and going to work. I said, oh gosh!

Good afternoon, Marquette speaking, may I help you?

I had to give it thought, I had to plan it, I had to get organized.

"This is what you're going to do. This is how you're going to do it."

My commute would be like an hour, fifty minutes one way.

And going home also, and that's where I read.

I would get in 9 o'clock, 9:30 at night, sometimes even later.

I couldn't just get ready for bed, the kids have to eat.

So after I do that.

Then you have to check their homework.

And then I was like, OK, now it's time for me to do my assignments,

so I would sit there and just read, just do homework.

You have to read certain chapters and a lot of those chapters are long.

You have to do what you have to do to get it done. It's like 2-3 o' clock in the morning,

I'm like oh my goodness, I have like four hours of sleep,

how am I going to live with only four hours of sleep?

When you're by yourself and you're doing everything, it does,

it becomes overwhelming, it becomes stressful and you know the anxiety sets in.

These students who need so much and who

with just a little bit more help would make it over the barrier,

to watch them fall by the wayside is just heartbreaking.

[Matt Reed] We have students here who sleep in their cars.

We have students who couch-surf.

We have students who live in domestic violence shelters.

When you are living in your car, the odds that you'll be able to focus fully

on your algebra homework I think are slim.

Students going hungry, students coming to the food pantry.

The problem of hungry, homeless college students is gaining some attention,

the study found, one in five students had gone hungry in the last 30 days

because they didn't have enough money for food.

Our high schools have free and reduced priced lunch programs.

There's a reason for that. We know you can't learn if you're hungry.

We also provide busses because we know that if you can't get there on time,

you can't be there in your class.

But for some reason, when they go to college,

when they turn 18, the assumption is

that those socioeconomic disadvantages that they grew up with

are no longer there.

[Sara Goldrick-Rab] Schools that quote-unquote "lack prestige"

and are places that are predominantly attended by

students of color or by poor people

tend to get fewer resources on a per student basis.

[narrator] Elite private colleges and universities where most of the students come from

wealthy families have a lot of money to devote to their students.

Community colleges have just a fifth of that to spend on their students.

The whiter the institution, the more money it gets

and the more affluent the students at the institution, the more money it gets.

[narrator] Private non-profit colleges have done extraordinarily well

under the current system.

But they still mostly serve the wealthy.

I think we oughta' hold them accountable to what they promised in 1972.

Nobody has done that. They're supposed to substantially increase

the number of low-income students that they serve, they've done the exact opposite.

Our community colleges still carry the bulk of the low- income population.

Here at Miami-Dade, the largest community college system in the country,

well over capacity at 170,000 students.

The demand for classes this semester crashed the computer system.

[Sara Goldrick-Rab] When the school doesn't have resources,

you tend to see a heavy reliance

on faculty who have very short term contracts,

who are often paid very little money, it doesn't mean that they're worse teachers.

What we are going to do today

is to find the formula, formula of the hydrate.

It means they don't have time for the students.

At best, there are 750 students to one counselor,

and at worst upwards of 1,500 students for one counselor.

[narrator] At elite privates, the ratio can be as low as 14 to 1.

[Gail Mellow] If we start closing the doors to students,

they're going to stay outside of everything.

You are really creating a permanent underclass

and you have to be realistic about that.

It won't be immediately, right? You won't see a big explosion in the street,

but you will see it downstream.

When the recession hit hard here in Massachusetts,

we took a huge cut from the state at the same time

that we had a double digit enrollment increase.

[narrator] During the recession, community colleges across the country turned away students

for the first time in their history.

[Matt Reed] California had waiting lists of tens of thousands of students.

A student who tries to enroll at a community college and gets frustrated,

will be found and recruited very easily into a for-profit.

The way to make money is to run a school successfully.

90% of the people who graduate go out and get the job

they were trained for in a very short period of time.

[news reporter] Former employees say the school forged signatures

on job placement records.

If our students don't succeed, our company won't succeed.

The employment records of hundreds of students at Everest College at Arlington

were falsified for years.

Think about the progress we are making with our graduate employment rate,

but there's still much work left to do.

[news reporter] The Dow tumbled more than 500 points

after two pillars of The Street tumbled over the weekend.

[narrator] While the rest of the market was tumbling,

for-profit college stocks were on the rise.

In 2010 ITT Tech had better profit margins than Apple.

After the 2008 election, I was asked to serve on the transition team

to sort of help meet with constituency groups on behalf of the incoming president.

Credit markets were collapsing, there were worries about

whether even the student loan money would be able to float.

The for-profit colleges talked about how this is their moment to shine.

They're expert at finding the jobs of the future, training people for those jobs.

It would have been great if everything that they were saying was true.

That year, 2009, students at University of Phoenix were in a program on office management.

Ten thousand of them defaulted that year.

You wonder if these executives that are making millions of dollars a year,

did they know the level of abuse? Absolutely.

These schools were loading students up not just with federal loan debt

but also private loan debt that had interest rates of like 17-18%.

The students that they enroll, who are mostly low income and minority students,

didn't really have great credit ratings and normally wouldn't have been able to

get private loans. So then a bunch of the companies started

creating their own institutional private loan programs.

They didn't really care if nobody could really ever pay that money back

because it was entirely a vehicle to get access to the government loans.

[narrator] In order to comply with the 90-10 rule, for-profit colleges devised

an immensely complex series of financial transactions

in which they obtained hundreds of millions of dollars from Wall Street banks

that they could dole out at will without credit checks or permission from the lender.

[Steve Burd] And that allowed them to lock students in quicker.

They could do it automatically right there. Publicly they were saying:

"We're providing access to low income and minority students."

If you listen in to the investor calls, you heard a much different story.

The schools will turn around and report that they expect, you know,

50, 80% defaults on some of these loans.

[narrator] These loans came with few or zero protections for the borrower.

[Steve Burd] So these students were getting a terrible education,

taking on huge debt, and even if they graduated,

they didn't really have the skills they needed.

These companies were knowingly destroying people's lives.

When I found out I was enrolled, I was like: "Ok, well alright,

I'll just go with it." You know, because I really wanted to go to college,

and I really wanted to get this degree, and I really wanted to make a difference.

This is the final picture of me while I was still happy.

I graduated Summa Cum Laude. I got my associate's degree,

and that was the beginning of the end.

Then I remembered, my school's got job placement,

I'll go to the school, because they had promised that they would be with me

every step of the way.

I tried to call, I tried to call, I tried, I can't--

I called more times for the job placement than I did calling about the loans,

which I did backwards, I guess.

And I couldn't even get them on the phone.

So, after about a year, I kind of just gave up.

This $50,000 piece of paper is actually completely worthless.

I owe $20,000 for an 18-month program and I don't have anything to show for it.

The bills are coming in, you know, I would pay them, but

I was working at a supermarket at the time.

I was working in the deli department making $7 an hour.

Eventually I went into default on those loans.

It just really messed me up, to finish it and to, to not really have what I needed to,

to get a job, it just crushed me, man. It crushed me.

Some schools are notorious for having students take out a lot of loans,

making big profits, but having really low graduation rates.

Students get out of these for-profit schools loaded down with enormous debt.

They default. Their credit is ruined

and the for-profit institution is making out like a bandit.

[narrator] When Barack Obama took office, his administration started looking for a way

to rein in the for-profit sector.

[Davis Halperin] For-profit colleges that get federal money are required by statute

to prepare students for gainful employment in a recognized occupation.

But despite hundreds of pages of federal regulations, nothing explained what that meant.

[narrator] So the Department of Education decided that

if students couldn't repay their loans,

they clearly weren't gainfully employed.

Earlier this morning we released

a proposed regulation that addresses growing concerns

about unaffordable levels of loan debt for students enrolled in gainful employment programs.

[Kevin Carey] The government's saying, we don't care if you're accredited or not,

if it turns out that none of the students who borrow money to get your education

can pay their loans back, we're throwing you out of the federal financial aid program.

[Bob Shireman] When I started looking at the repayment rates as a possible indicator,

I thought there was no way we could ever go below 50%.

I mean, how can you, with a straight face, say that if fewer than half

are repaying their loans, that this school is doing an OK job?

When we started looking at the numbers, we saw that using 50%

would eliminate so many schools that we could not politically survive.

We needed to make sure that whatever rule we came out with

could withstand possible opposition from Capitol Hill.

Some of the biggest players in the for-profit industry were

very close to very powerful Democrats.

And some were close to Republicans.

And so they, they played a very smart inside game.

[narrator] The industry mobilized, they already had support from Republicans

like John Boehner and Mike Enzi, but they needed Democrats to fight their case.

They hired former Congressman Dick Gephardt,

and former Clinton White House lawyer Lanny Davis.

[narrator] Laureate University, owner of Walden, paid Bill Clinton over $17 million

to become an honorary chancellor,

and John Sperling, University of Phoenix owner,

took his friend Nancy Pelosi out

on a private helicopter ride.

They hired economists. There were TV ads.

[TV voice] When Washington proposes making it harder for working people

to get the skills they need, tell Congress:

It's my education, my job, my choice. Now is no time to get in the way.

[Brody Mullins] The Department of Education got thousands and thousands

and thousands and thousands of letters.

The White House met repeatedly with

representatives of the for-profit industry,

whereas there was only one meeting where there were

advocates of consumer organizations and student organizations and the like.

They recruited President Obama's own former Communications Director, Anita Dunn.

My question is for Anita Dunn, you have a lot of access to the President,

do you think it's a little bit disingenuous that you're simultaneously being paid

by a lot of corporations to lobby against his reforms,

specifically predatory for-profit colleges?

Ok, well I'd like to start by saying that I'm not a lobbyist,

I never have been a registered lobbyist and I do public relations.

This sector overall has much worse results

-and it continues to get government funds. -That's your view.

They threw a lot of money at members of the Congressional Black Caucus.

I know more about gainful employment

than you would know if you were born again.

Well sir, they fund your campaign, they don't fund my campaign.

[Steve Burd] They can't have the Congressional Black Caucus against them.

It will apply an unnecessary broad brush approach.

[Steve Burd] They largely serve minority students.

We have served, for over 40 years,

the population that will be most negatively impacted by these proposals.

The gainful employment rule is a job killer.

It's designed to attack for-profits.

If you make trouble, a powerful member of Congress may call your boss and say,

"Who is this person making trouble for my school?"

I got a call from Secretary Duncan's assistant asking me to go to his office.

The group of senior staff people all started filing in.

It felt like I was being interrogated.

"What is this? How did this come about? Where is this going?"

I'm sure that some of them were receiving an earful from Don Graham.

The administration and Arne Duncan backed down quite a bit

after they saw the fight that they were involved in, and they got a shock.

Members continuing their votes on the gainful employment regulation.

A good number of Democrats voted with virtually every Republican

to strike down this rule.

What was finally produced was a very watered down set of rules.

[narrator] Under the final rule, gainful employment is determined by

a complicated debt to income formula, and even if a graduate's student loan payments

are considered too high, for-profit colleges are allowed multiple years of violations

before penalties kick in.

Yeah, these, these for-profit schools, boy they, they had,

they had a lot of tentacles inside of Congress.

Poor people don't have that kind of pull.

[narrator] In 2010, Tom Harkin became chair of the Senate Education Committee

and launched his own investigation into the for-profit college industry.

They were used to just saying, "The company has good policies

but this individual at the company is acting poorly."

We asked for some of the training material.

That is where we found this wasn't a rogue employee,

this is how the company taught its employees to act.

I know for a fact that, you know, that people were trained on it

because I did it. In the press release, Kevin Modany said:

"It's not authorized, it's not encouraged to be used by the company."

This guy is lying.

[narrator] Laura Brozek decided to come forward.

Techniques such as the pain funnel were commonly used

by the recruiters to demoralize potential applicants

by discussing their life's shortcomings in order to have them enroll.

[narrator] Despite overwhelming evidence, Harkin couldn't get Senate Republicans

to admit the industry's wrongdoing.

I'll leave you to go ahead and beat up on the for-profit schools.

[narrator] All of the Republicans walked out of the committee's third hearing.

For-profit, that alone I can see offends some on this committee, I thank you, Mr. Chairman.

[Senator Tom Harkin] Taxpayers being ripped off, students are being ripped off

and they're getting a mountain of debt that they'll never pay back.

But, the executives that skimmed off all this money,

they're free, they're free.

Is that unfair? Hell yes, it's unfair.

People know that the system is rigged,

and it's rigged against them.

Shortly after getting out of the military, I didn't really care about anything.

I didn't-- I didn't want to see any of my classmates,

I didn't want to do any of the coursework.

Looking back, probably someone from the school shoulda' came and said:

"Hey, what's going on?" 'Cause I was doing great and then all of a sudden I wasn't.

But when it came time to sign up for more classes,

no one hesitated to put me in a room and sign the documents for more loans.

My drinking was out of hand and I was isolating myself. I felt like a failure.

Some friends came down from my hometown and we went to a baseball game.

I was just talking to my friends about how I was doing,

when I was graduating and everything that went on,

the amount of loan debt that I had accrued.

They realized I was-- I was in over my head.

They were supposed to drop me back off at the campus, but they said: "You're coming home."

They're told by recruiters to believe in their dream.

They're told by recruiters who use this very powerful emotional language that,

you know, this is their time, and this is their time to make something of themselves.

And when it goes wrong, students typically blame themselves,

and I have to tell them that you're a victim here.

There's not a day that goes by that I do not find myself thinking about it.

And wish I had not fell for it.

And still find myself getting so angry with, with me,

because I fell for it and I shouldn't have fallen for it.

I feel like I went from one tragedy

right into a whole other tragedy.

And-- and I just feel like I'm still not able to wake up from it at all.

[Luis Tayahua] You can't-- you can't go back. They duped you. You owe all this money.

This is it, this is where Westwood College was.

It was just fancy enough for us to think it was legit.

[Alex Shebanow speaks]

I'm sorry. Hold on.

I would never do that to people, but that guy?

Real piece of work.

Good evening. Tonight, an investigation

into the surging popularity of for-profit colleges.

Widespread complaints like overpriced degrees, misleading claims

and an alarming level of student debt led to some embarrassing revelations this year

on the entire for-profit college industry, including Westwood.

[news reporter] Is it to educate students or to turn a profit?

[news reporter] It's a costly lesson not just for students but also for US taxpayers.

I will say this for for-profit schools,

they've just given us all a first class education

in the depths of human depravity.

[narrator] In 2014, the department of education subpoenaed

Corinthian's job placement, attendance and grade records for its graduates.

They failed to produce the documents.

[narrator] So the Department put a 21-day freeze on their access to federal aid.

Corinthian somehow could not survive three weeks without federal funds.

School is over for thousands of Southern California students.

The doors were locked in Everest West LA & Santa Ana campuses,

same story for Heald Colleges in the Sacramento area.

Corinthian Colleges was taking as much as $1.5 billion a year

of our tax money. When they finally shut down, they said:

"We can't afford to pay back the students or the taxpayers or our creditors, we're broke."

Where did the money go? I guess to executives.

These students are going to pay for that fraud for a lifetime.

And the question is, will anybody at Corinthian pay for what they've done?

The ITT Technical Institute is shutting down

all of its campuses nationwide.

The school blamed the US Education Department's ban on ITT

from enrolling new students who use federal financial aid.

The government is now talking about how they're going to discharge loans of students who

have been defrauded. But if the government had done its job and had been a gatekeeper,

these schools should never have been getting the federal student aid dollars

that they were getting.

Are you telling me that you found no evidence

that Corinthian lied to its students and defrauded them?

As I mentioned, for some campuses, they were not up to our standards

and those campuses are on monitoring, or on, they're on sanctions.

But you are monitoring them and they continue to be eligible for federal funds.

The U.S. Department of Education might congratulate itself on Corinthian, but, those who know

this industry, know that it continues.

[for-profit ad] Whether you know how to code, or you're starting from scratch,

the path to a new career, and a new you starts here.

[Elizabeth Baylor] A lot of the for-profit colleges are now opening these coding boot camps

because there's a perception among young Americans that that's like a cool ticket

to a great job in Silicon Valley.

It doesn't seem like the same kind of operators,

but it really is the same companies over and over again reinventing themselves.

[narrator] Coding boot camps are unaccredited,

so they're not eligible for federal financial aid, yet.

[Bob Shireman] My big worry is it's going to come back, you know,

and we don't know how exactly that might emerge,

but we need to be vigilant and watch for it.

[crowd] USA! USA! USA!

Thank you. Thank you very much.

[narrator] The day after Donald Trump won the election,

major for-profit college stocks rallied by as much as 24%.

Wall Street and the industry know, they have an ally.

Trump University is something I've thought about for a long time

and I didn't want to put my name on anything having to do with education

unless it was going to be the best.

[narrator] Although Trump university was never eligible for federal student aid,

multiple lawsuits, alleged widespread fraud and student abuse

at the now defunct for-profit education company.

Court documents show the company instructing recruiters to use

high pressure sales tactics to coerce applicants to enroll

in the $35,000 unaccredited program.

[narrator] In November 2016, the for-profit lobby invited

Trump advisor and former speaker, Newt Gingrich,

to give a speech at its annual conference in Dallas.

[Bob Shireman] The reforms will be rolled back

and then we'll have another repeat of

uhm, you know, massive abuse.

[narrator] For low-income students about to enroll in college, the options are grim.

The public sector is literally falling to pieces.

[narrator] If cuts continue, state publicly funded higher education

could become a symbol of a bygone era.

Eight years ago in Louisiana, the state provided 60% of the funding

for its public colleges. Today, it's barely a quarter.

In California, UC Berkeley has warned that it faces

a substantial and growing structural deficit.

And in Illinois, severe cuts threaten to close

a number of the state's public colleges.

And conceivably that means there are kids in kindergarten

and first and second grade, who by the time they graduate from high school,

will not have a public college or university affordable opportunity

to attend any institution.

The story of what has happened to American public support

for higher education is a really discouraging one.

If we continue doing what we're doing right now,

we are not going to see an increase in college graduation rates among low-income students.

And what this leads to is the demise of opportunity for Americans.

Some people have said that American higher education is becoming

"separate and unequal" and that's, those are sort of shocking words

in America, right? To-- to go back to a sort of "Jim Crowe" analogy,

but it's unfortunately all too true.

[Jon Marcus] We misunderstand the notion of prestige in higher education.

Taking a kid that already has a 1600 on the SATs and give them a bachelor's degree, that's easy.

What's hard is taking a low-income student whose parents didn't go to college.

What's hard is getting them to graduate.

[Marquette Bascom] Even my youngest son, he would see me studying late at night

and he would say: "I'm proud of you."

My whole thing was like: "You can't give up." I did not want my sons to see me give--

I wasn't going to give up.

That feeling, that was like the best feeling in the world.

To let my sons know that you can do it, those nights you saw me stay up late,

go through all the hard times. It all led to this very moment.

Those graduations should be considered like a miracle.

[Gail Mellow] I cannot tell you how fabulous you all look.

It is such an exciting day. I can feel the, both the energy and the intellect

that's out in this room. You are amazing and you're going to change your lives,

the lives of your family, the city and the country.

Everything we know about what's going to make you successful in higher education

you don't have, you don't have parents who went to college, you don't have a stable home,

you don't have the finances, you're working two jobs,

you did not come from a high school that trained you well.

And yet that student made it.

[F. King Alexander] I'd like it to be free for every student.

I'd like to live in a society where everybody has a college degree

because I know what I will benefit from because they do.

[Sara Goldrick-Rab] It's the same reason that you pay your taxes

to pay for a public fire department,

because if you believe that simply funding

a private fire department to put out a fire at your house will work for you,

you just need to have a fire at your neighbor's house to discover that

when they don't call the fire department because they can't afford it,

your house will burn down too.

That's getting lost in this dialog, the societal benefits.

In today's world, workforce preparation is maybe the key issue.

[narrator] In Tennessee, Republican Governor Bill Haslam noticed that

there weren't enough skilled workers to fill jobs.

I could see that there was a looming mountain

coming where we were going to crash.

[narrator] His solution: Make community college free.

[Governor Bill Haslam] I had a lot of people in my party say:

"Again, you're just setting up another entitlement

if you're saying everybody gets to go regardless of their GPA."

But, we felt like we had to shock the system.

[Governor Bill Haslam] At the end of the day we said, if you graduate from high school,

you can go free. We had a higher retention rate with our Tennessee Promise students

than we did with our traditional students.

We're squandering an American Legacy of using higher education

to promote broad public purposes.

The middle of the 20th Century was a very transformative period

in all sorts of ways in the United States.

We made tremendous progress.

[Suzanne Mettler] The fact that you had many more people than ever before

from all of these different backgrounds, who now had college degrees,

meant that they were able to contribute to society in a myriad of ways,

and they really transformed the country.

[electronic music]

I really find hope that because we've managed to do it before,

we should be able to do it again.

Okay, Alex, here it is.

This is either going to be the greatest letter of my entire life,

or it's going to be the biggest let down of my life.

And even though I don't look my best right now,

I'm doing this for you.

[Jen] So here it goes.

Subject: Claim of Borrower Defense to Repayment of Direct Loans.

Dear Jennifer Wilson, as your loan service, as your federal loan servicer

for the U.S. Department of Education, we write regarding your claim for release

based upon the borrower defense to repayment rules.

The purpose of this letter is to inform you your student loans

have been discharged by E.D.

After carefully reviewing your claim,

E.D. has determined that your claim meets the requirements of

a successful borrower defense claim because the acts or omissions of a school

you attended would give rise to a cause of action under state law.

Total... Total amount discharged:

The first loan $12,655.

The second loan $29,441.

Total amount remaining: Zero!

At the time of this discharge, your student loan account serviced by us

has no remaining balance to be paid.

We did it! Thank you!

Thank you to all of you, we did it.

[tense music]