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How Goldman Sachs Exploits Student Debt For Profit

How Goldman Sachs Exploits Student Debt For Profit

There’s a reason why the investment bank Goldman Sachs is called “a great vampire squid wrapped around the face of humanity” — it will do anything to make a quick buck. Goldman, though, has reached a new low in its craven pursuit of profits: targeting college students. The investment bank took over the for-profit college company Education Management Corporation (EDMC) and then forced them to take up exploitative and cravenly opportunistic practices to get students to take on debt, according to a new report by Huffington Post reporter Chris Kirkham.

For-profit colleges make money for every student that comes to their school. Goldman Sachs executives realized that they could make more money by shifting resources out of teaching and into recruitment. Kirkham reports: “After the deal closed and Goldman became a partner, employees soon noticed a drastic shift in culture. Longtime admissions managers were replaced, ushering in an era in which recruiters were endlessly hounded by supervisors about hitting weekly enrollment targets.” The company culture started caring more about getting students into the classroom than educating them.

This aggressive recruitment especially became a problem because recruiters were told to “prey on poor and uneducated consumers” who would have to take on substantial debt to get a degree. Fueled by the debt that low-income students were taking on, EDMC (and by†extension†Goldman Sachs) tripled their revenues in less than five years, bringing in almost 3 billion dollars in 2011. Of that revenue, almost 90% came from federal student aid programs.

Given that for-profit colleges have the highest rate of student debt and that EDMC has the highest tuition rates among for-profit colleges, it’s clear that Goldman Sachs is making profits by saddling poor students with a lifetime of debt. Thankfully, the Obama administration issued new sets of guidelines earlier this summer to prevent companies like Goldman Sachs from profiting from student debt, which should hopefully curb these predatory practices.

These reports, though, just underscore how unethical companies like Goldman Sachs are, and how necessary it is to protest them, much as Occupy Wall Street has done over recent weeks. The accompanying “We Are the 99%” movement speaks to this issue — Americans of all stripes are tired of the wealthiest in the country profiting while everyone else has to take on astounding debt just to stay afloat. It’s time to stand up against the corporations like Goldman Sachs that make money off of others pain and loss.

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6:47PM PDT on Nov 3, 2011

Financial "aid" offices employ predatory liars who will say and do anything to trick students into taking on crushing debt. Predatory banks should be seized and liquidated - they create NOTHING but poverty, despair, inequality, misery, and worse for the vast majority of people. They make people who wanting nothing more sinister than an education into debt slaves, heartlessly & deliberately exploit innocent students. They are worse than pirates, worse than muggers, they are slavers - irremediably criminal. The 1% really are inhumane scum.

7:01AM PDT on Oct 21, 2011

Thanks for the article.

6:38AM PDT on Oct 19, 2011

Typical of todays money - grubbing financiers!

5:17AM PDT on Oct 19, 2011

Cancel all student loans!

11:42PM PDT on Oct 18, 2011

A student loan with no job, occupy Wall Street.....

10:11PM PDT on Oct 18, 2011

We need to challenge brainwashed individuals like Steve, and sellouts like the Obama democrats, and expose the lies of the republican tea party. But eventually we need to start taking action against the takeover of our lives by the greedy economic forces.

I suggest we attend as many occupy wall streets as we can. Then we need to organze some concert compaigns. My favorite is Why? Because it is Goldman Sachs money that buys off politicians like Obama that allows Goldman Sach's to exploit us. We can organize a boycott of all students to stop attending college until usurist students loans are cancelled. We should then demand that the rich pay their fair share of taxes.

9:12PM PDT on Oct 18, 2011

College fees should be much lower. We should not force our young people to be shackled to debt for an education.

9:05PM PDT on Oct 18, 2011

Frank W. They are helping people get an education? At what expense? To become endentured slaves for the rest of their natural lives?

7:13PM PDT on Oct 18, 2011

Jim G. no I can't see it that way. They are helping people get an education. How could that be wrong? If you don't want student loans, join the military or go to junior college until you can get a Co-op deal with a corporation or just pay as you go. Get good grades and earn a scholarship. Unfortunately not everyone can do that, so student loans are a good thing to help people get the education they would otherwise not get. Goldman Sachs is doing a good thing and should be applauded.

6:46PM PDT on Oct 18, 2011

There are many issues around university education....but I will just comment on the debt/loan issue. There are other solutions: in UK, students have a grace period to repay debt.....that is they only start paying it back when they have a job that affords the repayment plan! And they help students find appropriate jobs.
But at this point in time, due to the banking/mortgage crisis, no one is safe any longer. Best is not to go into debt, but to learn skills that are employable if you can for hopefully other opportunities later. This is sad, but the realities are tough now and no easy or timely solutions.

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