DEGREE OF DEBT: As for-profit college students struggle, school leaders are getting rich

NEW ORLEANS (WVUE) - There are 8.1 million Americans currently in default on their college loans, the most ever. Studies show the majority of those defaults come at for-profit colleges, around 70 percent.

"I don't know what I'm going to do," Ariel Craig tells us.

Craig spent 13 months at Blue Cliff College in Metairie, working on a cosmetology degree. She says that experience has left her heartbroken.

"I cried my eyes out," she tells us. "A lot of times I wouldn't even want to get out of bed. You know, I was just so hurt. I didn't know what I was going to do with myself."

She's been doing hair and make-up since the age of 13. Her dream is to work in a salon, one day maybe own a shop.

"My life is just going down the drain," Craig says. "Everything I've worked so hard for... It's just gone now."

A medical emergency forced Craig to put her college education on hold, three months before graduation. But when she tried to go back, she says, Blue Cliff wanted her to pay $11,000.

"I can't afford the $11,000 and they won't let me back in until the $11,000 is paid," she says. "$11,000 for three months when the program itself is only $18,500?"

Craig tells us she feels trapped.

"They told me that, if I don't come up with the $11,000, I won't be able to go back to school and I won't be able to continue my education nowhere else," she says. "I can't even start over."

Per that account, this for-profit school is telling a former student she not only cannot transfer credits, but she can't even re-start a similar program at another school.

"You can't go to any other school," she recalls school reps telling her. "They say, once you get in Blue Cliff, you're tied in. You can't transfer your credits, you can't leave and go to another school, you're just tied in. So, for me it's like my life was just over with."

State records show Blue Cliff in Metairie has been labeled "financially at risk" for six straight years. In fact, the school has been placed on a federal monitoring list – a list populated with schools with questionable administrative capabilities and financial responsibility.

They snatched all the hope, all my dreams from right underneath me. – Ariel Craig

"We gave them the wrong tuition," recalls Jasper Rockwood.

For seven years, Rockwood helped recruit students to for-profit schools, including Blue Cliff College.

"My job is to get them started right away, so we can make our budget," Rockwood tells us. "Then we can make our revenue. So, it's all about making revenue, making the dollars. It's not concerned about the student life."

Rockwood says he was often instructed to give potential students inaccurate information, such as the job placement rate.

"Really, we used to lie to the students," Rockwood says. "Our accreditation statistic was 80 percent; it was really 60 percent. So, they always tell us to tell them, 'oh it's 80 percent of students find jobs.' Really, it was only 60 or 50 percent… below accreditation."

We found another college giving out apparently incorrect information when we sent an undercover producer to Cameron College in New Orleans. Federal records show Cameron has a completion rate - the percentage of students who graduate - of 56.4 percent.

But on a recent visit, our producer heard something far different.

"82 percent completed," the Cameron representative says, "And that's only because we do have a demographic of…[inaudible], you know. We try to change that. They just don't want to come to class."

"That's beyond the pale, just absolutely absurd," says Alan Collinge, who runs the grassroots organization Student Loan Justice.

Collinge says no for-profit school has a completion or graduation rate as high as Cameron contends.

"I would say my best guess is that is just a bald-faced lie," he says. "I don't know where they could possibly pull those numbers from. Wherever they did was fantasy land, it was not a reality."

In another school visit, this time at Camelot College in Baton Rouge, a representative was asked about default rates.

"We have a default person for that, who explains all that," she told our producer. "I only deal with financial aid. I just tell people, point out to them, just to stay out of default."

Getting an answer on default and repayment rates proved impossible on this trip. But experts say those rates should be readily available.

"All we know is that you sign up for school, get your loans, and… I mean, students that have went to default paid back the school, got out of default," the Camelot rep says. "But I mean, that's not on us."

Collinge says every student should ask for and receive an answer to that question before enrolling, that recruiters should have that information at their fingertips, ready to disclose."

In October, the federal government sanctioned one of the biggest for-profit colleges, DeVry University, for making false claims.

The school had one ad that claimed, 90 percent of DeVry graduates in 2012 had careers in their field within six months. But the government said DeVry couldn't substantiate that claim and ordered them to stop.

Last year alone, DeVry spent $227 million on advertising.

"Publicly traded companies: many would argue that their mission is to make money for their shareholders," says Debbie Cochrane with the nonprofit Institute for College Access & Success. "And I think are probably many of them who do a good job of that. Are they doing a good-enough job to actually warrant taxpayer investment, through federal grants and loans? Doesn't appear to be, doesn't appear the case that they're doing a good-enough job with that."

DeVry pays its CEO $5.3 million. He makes more than the presidents of LSU, Tulane, Xavier, Dillard – a long list of presidents at 14 Louisiana universities, combined.

Cochrane says that's not surprising to her. But is it right?

"It's legal," she answers. "I don't know if I would say it's ethical."

DeVry's enrolls about 42,000 students, about the same as LSU and Southeastern combined. By the way, DeVry's former CEO holds $20 million in company stock.

Another for-profit CEO is highly paid, too. Records show the Federal Trade Commission is also investigating the University of Phoenix, while its CEO makes $9 million a year.

It's all about making revenue, making the dollars. It's not concerned about the student life. – Jasper Rockwood

Josh Hudson spent four years trying to complete an information system security degree at ITT Tech. After spending $62,000, he says, he found his ITT college credits were nearly worthless.

"It's basically just paper," Judson says of his education. "I go to Nunez right now, and I don't think they accepted any credits from ITT. So, it's just waste, really, because no one wants their credits, for whatever reason."

ITT shuttered 130 campuses in September after the federal government cut off student loan funding. Hudson is out $65,000 and four years of his life as he starts over. He calls his experience horrible.

"It's a bunch of, you know, wasted money that I'm owing for the rest of my life," he says. "And wasted time – I could have done something else from an actual, more accredited university like Southeastern or LSU."

Hudson and 35,000 other ITT students now are looking to start over. But the school's former CEO may be doing just fine, with a salary last year of $3 million.

"It does not make sense," Cochrane says. "In many cases, they're making millions of dollars on a business model that boils down to fraud."

As for Ariel Craig, she says she now does some hair on the side. Her income is right around the poverty line.

"I can't afford to pay the loans right now," she says.

She tells us many of her Blue Cliff friends face similar problems.

"We had like 25 people" in her class, she tells us. "They have jobs but not in cosmetology. They're not in what they were going to school for."

Craig continues to call, continues to write Blue Cliff.

"It's like no one answers," she says. "I call, I reach out, no one gets back with me. They just really don't care. They're all about the money."

She still hopes she can move on and earn her degree one day.

"This is my passion," Craig says. "This is what I do. And I wanted even more to be a salon owner, or to teach, maybe to teach, spread the knowledge of what I know, what I've learned over the years. But it's like, everything's just at a halt right now."

Blue Cliff declined our request for an interview and comment. Cameron College told us they're under new management, but that they remain in compliance with state and federal benchmarks.

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