Adam Wolf stands at the frontlines of the student debt crisis. His job is to administer the funds established after the California Culinary Academy reached a $40 million settlement with former students saddled with high debt and high interest and no serious job prospects.
The settlement Wolf administers is separate from an arbitration judgement awarded last week to a student who alleges that another culinary school in California similarly defrauded her.
LA Weekly reported that the student was awarded $217,000 in arbitration. "Among their claims against the CSCA and CEC, the father-daughter duo sought reparations for having been led to believe that Anna Berkowitz would 'earn at least $75,000 per year to start' and that she'd 'easily pay off the loans they were encouraged to take out' upon her completion of the pastry chef program."
According to California Lawyer, the CCA agreed in the earlier case to a $40 million settlement in late 2010 "after plaintiffs accused the school of misrepresenting its job placement rates, exaggerating its prestige, and falsely suggesting that it had a selective qualifying process when, in fact, it required of its entrants no more than a high school diploma or its equivalent, an interest in cooking, and the ability to pay $46,000 in tuition and fees for the 12-month program."
Wolf took to the Los Angeles times this week to lay reveal what he has seen at the ground level, including this profile of one of many former students he worked with:
"Believing that education was the path to financial security, he financed his culinary education by taking out a $42,116 private loan — at 17.375 percent interest. Upon graduation, he could not find a culinary job in California, so he moved to Oklahoma. Unable to find employment there, he moved to Florida. Still, no jobs. He finally found work in Missouri, where he earns $11 per hour, 20 hours per week. But with two children, he isn't making enough to live on, much less to begin paying back loan debt that, with interest, has increased to $110,000 (and continues to grow)."1 comment on this story
It would be bad enough if the students were simply acquiring debt at low rates. But much of this debt is at high credit card levels.
"The federal government issued some of the loans to the students," Wolf wrote, "but those covered only a portion of the school's tuition and costs. Sallie Mae, the now-private lender, made up the difference, dispensing loans to students like Halloween candy. But there was a catch: Whereas the federal government's loans had interest rates of about 6 percent, the interest rates on the private loans often hovered between 13 percent and 18 percent."
Eric Schulzke writes on national politics for the Deseret News. He can be contacted at email@example.com.