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I've written and railed about rip-off student financial aid schemes here for years.
And based on all the very personal stories I've received, I know many of you are outraged as well – even more so because of your devastating first-hand experiences.
Make no mistake: For-profit education companies are (more often than not) "rip-off traps" that condemn unsuspecting students into indentured servitude to greedy companies' bottom lines.
Well, there may be a White Knight after all.
The Beginning of the End for the Student Rip-Off Trap
His name is Richard Cordray, and he's the Director of the Consumer Financial Protection Bureau (CFPB).
This guy is smart and aggressive and has already smoked out some of Wall Street's biggest scammers – including Fannie Mae, Bank of American, and AIG.
Now he's going after an even bigger scumbag company, filing a civil lawsuit against ITT Educational Services Inc.
In case you never heard of them, ITT Educational is one of the country's largest for-profit educational services companies, providing undergraduate and degree programs through its ITT's Technical Institutes and Daniel Webster College. In addition to its own schools, the company provides educational services to another 150 institutions in 40 states.
Among other allegations, Cordray's suit claims the company offered a zero-interest loan, payable in full at the end of a student's first academic year, assuming most students would never be able to repay it. Facing delinquency, the students were then forced to take out "high-cost private student loans" from the company to rollover unpaid obligations and continue tuition payments.
Cordray said, "ITT kept students in the dark about its lending model that it freely shared with investors. In fact, we found that ITT used its financial aid staff to rush students through an automated application process without affording them a fair opportunity to understand the loan obligations involved. In some cases, students did not even know they had a private student loan until they started getting collection calls."
About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.