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In November 2005, Alejandra Lalama was feeling hopeful about college. The New Jersey teenager had been accepted at Full Sail Real World Education (now Full Sail University), a for-profit school in Florida specializing in music, video and film production. It seemed she was on the path toward her dream career as an audio engineer.

“The school had the best of the best in hardware, software, stages,” Lalama says. “I guess for a 17-year-old, it looked exciting.” A Full Sail financial-aid counselor laid out a package of government and private loans. After listening to her daughter’s pleas, Lalama’s mother—a single parent and a teacher—put down the $650 application fee and deposit.

Fast-forward eight years: Lalama has her degree, but she now pays $758.51 a month toward her student loans. Due to compounding interest, only $4,360.14 of the $32,000 she has paid so far has gone toward her principal balance. She still owes more than $65,000 overall.

For middle- and low-income students like Lalama, the path to higher education has become fraught with financial traps. Whether these students attend for-profit schools like Full Sail, private colleges and universities or public institutions, shifts in financial-aid policies and questionable lending practices have put a growing number of idealistic students and their families in long-term financial peril. Children of immigrants, students of color and first-generation college attenders are particularly vulnerable.

The Inflation of Higher Education

For the last 35 years, the costs of postsecondary education have been rising at unprecedented rates. According to Bloomberg and the U.S. Department of Labor, college tuition and fees have ballooned 1,120 percent since 1978—an inflation rate that is four times the consumer price index. A year of college tuition for an out-of-state student currently averages about $22,000 a year at four-year public universities.

Policy analysts, including Rachel Fishman at the New America Foundation, trace the skyrocketing costs of the last generation to two main variables: (1) Many schools have taken on heavy debt of their own to upgrade their facilities and better compete for faculty and students; (2) states have slashed public contributions to higher education due to budget crises.

“Many of these financial and educational institutions do not have student outcomes at the heart of their mission,” says Fishman. “Institutions have been shifting the costs to students through higher tuitions and fees.”

Some for-profit institutions capitalize on student aspirations by enrolling students with little regard to their academic or financial qualifications. And some specifically target students of color using slick advertising campaigns that emphasize racial diversity and hopes for a brighter future via education.

What these schools don’t highlight are average graduation rates of 42 percent after six years, according to National Center for Education statistics, significantly lower than the average for private nonprofit colleges (65 percent) and public four-year institutions (57 percent). What might be worse than leaving college without a degree? Not having a degree and being on the hook for tens of thousands of dollars.

For many lower-income students, a shift in financial-aid practices has also widened the money gap they must cross to complete a degree. In order to boost college rankings, schools have been shifting financial-aid dollars from “need-based” to “merit-based” aid in order to lure top-performing students. A study by the New America Foundation reports that, at almost two-thirds of private colleges, students from households earning less than $30,000 annually pay more than $15,000 per school year.

“Colleges are always saying how committed they are to admitting low-income students,” Stephen Burd, the report’s author, told Bloomberg BusinessWeek. “This data shows … the pursuit of prestige and revenue has led them to focus more on high-income students.”

These shifting priorities, policies and practices are pushing students—particularly students of color—into the clutches of private lenders.