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Special Report (Trade Schools) #241520

CBS Evening News for Monday, Aug 18, 1975
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(Studio) Federal government underwrites loans for trade school tuition.
REPORTER: Roger Mudd

(No location given) Department of Health, Education and Welfare gives loans to students enrolled in accredited colleges and vocational schools, known as proprietary schools. McMahon College television commercial shown. Students have 15 mos. to start repaying loan after finishing school or dropping out. Bank gets extra 3% interest from government; government will pick up tab if student defaults. McMahon College went bankrupt. 95% washout rate. Students refuse to pay for courses they couldn't finish; so taxpayer stuck with bill. 5 million students have taken loans. 14% national default rate; 60% in proprietary schools. Banks and schools gained money.
REPORTER: Sharron Lovejoy

(Texas) Texas chain of schools controlled by Carl Whaling. Refuses to talk about schools or student loans. Whaling salesmen recruited 6000 students over 4 years, most from Rio Grande valley. [Connie STANLEY - says had to work.] [Margie FONTANA - says salesman made it easy.] [STANLEY - says salesman said no money needed down.] Loan applications run through HEW computer. Loans from banks forwarded to schools, not students. Students never saw checks. At Whaling school, McAllen Bus. School, students found outdated books and business equipment.
REPORTER: Sharron Lovejoy

(Texas) [Ex-McAllen student Margie FONTANA - says we were guaranteed jobs.] [Ex-McAllen student Connie STANLEY - says led to believe school accredited, but it wasn't.]
REPORTER: Producer: Roger Simms

(Texas) Alleged Whaling schools gave kickbacks to banks. FBI investigates missing $2 million in Department of Health, Education and Welfare education grants that students never saw. 7 HEW representatives fired in Texas for making irregular loans to Whaling. [Ex-McAllen student Janice WEST - says doesn`t feel she should pay $1700 to bank.] [FONTANA - says wants something for her money.] [Department of Health, Education and Welfare representative Charles COOKE - explains why Department of Health, Education and Welfare delayed action.] Real losers are students.
REPORTER: Sharron Lovejoy

Lovejoy, Sharron;
Mudd, Roger;
Simms, Roger

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