If Michael Myers and other Halloween-related phenomenon (like inebriated Ewoks) make you jumpy, the practices of many for-profit (“proprietary”) schools should give you chills all year. The Washington Monthly just published a great article on the aggressive and misleading marketing that some of these schools engage in, as well as the disturbing way that they push students into dangerous levels of debt.

In a nutshell, many of the institutions in this sector ultimately care about one thing: getting “asses in classes.” Aggressive recruiters often oversell chances and salaries of graduates, as well as other aspects of the program, and pay little attention to whether the student can benefit at the school or whether they have any chance of paying off their loans.

For example, it is likely that there is a tendency to doctor or help students cheat on “ability to benefit” tests, which are given to ensure that students have a minimum level of competency for college level studies before receiving federal financial aid. If the students later drop out and default on their loans (and many do), the school still makes a handsome profit.

So long as enrollment numbers are rising and tuition bills are being paid investors will be happy.

One way they ensure their own profitability is driving students deep into private student loan debt—whether or not the student can repay—in order to pay tuition. As many lenders have temporarily left the subprime student loan market, many schools have started making private student loans themselves. It sounds like some kind of VooDoo economics, but Steve Burd, the author of the article and blogger at HigherEdWatch.org, summed it up nicely:

Why would they lend knowing they won’t get the money back? Because any loss is more than offset by federal loans and financial aid dollars, which, despite the surge in private educational lending, still fund the bulk of tuition at proprietary schools. Say a student gets a $60,000 federal financial aid package and supplements it with a $20,000 institutional loan. The school comes out $40,000 ahead even if the borrower ultimately defaults.

This brings up two questions. First, what will Congress & the Department of Education do to make sure that these schools, as well as the private student loan market, is regulated.

There are some encouraging signs that the department is starting to get tougher on proprietary schools: let’s hope they are a prelude to some even stronger oversight for this out-of-control industry. Some Representatives, on the other hand, seems to be wavering a bit. An amendment to make sure that all private student loans, including those made directly by for-profit schools, are covered by the proposed Consumer Financial Protection Agency was defeated, although another amendment exempting all private student loans from the agency’s jurisdiction was voted down.

Second, will all of the very good and necessary attempts at expanding job training, including for green jobs, that are going on right now make sure that students and tax dollars are steered away from the worst players in this industry?

To the extent possible, these programs should either have strict accountability measures when it comes to the costs for students and the quality of the training programs, and they will hopefully be steered more towards community colleges, which tend to leave graduates with much lower levels of student debt.