Rep. Maxine Waters of California in Fail State (Gravitas Ventures)

Alexander Shebanow’s documentary starts out with everyday Americans with a similar story: believing college to be the key to a better life, they each enrolled in a private, for-profit trade school, for which they took out loans amounting to tens of thousands of dollars. What they ended up with were worthless degrees and backbreaking debt. They are, the film argues, the latest victims of tactics dating back to the 1970s that fleece students and taxpayers as well.

Fail State leaps back in time to explain the rise of for-profit schools. The postwar economic boom times paved the way for the Higher Education Act of 1965, which ostensibly opened up college to applicants by establishing a system for financial aid and grants. This section of the film has a relatively upbeat tone, as it portrays the time period between the 1940s and early 1970s as a golden age, during which the number of public universities offering relatively free or low-cost education grew dramatically. This would not last, however, as elite private schools responded by lobbying for legislation that took aid money out of public universities’ hands and put it directly into students’.

In theory, the passage of the Higher Education Amendments of 1972 meant students could start using federal aid to attend elite, four-year private universities. For-profit trade schools and colleges, which had begun operating around the same time, were also eligible to draw from the federal pump, and unfortunately, these were largely scam outfits preying on low-income students. Rep. Maxine Waters, who served on the California State Assembly during the 1970s, recalls investigating computer repair schools in Los Angeles that didn’t even have computers in the classrooms. The schools were also notoriously unregulated, as one attorney famously set up a fake trade school and received accreditation from the for-profits’ regulatory body, despite submitting a photograph of a mostly empty bookshelf as proof of the library and signing forms under a homophone for “Pillsbury Doughboy.”

The film argues that the 1972 amendment did not just foster a problem for lower-income Americans, it has negatively affected everyone as the increase in direct federal aid to consumers has been more than offset by state cutbacks over time. The result has been tuition rates that continue to rise. In the meantime, for-profit schools continued to recruit among lower-income and minority communities particularly hard. Shebanow also makes the case that attempts to regulate the industry over the past few decades have been largely ineffective, the lone exception being a period while President George H. W. Bush was in office. In response, the corporations behind these schools donated considerable sums of money to the likes of former Republican congressman John Boehner, with the goal of undoing restraints.

The film is definitely on the talky side, but graphs and charts reveal in the plainest terms possible how the amount of federal financial aid to for-profits has accelerated over time, while the percentage of the average student’s college costs it covers has fallen dramatically as a result of rising tuitions. Yet what makes Fail State especially effective in conveying how our current higher education system is highly flawed, if not outright broken, are the stories of those who had dreams dashed. They describe heavy-handed sales pitches by recruiters who promised huge future earnings while downplaying the costs. Thanks to helpful whistleblowers, we also get access to the actual scripts salespeople would use, which emphasize exploiting their listeners’ weaknesses in order to make sales.

It is hard to overstate just how shameless the for-profits come across here. They went hard after military servicepeople who might have had PTSD. Even more outrage-inducing is that they preyed on the mentally disabled and illiterate, according to reporters who broke the story on their tactics. Under the terms of the original Higher Education Act, the federal government guaranteed any loans that students defaulted on, so these corporations had absolutely zero incentive to be choosy. The victims, in turn, come across in interviews like smart, well-meaning people, and the film is respectful toward them as opposed to treating them as rubes who should have known better.

Doubtless, there will be some viewers who are already well-versed on this topic, but even for someone who keeps up with the news, Fail State is occasionally enlightening due to how it pulls no punches. While it spotlights the industry’s connections to politicians such as Boehner, it also points out the ways that President Obama’s administration did not do nearly enough to curb the industry’s practices. In addition, the film implies that Hillary Clinton and President George W. Bush may have been in the pockets of the for-profit corporations to varying degrees. And of course, it does not ignore President Trump’s connection to a notorious for-profit university that employed similarly questionable recruiting methods, even if his school was not eligible for federal monies.

This is a serious and sober film, but what makes it engrossing are story lines that feel incredibly personal, including a single mother in Queens who often goes without enough groceries for herself and her children in order to afford her classes at a local community college. Fail State questions why this must be the case. In being open to solutions from both sides of the ideological divide, it explores a recent policy initiative by Tennessee Governor Bill Haslam, a Republican. The film closes on a note of hope, emphasizing the importance of learning from past mistakes about preconceptions about who should have access to higher learning.

Directed by Alexander Shebanow
Released by Gravitas Ventures
USA. 94 min. Not rated