The real story here is that several for-profit colleges have engaged in questionable practices - perhaps even illegal - that have gotten students into enormous, Federally-backed loans that are then not repaid.  It is suspected that some of these colleges are manipulating kids into loans that are ultimately unaffordable, but very profitable for these colleges.

There is a really good story about this on NPR.  Here's a piece of it:

A Senate committee saw video evidence that for-profit colleges are using high-pressure sales tactics that would make a used-car salesman blush.

The Senate Health, Education, Labor and Pensions Committee held a hearing on recruiting efforts by for for-profit industry, which has been growing rapidly over the last decade, thanks in large part to federal loans students take out to pay tuition.

The Government Accountability Office sent undercover investigators into 15 different for-profit colleges around the country.

Some recruiters, caught on hidden cameras, openly urged applicants to lie on the federal form use to obtain student aid. One student was urged not to report $250,000 in assets because it was "none of the government's business." Other would-be students asked to speak to a financial aid counselor, but were told they'd have to sign an admissions form first. In some cases, applicants practically begged to get a full accounting of the likely costs, but were told they'd have to sign on the dotted line first.