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Student Loan Repayment Rates

By Matthew Yglesias  

"Student Loan Repayment Rates"

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The current paradigm of for-profit higher education basically rewards schools for roping in as many students as possible with no attention given to whether they graduate or end up gaining anything worthwhile. The Obama administration is trying to turn this around with proposed new rules that would deny federal student loans to the worst-performing schools and start shifting the incentive structure. One additional blow in that direction is simply releasing the data about loan repayment rates at different institutions:

At the headquarters of the University of Phoenix, the nation’s largest for-profit education company, the repayment rate was 44 percent, compared with 38 percent at DeVry and 27 percent at Kaplan University, a unit of the Washington Post Company. [...]

Under the proposed “gainful employment” regulations, programs with a repayment rate of at least 45 percent will continue to be eligible for federal student aid. The regulations, which are to be completed by Nov. 1 and will go into effect in July 2011, outline two tests for eligibility: repayment rates and debt-to-income loads. [...]

The Department of Education cautioned that the data released on Friday was based on an institution’s overall repayment rate, but the regulations would determine eligibility program by program.

This sounds like many University of Phoenix programs are in fine shape. And as the market-leader in this sphere, I think there’s reason to believe that they’ll be able to look at what it is that makes their better-performing programs work well and turn these new rules to their advantage. Kaplan, by contrast, seems to be the Charles Krauthammer of for-profit higher education.

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