At Many Colleges, Students Are More Likely To Default On Loans Than Graduate

Forty-four percent of for-profit private institutions have higher rates of students who default on loans than students who actually graduate college, a new report shows.

USA Today and think tank Education Sector analyzed federal data from schools that had at least 100 borrowers who started repaying loans in 2009 and the equivalent of at least 250 full-time students who were enrolled in the 2009–10 academic year. The results demonstrated that for-profit institutions and community colleges were the worst for students. Of the schools analyzed, 37 percent of four-year for-profit institutions had more students defaulting on loans than graduating on time. Community colleges did not fare much better, as 33 percent have higher default rates than graduation rates. The report from the Education Sector called the institutions “red flag colleges.”

Of the 117 for-profit schools that USA Today found to have higher default rates, 45 were affiliated with ITT Educational Services, the highest concentration of for-profits in one company.

Default rates on student loans are widespread. After $3.5 billion in government and private student loans went bad in the first three months of 2013, the total of federal student loan borrowers defaulting on their loans came to 6.8 million, setting a record.

The report’s release coincides with a tumultuous period for student debt, as Congress allowed rates on subsidized loans to double Monday. Student debt also surpassed the $1 trillion mark last year and in the first quarter of 2013, outstanding student debt came to the total of $986 billion.