Students at For-Profit Colleges More Likely to Default on Student Loans, Study Finds

Default on Student Loans
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Students at Private Institutions More Prone to Student Loan Default

A recent study by the National Center for Education Statistics (NCES) has found that students enrolled in private colleges defaulted more on their student loans than those studying at public institutions.

The federal study analyzed data on undergraduate students enrolled in both public and private institutions from 2003 onwards. The study found that about 52% of the students who studied at for-profit colleges went delinquent on their student debt.

In contrast, only 17% of the students who attended publicly-sponsored state institutions defaulted on their student loans. The stats on community colleges were also found to be better than private institutions, where about 26% of the students defaulted on their loans.

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For the Education Secretary, Betsy Devos—who has long been a proponent of private education and proudly claims to have sent her children to private schools—the challenge is to justify the growing inability of students at for-profit institutions to repay their debt load.

Meanwhile, the study also found that students analyzed in the past decade-and-a-half have defaulted more on their loans than their predecessors who studied at the same institutions eight years ago.

It was found that 27% of the students who began their undergraduate education in 2003 or after that defaulted on at least one loan 12 years later. On the contrary, only about 18% of the students who started college in 1995 defaulted on at least one loan in the years following.

Some experts say that the rise in defaults may have had to do with the Great Recession, which followed in the years after these students graduated. They had troubles finding jobs and consequently failed to make timely payments on their debt.

Meanwhile, others say that early dropouts may be partly to blame for the high delinquency rate. Default rates are naturally higher for students who took on debt to enroll in four-year degree programs but never completed their education.

No matter how we try to justify these statistics, the bitter truth is that the American youth is severely burdened by their student debt, which remains one of the major factors affecting their personal and financial decisions in life.

It is in fact worrisome that America’s student debt burden has skyrocketed to record high levels, while delinquencies on student loans are continuing to be on the rise.


Sources

Repayment of Student Loans as of 2015 Among 1995–96 and 2003–04 First-Time Beginning Students,” National Center for Education Statistics, October 4, 2017.

More than half of students at for-profit colleges defaulted on loans, study finds,” Chicago Tribune, October 5, 2017.

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