Student Loans at For-Profit Colleges:64 of Every 100 Are Not Being Repaid

Aug. 31, 2010 - PRLog -- Contact: Floyd@FloydLagerPublishing.com  T. 714-328-0051

Student Loans at For-Profit Colleges:
64 of Every 100 Are Not Being Repaid

BY FLOYD LAGER


 Santa Ana, CA This astounding non-payment rate was taken from a recent report by the U.S. Department of Education. Records for 2009 from more than 8,000 colleges and universities in the U.S. were used in tabulating these troubling findings.    Student loan non-payment rates are far worse at for-profit schools. The government report shows Corinthian College, Kaplan University, and ITT Educational Services, three of the largest for-profit schools have among the worst repayment rates. Kaplan had an average repayment rate of 28%.  Federal student loan debt at the University of Phoenix is estimated at $2.8 billion dollars. (Figure is based on a 44% repayment rate of total loan debt of nearly $5 Billion).
    A few for-profit colleges rely on federal loans to enroll nearly 90% of their students, the maximum percentage allowed by the U.S. government. Only 1 of 10 students attends for-profit schools, yet the schools get nearly 25% of the $24 Billion the U.S. government makes available each year for student loans.
    If this scenario sounds familiar, you might recall the sub-prime home loan crisis. Millions of government-backed loans were given to people to buy homes who did not have the ability to make the payments. Millions of these home loan holders declared bankruptcy, tens of thousands have quit making payments, and many more are struggling today to get new loan terms and rates.
    However, the main difference between a home loan and a student loan is a student loan must be paid. Student loan holders can only avoid payment by declaring bankruptcy and proving extreme hardship or “total, permanent disability”. The question is: How many students taking out student loans know these facts?  The reality is a student loan will stay with them for as many years needed to pay the full amount, including interest.
    The Department of Education has plans to take a closer look at programs where student loan non-payments are the greatest. They will ask why specific programs have low loan repayment rates. One obvious answer is simply the loan is too large, with payments too high, in relation to the future income of the student. More information can be found at www.FloydLagerPublishing.com

# # #

FloydLagerPublishing.com is the publisher of "Learn What You Want and How To Get It", a work book that serves a guide for students planning studies and their lives.