A new U.S. Department of Education (ED) report details rising loan default rates among students at for-profit colleges as the for-profit industry – including some of the country’s largest online education programs – fends off government regulations that could limit their federal aid.
About 25 percent of students at for-profit institutions – such as the University of Phoenix and Kaplan University – defaulted on their school loans within three years of starting repayment, according to the federal analysis, released Feb. 4.
That default rate is up from a 21-percent rate at for-profit colleges in late 2009, according to ED. For-profit college students, who make up about 15 percent of all U.S. students, now account for 46 percent of all student loan defaults.
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Student loan defaults have increased as higher education enrollment has risen in the down economy. About 8 percent of nonprofit college students default on their loans within three years – up from 7 percent in 2009 – and students at public colleges and universities recorded an 11-percent default rate, marking a 1-percent increase.
For-profit college giants Kaplan Higher Education and Corinthian Colleges Inc. have campuses with default rates higher than 30 percent, according to the report. New Jersey-based Drake College of Business, a school with 543 students, posted the highest student loan default rate at 43 percent.