Student Loans – Study tracks student loan defaults at for-profit schools
More than one in five borrowers of federal student loans who attend for-profit colleges default within three years of repayment, new figures made available by the U.S. Department of Education on Monday show.
Historically, the government has reported such figures in terms of how many students default within two years — a figure that stands at 6.7 percent of student borrowers overall and about 11 percent at for-profit schools.
But the new three-year numbers, though preliminary, give a clearer picture of whether a student at a particular school will default, so the government will soon begin using them to help decide which colleges qualify for taxpayer-supported student aid programs.
Currently, schools with default rates over 25 percent for three straight years can be disqualified, but experts argued that schools were gaming the two-year figures. So starting in 2012, colleges will be judged on how many students default within three years of starting repayment, though the new threshold default rate for sanctions will be 30 percent instead of 25 percent.
source here.
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