CC students post 15.6% loan default rate

New Education Department data shows 15.6 percent of community college students default on federal loans over the lifetime of the loan, reports College Bound. That’s lower than the 18.6 percent default rate for students of for-profit colleges, but considerably higher than the default rate for four-year, private, nonprofit institutions (5.6 percent) and four-year public colleges (6.3 percent).

The overall cumulative lifetime rate was 9.8 percent for the 2008 cohort, down slightly from 10.4 percent the previous year. Projecting out 20 years as to what the default rates in total dollars might be for students, the Education Department puts the estimate as high as 46 percent for students at two- and four-year proprietary schools and 31 percent at two-year public and private nonprofit schools.

I’m surprised the default rate for two-year public college students is so close to the for-profit rate since for-profit students have to borrow much more money to pay tuition. That may reflect poor completion rates for community college students.

POSTED BY Joanne Jacobs ON December 31, 2010

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Linda Eckert

The reason Community College default is so close to for profit schools is — both systems are being used as a new social welfare support revenue stream. The Financial Aid portion of the system is now the new welfare income for many low income individuals.

I see students every day who no intention of using the aid to improve their education…they simply want the money left over from the actual cost of schooling to feed their families. One cannot blame for taking care of their families but…

People are quite desperate in this economic environment. Not to mention they simply do not understand what they are getting into. I have seen students with over $25,000 in student loans. These students are still in remedial classes. By the time they graduate, if they graduate, they will have over $60,000 in loans and aid. And most likely not have the training or credentials to make over $25.000 a year…it is fairly difficult to pay the student loan payment and feed your family at this point.

Yep, you are going to have a high rate of default with this group…

Lydia Estenoz

So true, Linda. We often see students using Financial Aid as social welfare. It’s sad, but even with SAP (Satisfactory Academic Progress) being measured each term to ensure that students are progressing (2.5 GPA, taking required courses, etc.) students can still access and take out enormous loans adn rack up their future debt to a point where they’ll have to default. With Pell Grants covering up to 150% of the required credits for any given degree program, you can see why students are acrruing more than they can handle in debt. For a 60 credit degree program, if you end up taking 90 credits, and pay with a loan, you can see how the game is played. The private colleges make students take a prescribed curriculum where if you need remediation, you must pass that to enroll in the next semester. You can’t put off remediation to the last 12 hours of your degree program. Public schools do not implement this practice. To get financial aid, you must be degree-seeking, and publics let you “declare” yourself degree-seeking before you ever take the College Placement test to see if you can handle basic math or English Comp. I. Students should not be allowed to declare themselves in a degree program until they complete remediation.

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Karen Knight

If you end US job losses. Raise wages in the US.
Stop NAFTA and Free trade agreements. Lower education costs. College tution defaults will approach zero. It’s simple.

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