Career college students defaulting on loans more often

Student loan default rates by career college

For-profit degrees come with a price

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By Christopher Magan, Staff Writer Updated 7:01 PM Saturday, May 8, 2010

DAYTON — Miami Valley career colleges have students defaulting on education loans at rates nearly twice the national average and five times that of traditional four-year universities, a Dayton Daily News analysis shows.

Default rates at local career colleges such as Miami-Jacobs, ITT Tech, Southwestern College, the International College of Broadcasting and the Ohio Institute of Photography are in double digits, according to 2007 data from the U.S. Department of Education, the most recent available. At some schools, a fifth of the students are failing to repay.

Experts say the combination of high-cost programs and low-income students leave many people with debt inescapable by even bankruptcy. More than 1,500 local students defaulted in 2007 alone.

Community colleges offer similar programs but create much less debt, said Kevin Kinser, for-profit college expert at the State University of New York at Albany. Although community colleges don’t offer the same fast-degree time frame, students can often go there without taking out loans, Kinser said.

Only 4 percent of students earn a bachelor’s degree from a for-profit school without loan debt, said Patricia Steele of the College Board Advocacy & Policy Center. “If you attend a for-profit institution,” she said, “you are much more likely to borrow.”

Miami-Jacobs, where accreditation problems sparked a lawsuit recently, had a default rate of 20.3 percent in 2007, one of the highest in the area. However, President Darlene Waite said the school instituted measures that included counseling and an “aggressive default prevention plan.” She said she expects to see its default rate nearly cut in half to 11.8 percent in the report for the 2008 school year.

Nationally, student loan default rates are again rising, from 4.6 percent to 6.7 percent between 2005 and 2007, after plummeting from 22 percent in 1990. For-profits lead the pack with 11 percent in default, compared to 3.7 percent at private and 5.9 percent at public schools.

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