Student Loan Defaults Have Never Been Higher: Is College Worth It AnymoreBy Joanna Hamilton on February 9, 2011, 11:16 am
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.
Private loans have traditionally offered a way for schools to beef up the 10 percent of revenue in the non-federal category, according to the report. But since the credit crisis began in 2007 and ’08, third-party lenders such as traditional banks and student lending giants like Sallie Mae have been largely unwilling to lend to for-profit school students, citing the high default rates and bad credit scores for the typically lower-income students who attend such institutions.
Here's a look at the top ten California colleges with the highest rate of student borrowers who default on federal loans within three years of starting repayment. Keep in mind that unlike the official two-year rates, these figures aren't subject to appeals. Also, colleges with 30 or fewer borrowers who entered repayment would see a slight adjustment in their official rate. These would include Pacific Coast Trade School in Oxnard, the Academy of Barbering in Northridge and the American College of Healthcare in Riverside.
“We are disappointed to see increases in the cohort default rates projected for our students and for students in all of higher education. These are speculative numbers, not actual rates however, and follow general trends in consumer loan defaults, such as credit cards and home mortgages. APSCU will continue working with its member schools on steps to curb defaults and to assure that borrowers are getting all the information they need to manage their debts responsibly. At the same time, we must remember that cohort default rates tend to rise and fall with the economy and the ability of borrowers to get and keep good jobs and incomes. An economy marked by near double digit unemployment for a sustained period has contributed substantially to this problem. We must also keep in mind that private sector college and university students are individuals working hard to build better lives, but are starting from the farthest back in the pack. They are the most economically disadvantaged, and unfortunately this fact becomes most pronounced in difficult economic times.”