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For-profit students twice as likely to default on loans, report finds

WASHINGTON – Students who attended for-profit colleges were twice or more likely to default on their loans than students who attended public educational institutions, according to a federal study released Wednesday.

The National Center of Education Statistics report examines students who began their undergraduate education in 2003 and who defaulted on at least one loan over the next 12 years. Fifty-two percent of students who attended for-profit schools defaulted on their loans. That’s compared to 17 percent for those who attended four-year public school and 26 percent at community college.

The report also finds that for-profit students defaulted on their federal student loans in greater numbers than their predecessors eight years ago.

The report comes as Education Secretary Betsy DeVos is rewriting rules that had been put in place by the Obama administration to protect students who said they were defrauded by their for-profit colleges.

The study also found that this group of students defaulted on their federal student loans in greater numbers than their predecessors eight years ago.

Among students who started college in 2003, 27 percent had defaulted on at least one loan after 12 years, according to the study. For those who started their undergraduate studies in 1995, the default rate was 18%. The full reimbursement rate was 20 percent in the younger group, compared to 24 for the older group.

Robert Kelchen, professor of education at Seton Hall University, suggested that the higher rate among 2003 freshmen could be due to their entry into the workforce at the height of the Great Recession.

Default rates were higher for students who never completed their education, according to the study. “Obtaining a degree is a key part of a student’s ability to repay their loan,” said Joshua Goodman, professor of public policy at Harvard University. “Just going to college without finishing doesn’t really pay off. “

Among borrowers in the 2003 group, the median amount owed after 12 years was $ 3,700 for those with an undergraduate certificate, $ 11,700 for students with an associate’s degree, and $ 13,800 for an associate’s degree. bachelor’s degree or higher.