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Feds publish for-profit loan repayment rates

A spreadsheet published late Friday by the federal Education Department answers a much-debated question in the federal effort to regulate for-profit colleges: Can students at for-profit schools repay their loans?

The department released loan repayment rates for individual colleges. The data show a remarkable range from school to school in the ability of students to pay down their college loans. A quick analysis by the Institute for College Access & Success found that overall repayment rates were around 55 percent for non-profit colleges, compared with 36 percent at for-profit schools.

For-profit stock plunged at the news.

At issue is a proposed federal rule that would potentially restrict a school's access to federal aid funds if its programs do not yield "gainful employment."

The department wants to measure this two ways. One is a graduate's debt burden -- what share of his or her salary must go to loan payments. The other is repayment rates -- what share of students are paying down the principal in their loans.

A for-profit college that scores poorly on both counts becomes ineligible for funds. A much larger group -- perhaps half of the industry -- would fall into a nebulous "yellow" zone, facing some restrictions but still entitled to federal aid.

Why does half the for-profit industry fall in the mildly restrictive "yellow" zone and only 5 percent in the more dire "red" zone? Largely because a college must fail both tests to become ineligible for federal dollars.

Colleges with student loan repayment rates below 35 percent face the stiffest penalties under the proposed rule: if they fail that test and the student-debt-burden test, they could become ineligible for aid. Schools with repayment rates from 35 percent to 45 percent could face restrictions -- they fall into the yellow zone. Anything over 45 percent is considered acceptable and frees the institution from any further federal scrutiny.

The federal data reveal sub-par repayment rates at some major for-profit colleges. It's important to note, though, that the for-profit companies are disputing the federal data and contend the percentages in the spreadsheet are too low. More on that below.

Let's start with Kaplan University, owned by the Washington Post Co. The institution's overall repayment rate is 28 percent, meaning that nearly three-quarters of students aren't paying down their student loans.

The University of Phoenix, the industry's largest player, fares better, with a 44-percent repayment rate.

Strayer University, based in Arlington, has a 24-percent repayment rate.

Let me pause here for an important disclaimer:

It's hard to tell if the figures stated above are for the universities as a whole, or merely for some of their holdings. The spreadsheet lists several campuses for each for-profit holding company. It's a confusing document, and it appears that a reader might have to carefully combine many rows of data to come up with an accurate repayment rate for an entire institution.

Kaplan officials told my colleague Nick Anderson that the government's definition of repayment was overly narrow and said the education department's spreadsheet did not count many borrowers who had consolidated loans or participated in federal income-based repayment plans.

Strayer said the figures in the spreadsheet were well below their own estimates of loan repayment rates.

No overall repayment rate is stated for the massive Corinthian Colleges corporation. Instead, several dozen of its Everest schools are listed individually, with repayment rates ranging from 4 percent at one campus to better than 50 percent at another.

Likewise, numerous campuses of DeVry University are cited, with repayment rates from the teens to higher than 60 percent, but no overall repayment rate for the holding company. But DeVry fares better in the analysis than Corinthian and some of the other for-profit entities.

For some points of comparison, here are the student loan repayment rates at some non-profit universities in the area:

American University: 69 percent

Georgetown University: 79 percent

George Mason University: 69 percent

University of Maryland: 73 percent

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By Daniel de Vise  |  August 16, 2010; 5:30 PM ET
Categories:  Administration , Aid , Finance , For-profit colleges , Public policy  | Tags: Corinthian Colleges, Kaplan University, Strayer University, for profit colleges, for profit stocks, for-profits  
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So, basically, taxpayers get a huge bill. Students get an "education" that doesn't allow them to make much income, plus a ruined credit rating. And the schools rake in the profits from the taxpayers. Is that about right?

Posted by: crazycatlady | August 17, 2010 7:58 AM | Report abuse


Yup that is about it but add the sallie maes and the guaranty companies that loan the money and because they are federal loans the student cannot discharge them in bankruptcy no mattter what the hardship

so the students were ripped off and the loans are forever, they got lousy educations and will never make enough money to repay the loans

and this country has p**sed away more of our resources for nothing.

Posted by: JohnAdams1 | August 17, 2010 11:58 AM | Report abuse

Educational financial overload?

to ease that headache and get back to work!

Posted by: joeysch | August 17, 2010 1:39 PM | Report abuse

Student debt is an important issue for this country – one that needs a solution. Your blog lists the student loan repayment rates of traditional, non-profit universities in the D.C. area (Georgetown, American, George Mason and University of Maryland) and compares these rates with those of private sector schools. This is an unfair comparison.

Private sector schools disproportionately educate a large number of low income students – students who are disadvantaged by fewer opportunities for higher education and who, because of their background and family income, take on higher levels of debt to complete their education. It is not surprising that the default rates for institutions with larger proportions of low income students are higher; their default rates are influenced significantly by student demographics.

Our education system needs both traditional (non-profit) and private sector schools to educate students of all backgrounds. Without the private sector schools, many low income students would be shut out of pursuing opportunities in higher education.

As former president of Colorado State University, I discuss this and higher education issues on my blog at You can also follow me on twitter at @LarryPenley.

Posted by: LEPenley1 | August 17, 2010 9:42 PM | Report abuse

For-profit, private colleges are not the same as non-profit, private colleges. Private colleges such as Georgetown, Howard and George Washington University do not answer to Wall Street nor do they rely on hard-core recruiting tactics that for-profits like University of Phoenix, DeVry or Strayer do. These latter schools should not be equated with the higher tier colleges that are private and non-profit. The for-profits add another dimension to education which should be investigated. It's about time the government and thanks to the current administration, are finally looking into these scam colleges. Low income students would be best served by going to their community colleges. For-profit college attendees are desperately seeking the degree without consideration of gaining an education.

Posted by: cricket35 | August 19, 2010 5:30 PM | Report abuse

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