For-profit colleges: huge student loan default rates

by David Safier

For-profit colleges too often sucker students with promises of future jobs, get them to take big government-insured loans, then take the money and run. Often the training programs aren't what they're cracked up to be, or the students lack the background to succeed in the programs.

The 3-year default rate on student loans at for-profit colleges is 25%, more than twice as high as at public colleges (11%) and three times as high as private nonprofit colleges (8%).

Remember, the default rate only includes former students who stop paying. Others who are still trying to pay back the loans are often struggling just to pay for housing and food.

The for-profits — our own University of Phoenix is the largest offender — don't give a damn. When the government guarantees the loans, the for-profits know they're golden. Some of them even give students their own home-grown loans as loss leaders. They know they probably won't get their money back, but the bigger, government-insured loans are so profitable, it doesn't matter so long as they get the students to sign up.