Student loan defaults are up. AZ leads the nation.

by David Safier

More students are defaulting on loans across the country. For-profit colleges lead all others in the percentage of students defaulting. And Arizona leads the nation in defaults, probably because we're the home of for-profit giant, University of Phoenix.

I've read three articles in the past few days, each of which adds something unique to the story. First is the graphic at right from the NY Times article. Not only do students from for-profit colleges top the loan default ranks — double that of public colleges, triple that of not-for-profit private colleges — but their defaults have increased more quickly.

Next is the graphic from the article in the Star.

 
Defaults were very high in 1990. They fell sharply during the Clinton years, after government lending reforms were put in place. They went up again during the Bush years. I don't know exactly how cause and effect worked here, but I can guess the corporate-friendly Bush administration made life easier for the banking and for-profit college industries when it came to granting loans.

Finally, there's the article from Cronkite News putting Arizona at the top of student default rates. The numbers are pretty astounding. We have more students in default — by numbers, not by percentages — than states like California and Texas. Our percentages top everyone else's as well.

The article cites the probable cause of our high default rate as the presence of our own University of Phoenix. The UoP spokesman, of course, denied there is any connection, then said (be sure to pay attention to the first words, "As always . . ."):

“As always, we are committed to helping our students understand and manage financial aid debt levels, and we continue to make significant investments in technology, learning and preparation to help our students succeed,” said the prepared statement from Chad Christian.

UoP has already made a non-admission admission to the Feds that it paid recruiters per new student, which led to all kinds of abuses, and on its website, it writes about new efforts to clean up its act. "As always," nothing! If they're not screwing over their students, it will be the first time.