Repayment study left out blacks

A U.S. Education Department analysis on the relationship between race and repayment of student loans left out black students, skewing results used to justify the gainful employment rule imposed on for-profit colleges.

Should Pell Grants be targeted at low-income students — or expanded to middle-class families? 

Obama’s loan plan will boost tuition, debt

Obama’s Pay As You Earn plan limiting loan repayment encourages students to borrow more and colleges to charge more, writes a business analyst. Taxpayers will get the bill.

College tuition is rising the fastest at public universities and community colleges, driven by big increases in California. College costs are taking a larger share of family income.

Obama eases student loan burden

President Obama plans to ease student borrowers’ repayments by accelerating a measure limited repayments to 10 percent of discretionary income and offering a small interest rate cut for consolidating loans.

Federal student loans lure students into debt and enable colleges to raise tuition, argues Republican presidential candidate Ron Paul.

When aid checks come, students go

The case of the vanishing students isn’t really a mystery: When colleges deduct tuition from Pell Grants and send the rest to grant recipients for living expenses, some “students” drop their classes or just stop showing up.

Also on Community College Spotlight: At a Virginia community college, students can’t get loans until they draw up a budget that shows current spending and how they’ll repay their loans once they graduate.

36% of for-profit grads repay loans

Only 36 percent of for-profit college students repay their loans, compared to 54 percent of public college students and 56 percent who attended private non-profits, according to advocacy groups cited in the New York Times. A new Education Department report lists “startlingly low” repayment rates at for-profit colleges.

. . . 33 of the 86 Corinthian Colleges’ Everest locations had repayment rates of less than 20 percent — and at several, the rates were less than 10 percent.

At the headquarters of the University of Phoenix, the nation’s largest for-profit education company, the repayment rate was 44 percent, compared with 38 percent at DeVry and 27 percent at Kaplan University, a unit of the Washington Post Company.

Proposed new regulations limit enrollment at for-profit programs with loan repayment rates under 45 percent and cut loan eligibility if the repayment rate falls under 35 percent. Only 5 percent of for-profit programs, accounting for 8 percent of students, would lose federal student aid, the department estimates.

I’m surprised that repayment rates are so low in non-profit higher education.

For-profits are only part of the problem, write Daniel L Bennett and Zac Bissonnette in Forbes. “Colleges of every stripe are soaking up societal resources and saddling students with debt.”

In their thirst for the blood of the institutions that are preying on less than 10% of all students, Congress and other critics are often ignoring similar exploitation by nonprofit institutions that enroll more than 90% of postsecondary students.

For-profits disproportionately enroll high-risk students — low-income, black and Hispanic, older — who are less likely to complete a degree, get a decent job and pay back their loans. But public and nonprofit higher education also enrolls lots of these students, Bennett and Bissonnette write.

Less than 35 percent of students at “noncompetitive” colleges earn a degree in six years; the rate is 40 percent for students at “less competitive” colleges. Edward Waters College and Southern University at New Orleans have “single-digit graduation rates,” they write.

Loan repayment rates would soar if would-be students had to demonstrate college readiness to qualify for aid. But there is no political will to cut off the academically unprepared, who are likely to be low-income, black or Hispanic and products of inferior K-12 schools.

Also on Community College Spotlight.

Update:  Students who’ve asked for more time to repay loans are counted as not repaying at all, notes Inside Higher Education.

But what disturbed officials at several for-profit colleges was that the department’s proposed method of calculating repayment rates also seemed to penalize institutions if their borrowers had taken advantage of two other programs that the Education Department has aggressively promoted as legitimate alternatives: income-based repayment and loan consolidation.

These students are considered non-payers, unless they’re paying down the principal of their loans.

If loan repayment is used to judge a college’s value, some non-profits will be in trouble, Inside Higher Ed points out.

For the 89 historically black colleges in the department’s Excel spreadsheet, according to one estimate, the mean loan repayment rate was 20 percent, and a full 93 percent fell below the 35 percent threshold that would make for-profit colleges ineligible for aid under the department’s scheme.

Devry Inc.’s Ross University School of Medicine has a 16 percent repayment rate, according to the report. That’s not much worse than Harvard Medical School and Tulane University’s medical school both at 24 percent, and the University of Chicago’s Pritzker School of Medicine at 22 percent.