Student Debt Editorial Makes Invalid Comparison

By Brian Moran, Interim President and CEO of APSCU

For-profit colleges enroll only 10 percent of students but account for almost half of all student loan defaults ("Avoiding student debt," Oct. 24). Something is radically wrong. Right? Well, yes. The comparison, itself. Unless it is to attack for-profit education, why mix up those who enroll with those who default? An honest inquiry would compare only those students who actually borrow: all student loan borrowers compared to those borrowers attending career colleges. And an even more honest approach would focus on needs-based student borrowers, wherever they attend school.

The reality is that only about one in three undergraduate students borrow anything at all to attend school. Of those who do borrow, 91 percent repay their loans.

Career college student borrowers represent 28 percent of all borrowers going into repayment. Of all the borrowers who enter repayment, 9 percent default. Career college student borrowers represent 48 percent of this total. Why so high? This percentage represents the fact that a majority of independent career college students have an annual family income of less than $20,000, while a majority of dependent career college students have an annual family income of less than $40,000.

Even this comparison mixes apples and oranges. For-profit colleges have dramatically higher default rates than schools serving more affluent populations; for schools serving less-affluent populations, such as community colleges and many historically black colleges and universities, the default rates are substantially similar.

We are concerned about rising default rates and taking steps such as helping students with budgeting, financial aid counseling and understanding loan repayment responsibilities. We believe that the federal government could help by limiting the use of student loan money to tuition, books and fees, rather than allowing student loans to substitute for credit card or other forms of debt. We also believe that, as it has in the past, a broadly shared economic recovery would go a long way to solving the student loan default problem.


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