Student Debt Is About More Than Default Rates

Career College Central Summary:

  • Each year when the Education Department's default rate report comes out, there is an inevitable jockeying of position among the different types of institutions about who comes out looking the best.
  • Which schools turned out financially solvent graduates? Private colleges can crow that their students have the lowest default rates, at 7.2 percent, while everybody's favorite bogeyman, the for-profit colleges, show default rates of 19.1 percent.
  • Public institutions fall squarely in the middle, at 12.9 percent.
  • But even those statistics are pretty meaningless, something the American Association of Community College Trustees hastened to point out when the latest data revealed that their students have the highest default rate, at 20.9 percent.
  • "Default rates are inherently limited, because they only look at the outcomes of borrowers entering repayment, and the vast majority of community college students don't borrow. We are still—by far—the most affordable sector of higher education," said ACCT President J. Noah Brown in a statement.
  • The Association of Private Sector Colleges and Universities noted in a blog post that the higher default rates among community colleges and for-profit colleges has a lot more to do with the types of students enrolled in them than how a certain institution counsels its students on debt.
  • "The reason more students who borrow to attend a community college or [a for-profit college] default is that these students do not have the same level of academic preparation or access to financial support as a student attending George Washington University, Northwestern, or University of Virginia.
  • The question is really how programs help students succeed compared to where they come from," the blog said.
  • APSCU and ACCT hint at the issues that Combe says need a much stronger spotlight–financial literacy about college costs, particularly for low-income attendees, and regular contact with borrowers before they get into trouble. Be a trusted source, he says. "It's all about engagement. It's all about developing a relationship.
  • Rather than thinking of us as a counselor, it's more about thinking of them as a customer."
  • Customer service is not exactly in the government's purview.
  • The last thing it does is think about student loan borrowers as individual customers. Some colleges do a better job than others on that front, but all of them are flying blind without comprehensive data on delinquencies or borrowers who are on the brink of default.

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NATIONAL JOURNAL

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