With Congress poised to take up legislation to reauthorize the Higher Education Act this week, proprietary institutions are lobbying furiously against a provision that could put hundreds of for-profit colleges out of business.
The number of college students who defaulted on their federal student loans climbed in the fiscal year that ended in September 2008, according to new government data released Monday.
Data released by the Department of Education today show that while the official loan-default rate for students of for-profit colleges who entered repayment in 2008 was 11.6 percent, the rate would be more than double that, or 25 percent, under a stricter measurement standard that begins to take effect next year.
About one-quarter of students who took out federal loans to attend for-profit colleges defaulted within three years of starting repayment, according to a new federal analysis.
For-profit colleges training security guards, medical assistants and law enforcement officers risk losing federal money because they leave students with debts they struggle to repay, the U.S. Education Department said.
Officials of South University, a proprietary-college system based in Savannah, Ga., took a calculated risk five years ago. At a time when nursing programs at many traditional colleges were struggling to attract students, South figured that it could profitably enter the field of nursing education.
Politically and financially, the $15.4-billion for-profit higher-education industry is on a roll. The legislative environment is friendly, enrollments and profits continue to grow, and demographic trends suggest strong opportunities for further expansion and profitability.
For-profit higher education is a large, complex system of institutions, and its explosive growth over the last decade has made it a prominent force in shaping higher-education policy and practice. The for-profit educational sector is composed of a diverse set of colleges, but most of the literature neatly ignores this.
Many for-profit colleges do not make their students' job-placement or program-completion rates readily available, or else give out inflated numbers, according to a report by the National Consumer Law Center.
For-profit higher education has continued to grow at a pace that once seemed unsustainable, thanks to an influx of capital, a favorable regulatory climate, and the industry's own nimble reaction to the changing demands of students.