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 and universities represent the fastest-growing but also most controversial sector of private higher education in the United States. Universities like Phoenix, DeVry and Kaplan have helped turn the for-profit sector into a massive revenue generator and the engine for higher education growth. From 1998 to 2008, for-profit enrolment grew by 225%.
A trade group has filed suit in federal court to block a series of U.S. Department of Education rules that would increase regulatory scrutiny over segments of higher education.
The Department of Labor is considering rule changes that could substantially alter the balance of power between private colleges and their employees' unions, by forcing college administrations and their outside consultants to disclose much more information than previously required on their efforts to influence union elections or contract talks.
Private colleges spent an amount equivalent to about 37 percent of all of their tuition and fee revenue on scholarships for students in the fall of 2010, an all-time high, according to an annual "tuition discounting" survey. The estimated tuition-discount rate for first-time freshmen—42.4 percent—was also a record high, according to a report on the survey by the National Association of College and University Business Officers.