514 Colleges Have Higher Default Rates Than Graduation Rates

A new study finds that students at 514 colleges and universities are more likely to default on their student loans than graduate.

The non-profit Education Sector conducted the study; the group partnered with USA Today for a subsequent joint analysis of federal data.

“These colleges should set off a red flag in the minds of prospective student borrowers–and their parents,” said Education Sector Director Andrew Gillen. “Many students at these colleges will no doubt take out loans, graduate and get good jobs. But the high default rates and lower graduation rates suggest that many will not.”

The report comes as the subsidized Stafford loan interest rates reverted back to near pre-recession levels of 6.8%, a rate double their current level. The higher rate will only apply to new student loans, not existing ones.

“Given the importance of defaults, and the recent jump in their numbers, it makes sense for the government to provide more detailed information on defaults, not just as an accountability lever but as a basic consumer right,” says Gillen.