Jay Bookman takes our discussion yesterday regarding student loans and extends it into the area of subsidies for for-profit institutions:
In 2009, just 5.2 percent of students who had attended four-year public schools such as Georgia State or the University of Georgia defaulted on their loans. Just 4.5 percent of those who had attended non-profit private colleges defaulted.
However, the default rate among those attending four-year for-profit proprietary schools was 15.4 percent. Between 2007 and 2009, the number of students from for-profit proprietary schools who defaulted on their loans increased by 65 percent. (It’s important to note that some for-profit schools do a good job for their students and have a relatively low default rate. If you have questions, the U.S. Department of Education maintains a database that allows you to check the default rate for each institution.)
Why are the default rates among for-profit schools generally so high? As the schools point out, part of it can be explained by the fact they serve non-traditional students. That’s a valid point. But in far too many cases, those students don’t get the education or the degree that they pay for and end up tens of thousands of dollars in debt to the taxpayer without the means to repay it.
Yesterday I asked why we subsidize all degrees the same way. Given the difference in default rates, the question must be asked why universities – who have a vested interest in accepting all students and seeing that all can borrow money if required – should also be subsidized in the same way, whether or not their students can demonstrate an aggregate track record of being prepared for the job market – and the related ability to repay government guaranteed loans.