Education Stks
- Thread starter mac
- Start date
Default rates in the "for profit" schools are through the roof and about to go higher. Many are at risk of losing their ability to provide federal funding.
From the article linked below:
The data also comes as the government is preparing to track defaults over a three-year instead of a two-year window because of a new law beginning in 2014, meaning that default rates will be significantly higher than they are now. Colleges with unusually high default rates risk losing eligibility for federal student loans and Pell Grants. Last December, the Education Department released informational data indicating that the new law would be particularly threatening to for-profit colleges.
http://www.citytowninfo.com/career-...-loan-default-rates-continue-to-rise-10050402
From the article linked below:
The data also comes as the government is preparing to track defaults over a three-year instead of a two-year window because of a new law beginning in 2014, meaning that default rates will be significantly higher than they are now. Colleges with unusually high default rates risk losing eligibility for federal student loans and Pell Grants. Last December, the Education Department released informational data indicating that the new law would be particularly threatening to for-profit colleges.
http://www.citytowninfo.com/career-...-loan-default-rates-continue-to-rise-10050402
More info:
The three-year cohort default rate calculation tracks the number of students who default for an additional year, but does not change the denominatorâthe number of students entering repayment. The three-year 2007 cohort default rate, for example, calculates the percentage of borrowers who enter repayment between October 1, 2006, and September 30, 2007, and who default on or before September 30, 2009. Because the numerator in this equation will almost certainly go upâtracking students for an additional year will catch more defaultersâthe three-year calculation will result in higher default rates for nearly every institution.
Schools, however, wonât face sanctions for the new three-year default rate calculation until 2014, at which time the threshold for sanctions will also increase. Currently, a school loses eligibility for federal financial aid if it has a two-year cohort default rate above 25 percent for three consecutive years or above 40 percent in any one year. In addition, there are benefits to schools with two-year default rates below 10 percent. These schools are allowed to deliver loan funds in one payment and can disburse funds immediately to first-year undergraduate students. When sanctions for the three-year calculations take effect in 2014, schools will risk losing federal student aid for having default rates above 30 percent over three years, or 40 percent in one year, and will receive benefits for having default rates below 15 percent.
