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Student Loan Debt Spirals at For-Profit Colleges (Page 1 of 2)

Despite the publicity in recent years surrounding an ostensible “student loan crisis” that has saddled a generation of college students and their parents with overwhelming amounts of student loan debt, a large number of college students are actually graduating with little or no debt from student loans, newly released data has revealed.

However, the likelihood that a college student will take on any student loan debt depends largely on the type of school he or she attends, with students at for-profit career schools, online schools, vocational training programs, and other for-profit institutions tending to rely on student loans in much higher proportions.

Many College Students Eschewing Student Loans

About one in three college graduates leaves school without any debt from student loans, according to data compiled by the U.S. Department of Education as part of its National Postsecondary Student Aid Study, which is conducted every four years.

Of those students who earned a bachelor’s degree in the 2007–08 academic year, 34 percent graduated with no debt from student loans — a figure that has held steady over the past four years. Of those students who earned either a two-year or four-year degree or certificate, 41 percent graduated with no student loan debt.

The For-Profit Exception: Student Loan Debt Saturates Career Schools

A breakdown of the NPSAS student loan debt data, however, reveals that student loan borrowing diverges widely across types of higher education institutions, with students at for-profit colleges borrowing money for their education more often and in larger amounts.

Virtually all for-profit students are graduating with at least some debt from college loans.

Among graduates of two-year associate degree programs, for example, whereas only 38 percent of those in public programs left school with at least one education loan, 98 percent of those in for-profit programs did so.

Among graduates of two-year certificate programs, only 30 percent of students in public programs left school with education debt, while 90 percent of students in the for-profit programs did so.

Of those students who earned bachelor’s degrees, 62 percent of those in public four-year programs and 72 percent of those in private four-year programs graduated with debt from student loans, while 96 percent of students in for-profit bachelor’s programs did.

More Private Student Loans Seen at Career Schools

Students in for-profit programs were also more likely than their private and public counterparts to leave school with debt from non-federal private student loans.

Overall, 30 percent of students earning a higher education degree in 2007–08 had taken out private student loans. But the percentages were much higher among students of for-profit schools.

Among graduates of associate degree programs, 60 percent of those in for-profit programs had taken on debt from private student loans, compared to just 15 percent of those in public two-year programs.