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The balances on federal student loans in the U.S. now exceed $1.1 trillion. That staggering number has fueled discussions about the so-called student loan crisis.
But a recent report by the Brookings Institution found that it’s a selective crisis that’s “largely concentrated among nontraditional borrowers attending for-profit schools and other nonselective institutions.”
Brookings said that while most borrowers at four-year public and private nonprofit colleges have low rates of loan default, decent earnings and stable employment rates, nontraditional borrowers who attend for-profit schools typically have weaker educational outcomes and difficulty finding jobs and paying their loans.
The Brookings Paper on Economic Activity, which was based on a sample of student-loan borrowers, says that in 2011, borrowers at for-profit and two-year institutions made up half of the student loan borrowers leaving school and starting to repay loans. It also found that those students accounted for 70 percent of loan defaults.
In 2000, of the top 25 schools whose students owed the most federal student loans, just one was a for-profit college. By 2014, the number that were for-profit was 13.
According to Brookings, these 10 schools, eight of which are for-profit universities, had the highest total outstanding student loan debt in 2014:
- University of Phoenix – Phoenix Campus: $35.5 billion
- Walden University: $9.8 billion
- Nova Southeastern University: $8.7 billion
- DeVry University – Illinois: $8.2 billion
- Capella University: $8 billion
- Strayer University– Global Region: $6.7 billion
- Kaplan University – Davenport Campus: $6.7 billion
- New York University: $6.3 billion
- Argosy University – Chicago: $6.2 billion
- Ashford University: $5.9 billion
In an interview with MarketWatch, a spokesperson for NYU (number 8 on the list) pointed out that the report has its limitations. For instance, the Brookings Report considered total outstanding debt, not the per capita outstanding debt. Naturally, schools with more students are likely to have more total debt.
There does appear to be some good news on the student debt horizon. According to the report, “Loan delinquency is likely to drop in the future, although with a lag of several years, thanks to several factors including a steep drop in the number of new borrowers at for-profit and two-year institutions as economic conditions improved, and as oversight of for-profit institutions has been strengthened.”
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