The federal government’s efforts to track student-loan-default rates and graduation rates are sending some students down the wrong path, according to a report released on Tuesday.
In the report, Education Sector, an education-policy group, calls on the U.S. Department of Education to pair the default rates and graduation rates, instead of releasing the numbers separately, to arm potential students with more-complete information.
The report, “In Debt and in the Dark: It’s Time for Better Information on Student-Loan Defaults,” by Education Sector’s research director, Andrew Gillen, also highlights colleges where default rates exceed graduation rates—a combination that it says should “set off a red flag in the minds of prospective student borrowers—and their parents.”
Looking at institutions where at least 30 percent of students borrowed and default rates exceeded graduation rates, the report identifies 265 “red flag” colleges, most of which are for-profit institutions and community colleges.
The report also urges the government to require more-detailed data about what kinds of students default on their loans, and to adjust colleges’ reported default rates based on family income and what percentage of an institution’s students receive Pell Grants. Adjusting how the data are collected and released would help students make better decisions about where to attend college, the report argues.
“Until we have better data on loan defaults, the federal government will continue to lend billions to students every year with little to show students, taxpayers, or policy makers about what happens when those students have to pay back that money,” the report says. <Read more.>