http://www.nytimes.com/2010/09/14/education/14colleges.html?_r=1
-Kelly Neary
Sunday, October 10, 2010
Student Loan Default Rate is Continuing to Increase
This article discusses how the default loan rate at public and for-profit institutions has risen to anywhere between 4 and 11 percent. One regulation the Obama administration has proposed requires for profit institutions to prepare students for gainful employment (provide them with a degree they can use) or risk losing federal aid. This relates to what we discussed in class about loan guarantees. Student loans are issued by a third party (banks) but the government is responsible for any defaults on the loans. This also relates to legitimacy in that Obama reacted alternatives to the loan problem because it could be rejected as illegitimate that student loans are rising so much and students aren't earning degrees that will allow them to pay of loans in the future.
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the loan guarantee should not be debated with an argument about chance. Some students may not graduate and earn degrees but they should still be given a loan and the chance. The fact that these are loan guarantees gives them that right. It could also be argued that the reason for this sudden loan rate increase could be traced back to the economy. So if the economy was in good shape then there is a "chance" these loans would not be needed.
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ReplyDeleteI don't think the argument for gainful employment is focused entirely on the students who default. The institutions are the ones being targeted. Students at for-profit schools (like the Art Institutes, DeVry, U of Phoenix, beauty schools, etc.) represent 26% of borrowers and 43% of defaulters (per information in the article). That's a high proportion of students who weren't able to pay for their schooling because they couldn't get employment with degrees earned from these schools. The system obviously needs to be repaired.
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