* For-profit school default rates 15.2 pct for 2009
* Private schools 4.7 pct, public schools 7.3 pct
* "Gainful employment" rule expected soon
WASHINGTON, May 20 Students who attended
for-profit schools defaulted on their tuition loans at
considerably higher rates than students who went to private or
publicly-funded colleges and universities, according to U.S.
Education Department data issued on Friday.
The figures come as the department nears release of a rule
expected to deny federal loans for programs where a high
proportion of former students are failing to repay.
Students who attended for-profit schools and began repaying
their loans in fiscal 2009 have defaulted at a rate of 15.2
percent, the government said. That compared with 7.3 percent
for former public school students and 4.7 percent for private
The 2009 data is a draft, and tracks students who defaulted
on or before the government's fiscal 2010 year ended Sept. 30.
The overall default rate for loans taken out to attend all
types of colleges and universities trended higher from 2007
through 2009, probably reflecting the deteriorating job market
over that time.
Defaults for all institutions were 6.7 percent for students
who began repaying in fiscal 2007, rose to 7.0 percent in 2008
and hit 8.9 percent for 2009, the Education Department said.
Harris Miller, head of the Association of Private Sector
Colleges and Universities, said the economy was largely to
blame for the poor repayment rate since for-profit school
students are less likely to have family support when times are
A critic of the for-profit sector said the data showed it
was not just the economy. "They account for a disproportionate
share of the defaults," said Pauline Abernathy, an official at
the Institute for College Access and Success.
The Obama administration and the for-profit education
industry have spent the past 12 months in a pitched battle over
rules designed to curb student loan abuses and raise education
The most controversial of these, a "gainful employment"
regulation, is expected to be finalized shortly by the
In its original form, the rule would make a school program
ineligible to accept federal loans as payment from students if
fewer than 35 percent of former students are paying them back
after three years or if other standards are not met.
In response to the government crackdown, some schools are
being more selective in their enrollments, attempting to weed
out students who are more likely to drop out and default on
Apollo Group (APOL.O), the sector leader, Strayer Education
(STRA.O) and Washington Post's WPO.N education unit Kaplan
Higher Education have all cut enrollments recently.
(Reporting by Diane Bartz; Editing by Tim Dobbyn)