Dive Brief:
- Data released as part of the Obama administration’s College Scorecard shows more than one-third of students who take out loans for college do not pay a single penny toward the principal balance in their first three years out of school.
- Inside Higher Ed reports the repayment rate data will provide a higher bar for colleges that have been judged based on default rates so far, and only 13.7% of student loan holders default in the same timeframe.
- Community college students tend to be slow to pay down their principal, and administrators worry the measure will take on too much weight, given that the bulk of their students do not take out loans at all.
Dive Insight:
The U.S. Department of Education has the power to deny federal student aid to colleges whose default rates are too high. So far, just 11 colleges have faced that sanction, according to Inside Higher Ed. The reauthorization of the Higher Education Act could focus regulatory attention on repayment rates. Under this metric, historically black colleges and universities, community colleges, and for-profit institutions perform particularly badly.