More than 440 U.S. colleges have student loan nonpayment rates above 40 percent, with many for-profit schools among the most challenged ones on the list, according to an Investopedia analysis of federal student aid data. Experts say this could reflect a growing trend where colleges are leaving students with debt they are unable to repay, especially as the Department of Education implements a renewed push to resume payments after years of pandemic-era disruptions. It's the debt compared with what that education actually helps you earn,” Michael Ryan, finance expert and founder of MichaelRyanMoney.com, said.
Student loan delinquency has become a growing concern since federal collections resumed and credit reporting protections ended. Borrowers who fall significantly behind on their payments can see their credit scores damaged and, in some cases, even become subject to wage garnishment. Repayment outcomes also vary dramatically by institution.
A high nonpayment rate can suggest that graduates are not earning enough to manage their debt burdens or that students are taking on loans without receiving the economic benefits they expected from their education. The new Investopedia report looked at federal student loan borrowers who entered repayment since January 2020 and were more than 90 days delinquent on their loans. The Department of Education groups borrowers by the institutions they attended, allowing you to compare repayment outcomes across colleges.
According to the data, Florida Career College posted the highest nonpayment rate among schools with at least 5,000 borrowers. The institution had approximately 28,000 borrowers, with 61 percent more than 90 days behind on their payments. Other schools with some of the nation's highest nonpayment rates included: Investopedia also found that nearly 1,200 colleges had nonpayment rates exceeding 30 percent, while more than 440 institutions were above 40 percent.
The result could not just prove problematic for students not meeting their payment obligations, but for higher education, as well,” Beene said. This is likely because students attending for-profit institutions often borrow more and are more likely to default on their student debt than those attending comparable public colleges. A Federal Reserve Bank of New York study found that enrollment at for-profit institutions leads to higher borrowing levels and increased default risk, while also producing weaker labor-market outcomes for many students compared with similar public-school attendees.
The changes recently enacted at the Department of Education regarding payment plans and debt collection have also exacerbated the economic certainty for borrowers, Thompson said. The Department of Education under the Trump administration has increasingly emphasized accountability for schools tied to student outcomes, and lawmakers are likely to continue scrutinizing the institutions with poor repayment records. This repayment data can also provide an important measure of a school's long-term value for prospective students.
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