More and more students are defaulting on their college loans.
New numbers from the federal government show the highest rate of student loan defaults is at Everest College in Chesapeake – 36% of the students there defaulted on their student loans. That’s a for-profit college once operated by the now defunct Corinthian College, which was shut down after charges of fraud and predatory lending. A spokeswoman for Everest says the business is now in the process of transforming from a for-profit college to a nonprofit organization.
But Diane Standaert at the Center for Responsible Lending isn’t sure that’s going to fix the problem.
“We’ve seen the general trend among for-profit colleges to try to convert to nonprofit status for the purpose of essentially not having to comply with federal or state level regulations aimed at for-profit colleges to stop some of these abusive practices.”
The largest number of student defaults at a nonprofit -- Liberty University, a private college in Lynchburg. About 3,000 students there have defaulted on their loans -- a 10% default rate. Robert Ritz is vice president of finance at Liberty.
“Well we’ve had a challenge with students that start a program and then stop, and we’ve tried to make sure that we retain them at a better rate. Also, there’s a trend nationwide of students trying to start school just to get federal money.”
Advocates for increased consumer protections are pushing the General Assembly to require student loan services to get a state license to operate in Virginia. That effort fell flat this year. But supporters of the effort say they’ll be back next year, when even more students are likely to have defaulted on their loans.