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Student Loan Defaults Jump
El Paso Times via Yellowbrix
October 26, 2009
Oct. 26—EL PASO — Fifteen percent of students at for-profit colleges in El Paso failed to pay back their federal loans on time — a trend that began before the economy faltered.
Students who borrowed and neglected to pay back thousands of dollars they used to attend for-profit colleges now find themselves tangled in a financial mess that threatens their credit ratings, wages and higher education opportunities.
“We found that those type of institutions have higher (default) rates,” said Sheila Dunlap, assistant vice president of default prevention at Texas Guaranteed Loan Corp.
The U.S. Department of Education reports that 726 loans had gone into default by September 2008 out of 6,590 that entered repayment in all El Paso colleges between October 2006 and September 2007.
Although the overall student loan default rate for El Paso is 11 percent, for-profit International Business College had a rate of 20 percent, and Career Centers of Texas had a rate of 16.8 percent. For-profit colleges in El Paso account for 447 of the delinquent loans in the city.
In addition to high unemployment and the weak state of the economy, Dunlap said a big reason for-profit schools have higher default rates is many borrowers are low-income and the first in their families to attend college.
“They don’t necessarily have the college preparedness,” she said.
Repayment neglect
Officials at for-profit colleges in El Paso cite different factors for their high default rates, including students’negligence.
“I don’t think they realize the consequences. Once you are in default, you are flagged,” said Margie Aguilar, president of International Business College in El Paso.
Students borrow an average of $5,500 to complete programs that can last from six months to 18 months. After students graduate, a company contracted by the school, Horizon Educational Resources, from Marble Falls, Texas, follows up with the repayment process.
