For-Profit Schools Enroll Approximately 10 Percent Of American Higher Education Students But Accounts For Nearly 50 Percent Of All Student Loan Defaults
There is a rule on the books, known as the "cohort default rate" rule, intended to limit high default rate schools' access to federal funds. But by hiring outside specialists or creating their own divisions of "default management" staff who are paid to counsel students into loan deferment and forbearance - options which ensure that students do not default within the window when the government is watching - the companies can effectively lower their default rates to seemingly acceptable levels. However, managing cohort default rates in this way merely delays default for some students and usually leads to a higher debt loads when a student can make payments.
Internal For-Profit School Documents collected by HELP Committee