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More and more students are unable to repay the student loans they got from the federal government. The Department of Education says seven percent of students defaulted in the most recent period - a little less than one in 10. It's the highest number in more than a decade.
NPR's Larry Abramson reports.
LARRY ABRAMSON: For the period that ended last September, 238,000 students were behind in their federal student loans.
James Kvaal of the Department of Education says, as the economy sputters, students are struggling to pay back what they borrowed.
Mr. JAMES KVAAL (Deputy Undersecretary, Department of Education): The period that we're measuring here is between 2007 and 2009, which obviously was a period of a lot of economic turmoil.
ABRAMSON: But, Kvaal says, something else is going on as well. The number of students at for-profit colleges and universities has also been climbing over the same period. Now, one in four students taking out a student loan is enrolled at a for-profit school - that could be anything from a small trade school, to a giant like the University of Phoenix. But those same schools account for nearly one-half off all defaults. Put another way, students at for-profits schools are twice as likely to default as students at non-profits.
James Kvaal says that's reason for concern.
Mr. KVAAL: If there's a particular institution that's generating very large numbers of students who are defaulting, it does raise questions about whether that institution is giving students more debt than they can handle.
ABRAMSON: That's why the department is proposing to cut off access to student loans, for colleges that graduate lots of students who default. Those who watch the sector say we should not be surprised to see students at for-profits defaulting.
Mark Kantrowitz is publisher of Finaid.org.
Mr. MARK KANTROWITZ (Publisher, Finaid.org): For-profit colleges tend to enroll a higher-risk demographic, low-income students, independent students, single parents - all of which are predictive, to some extent, of default.
ABRAMSON: That's what the industry lobbying group said Monday in response to the default numbers. But the industry says it should be rewarded for performing a kind of public service, by taking on students who can't get into traditional schools, or who work while studying and need flexible hours.
Some of the schools with the worst default rates are trade schools, like the Charleston School of Beauty Culture in Charleston, West Virginia. Owner Judy Hall says her barber and cosmetology school is helping poor students find jobs.
Ms. JUDY HALL (Owner, Charleston School of Beauty Culture): Job market is very good for students, both in barbering and cosmetology and aesthetics. Our placement rate is great. It's like 95 percent.
ABRAMSON: But Hall says, her students come in with financial problems, and many just can't handle the debt they rack up paying her school's $9,000 a year tuition. Hall says, she's been spending money, trying to educate students, but some don't seem to understand that this is a loan, not a grant, and must be repaid.
Deborah Cochrane, of the Institute for College Access and Success, says a lot of students at for-profits should be at much cheaper community colleges.
Ms. DEBORAH COCHRANE (Program director, Institute for College Access and Success): Whereas only about 13 percent of students at community colleges are even taking out student loans, about 97 percent of students at for-profit two-year colleges are taking out federal student loans.
ABRAMSON: But many for-profit students say they could not get the education they wanted at overcrowded community colleges. This issue shows just how much pressure students feel to improve their resumes for a tight job market. But if they can't foot the bill, they face years of pain if they default.
Larry ABRAMSON, NPR News, Washington.
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