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Monday, August 16, 2010

More defaults on college student loans is a symptom of the bigger problem

More defaults on college student loans is a symptom of the bigger problem (massive government intervention in college finance and an industry that has learned to depend on these subsidies).

Truth in advertising is a critical component of what is being questioned. But this should hold true just as much at the University of California just as much as for-profit colleges. Every college should be required to track and publish the starting salaries and number of graduates placed after graduation. By major.

Then we absolutely need to start cutting off funding to those institutions that do not create graduates that are sought in the job market. Actually we need to get the government out of these subsidies all together but that is a much longer putt.

The percentage of those defaulting on student loans is only one of the necessary criteria. The other critical factor is how much has the stuend borrowed? In the example in this story this young lady defaulted after borrowing $15,000. This is probably representative of the defaults of many of the one and two year certification programs. But if 50% of those borrowing $15,000 is a problem, how about if 30% of those borrowing $100,000 default after their History degree from Duke?

The problem is far from confined to the for-profit college industry.

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