Higher Education For All Blog: The Facts Related to Student Financial Aid & Student Defaults

April 22, 2014  
By APSCU Communications 
In a debate about numbers, we must remember that there are real students behind each statistic. While the following three statements seem obvious, they are often forgotten during conversations concerning student access and borrowing for postsecondary education.
  • A student with little or no savings will need to borrow more money to pay for postsecondary education.
  • If a parent cannot afford to help a student pay for postsecondary education, then the student will have to borrow more to afford tuition.
  • If a student has a family of their own, then they will need to borrow money to pay for education.
New traditional students face these and other challenges as they pursue postsecondary education. Private sector colleges and universities (PSCUs) and community colleges serve more new traditional students than others in higher education. The new traditional student stands to benefit the most from postsecondary education and career training.
U.S. Department of Education, National Center for Education Statistics, 2011-12 National Postsecondary Student Aid Study (NPSAS:12)
There has been a lot of discussion, without a lot of supporting facts, about enrollment at private sector colleges and universities, the amount of federal financial aid used by these students, as well as how and when they repay student loans.
Instead of continuing to make false comparisons, higher education stakeholders should confront the reality that while there may be issues with certain cohorts of students completing their education and repaying their loans, the vast majority of graduates and programs perform very well when compared to similar institutions serving the same type of student.
Source: U.S. Department of Education 3-Year FY 2010 Official Cohort Default Rates
Serving students with both limited resources and specific challenges
In higher education, PSCUs and community colleges are comparable to each other. They both serve students with similar backgrounds, similar life challenges and opportunities. As you see above, the three year cohort default rate for those two sectors are almost identical.
The reason more students who borrow to attend a community college or PSCU default, is that these students do not have the same level of academic preparation or access to financial support as a student attending George Washington University, Northwestern, or University of Virginia. The question is really how programs help students succeed compared to where they come from. At 2-year programs, 63 percent of PSCU students graduate within three years compared to just 22 percent for community college students.
So how do we get to the truth behind the Department’s talking points?  A more realistic version would be this:
  • PSCU students make up a smaller share of students overall.  True, 13 percent of students are enrolled in PSCUs.
  • More PSCU students use loans to finance their education.  True, because they don’t have the financial resources of other students.
  • PSCU and community college student borrowers default at the same levels.  True, 22 percent and 21 percent, respectively.
  • Students attending PSCUs graduate at higher rates than their community college peers.  True, 63 percent for PSCUs and 22 percent for community colleges.

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