TARGET 8: Students struggle to repay debt at Missouri for-profit colleges

3 years 7 months 4 weeks ago Thursday, November 10 2016 Nov 10, 2016 Thursday, November 10, 2016 9:27:00 PM CST November 10, 2016 in Target 8
By: Madeline Odle, KOMU 8 Reporter
loading

ST. LOUIS - New college affordability data reveals students who attended for-profit institutions in Missouri are struggling to pay back debt they incurred while in school.

Federal loan repayment rates: out with the old, in with the new.

Target 8 analyzed a new College Scorecard Dataset from the National Institute for Computer-Assisted Reporting at the University of Missouri. The College Scorecard system is a new federal assessment tool for the public and uses a measurement, called the loan repayment rate, to determine affordability of colleges across the country.

The repayment rate measures the percentage of students who received federal aid during their time in college who are making progress on repaying those loans 3 years after leaving school.

In Missouri, 328 colleges reported repayment data. Target 8 found the lowest repayment rates were among for-profit private schools. Public colleges had the next lowest repayment rate, followed by private non-profit schools.

Nicholas Prewett, University of Missouri Director of Financial Aid, said the repayment rate is a good measurement for prospective students to look at when choosing a school. 

"I would be very hesitant to direct a student to a school that has a low repayment rate because obviously that means that they're either taking out substantial amounts of debt or larger amounts of debt than what their jobs can actually repay after education," Prewett said. "That's a big concern for me as a financial aid person."

Prewett said the best way to avoid getting in this kind of debt is to know your financial aid limits and have constant communication with your school's financial aid department. 

"You know each student has individual family factors and income factors that may cause them to borrow more. When we sit down with students we really want to focus on how much aid they need to complete their college education, and then what their projected salary or income is going to be when they graduate," he said. "Our basic rule of thumb is we don't want students to borrow more in student loans than they're going to earn in the first year after they graduate."

Senate report: For-profit schools and federal loan default rates.

The previous benchmark to measure how colleges performed with federal aid money was the loan default rate. The U.S. Department of Education tracked the number of students who defaulted on student loans within 3 years of beginning to pay for them.

In 2010, the U.S. Senate Committee on Health, Education, Labor and Pensions released the results of a 2-year investigation into the practices of 30 for-profit education companies. The report was done out of concern that for-profit higher education institutions were not abiding by federal guidelines regarding federal loans and student default rates.

For-profit education companies are subject to two key regulatory provisions. The first is no more than 90 percent of revenues at the institution can come from federal aid payments. The second requires no more than 25 percent of students default on their loans within 3 years of entering repayment.

The report said, in general, students who attended for-profit schools defaulted at nearly three times the rate of students who attended other types of institutions.

The 2010 report also brought up concerns that reported default rates of the 30 schools significantly under-counted the actual number of students who ultimately faced default, because of companies' efforts to place students in deferments and forbearances.

The report explained when a student is in forbearance their loan balances continue to grow as the result of accumulating interest, but default is averted both for the student and the company.

"For many students forbearance and deferment serve only to delay default beyond the 3-year measurement period the Department of Education uses to track defaults," the report said. 

"Let's say you have a student who isn't making payments on their loan. One way to get them out of a default rate is to maybe encourage them to pursue a different kind of repayment option: either securing a forbearance, or pay as you earn type payment plans," Prewett said. "So, the student still has the debt, they're just not making payments on it."

Vatterott Educational Holdings: an investigation.

The Senate committee examined two Missouri for-profit higher education companies during its two-year investigation: Concorde Career Colleges, based in Kansas City, and Vatterott Educational Holdings, based in St. Louis.

An excerpt from the report on Vatterott Educational Holdings noted the company had experienced steady enrollment growth, but with that growth came concerns.

"The company's high rates of student loan default calls into question whether Vatterott students are receiving an education that affords them the ability to repay the debt incurred,“ the report said.

According to the report, in the year 2008, Vatterott's loan default rate was 20 percent higher than the average for all for-profit colleges, and more than double the average for all schools.

On Better Business Bureau website, the company's St. Louis and Kansas City locations recieved A+ ratings. However, consumer complaints told a different story.

Over the last 3 years, consumers have filed 17 complaints on the St. Louis location's page, seven this past year.

The complaints range from issues with billing to issues with product delivery, but a common theme among complaint details was that the school gave students a false sense of the quality of education they would be recieving.

One former Vatterott student, Jai Will, said it seemed expensive for what he got out of the program. 

"I thought they were going to go more in depth on, hands on and get certifications and things like that, so most of it wasn't that great," Will said.  

However, the new repayment rate data also showed Vatterott students struggling to pay back their federal student loans.

Vatterott Educational Holdings, Inc. reported a 28 percent repayment rate at the seven campus locations in Missouri, which was the third overall lowest repayment rate in the state.

KOMU 8 News reached out to Vatterott several times, and no one has returned phone calls.

The Target 8 team picked through hundreds of pieces of data on student loan debt and repayment. For more information on who owes the most after college and an interactive map of every school in Missouri, click here.  

Related Stories

More News

Grid
List
As COVID-19 continues to spread, KOMU 8 will continue to update you about impacts in the community. You can... More >>
5 hours ago Saturday, July 11 2020 Jul 11, 2020 Saturday, July 11, 2020 10:24:00 AM CDT July 11, 2020 in News
COLUMBIA - Medical marijuana could be available in dispensaries this fall, now that two cultivation facilities passed inspection and... More >>
5 hours ago Saturday, July 11 2020 Jul 11, 2020 Saturday, July 11, 2020 10:17:00 AM CDT July 11, 2020 in News
KANSAS CITY, Mo. (AP) — A Kansas City councilwoman is calling for a plan to remove monuments and rename streets... More >>
5 hours ago Saturday, July 11 2020 Jul 11, 2020 Saturday, July 11, 2020 10:00:34 AM CDT July 11, 2020 in News
ST. LOUIS — KSDK News 5 On Your Side has learned St. Louis police officers executed a search warrant... More >>
5 hours ago Saturday, July 11 2020 Jul 11, 2020 Saturday, July 11, 2020 9:49:00 AM CDT July 11, 2020 in News
MARSHALL - An employee of The Living Center at Fitzgibbon Hospital tested positive for COVID-19 after showing no signs of... More >>
17 hours ago Friday, July 10 2020 Jul 10, 2020 Friday, July 10, 2020 9:40:00 PM CDT July 10, 2020 in News
COLUMBIA -- The 90-day mask ordinance passed by Columbia’s City Council went into effect at 5 p.m. on Friday. The... More >>
20 hours ago Friday, July 10 2020 Jul 10, 2020 Friday, July 10, 2020 6:48:00 PM CDT July 10, 2020 in News
COLUMBIA - The City announced eleven drop-off recycling locations after it put curbside recycling on hold until further notice Wednesday.... More >>
21 hours ago Friday, July 10 2020 Jul 10, 2020 Friday, July 10, 2020 6:13:00 PM CDT July 10, 2020 in News
COLUMBIA - Columbia's mask ordinance officially went into place at 5 p.m. on Friday, but many businesses in the city... More >>
22 hours ago Friday, July 10 2020 Jul 10, 2020 Friday, July 10, 2020 5:35:00 PM CDT July 10, 2020 in News
COLUMBIA — Summer sport leagues in Columbia have been trying to keep athletes safe amid the COVID-19 pandemic. Mid-Missouri... More >>
23 hours ago Friday, July 10 2020 Jul 10, 2020 Friday, July 10, 2020 4:36:00 PM CDT July 10, 2020 in News
HUNTSVILLE - An employee at the Randolph County Sheriff's Department was fired after body camera video was released to a... More >>
23 hours ago Friday, July 10 2020 Jul 10, 2020 Friday, July 10, 2020 3:49:00 PM CDT July 10, 2020 in News
COLUMBIA - Police are looking into two reports of indecent conduct on the MKT Trail, both of which happened within... More >>
1 day ago Friday, July 10 2020 Jul 10, 2020 Friday, July 10, 2020 3:39:00 PM CDT July 10, 2020 in News
COLUMBIA- Tiger Academy of Gymnastics is hosting a summer camp for kids to attend, but it is going to look... More >>
1 day ago Friday, July 10 2020 Jul 10, 2020 Friday, July 10, 2020 2:22:00 PM CDT July 10, 2020 in News
COLUMBIA – As Boone County struggles to keep up with the need for contact tracing in the community, volunteers are... More >>
1 day ago Friday, July 10 2020 Jul 10, 2020 Friday, July 10, 2020 12:49:00 PM CDT July 10, 2020 in News
COLUMBIA - UM System leaders unveiled a new plan to bring broadband access to a rural pilot community on Wednesday.... More >>
1 day ago Friday, July 10 2020 Jul 10, 2020 Friday, July 10, 2020 12:09:00 PM CDT July 10, 2020 in News
JEFFERSON CITY - The Bicentennial Bridge project is a $3.75 million dollar bridge to connect the Missouri State Capitol Complex... More >>
1 day ago Friday, July 10 2020 Jul 10, 2020 Friday, July 10, 2020 11:51:43 AM CDT July 10, 2020 in News
JEFFERSON CITY (AP) — President Donald Trump has approved Missouri’s request for a federal disaster declaration for severe storms in... More >>
1 day ago Friday, July 10 2020 Jul 10, 2020 Friday, July 10, 2020 11:38:46 AM CDT July 10, 2020 in News
COLUMBIA – The city mask ordinance for Columbia goes into effect at 5:00 p.m. on Friday, and education will be... More >>
1 day ago Friday, July 10 2020 Jul 10, 2020 Friday, July 10, 2020 11:00:00 AM CDT July 10, 2020 in News
COLUMBIA (Missourian) - In the midst of Missouri’s budget crisis, $125 million from the CARES Act will help higher... More >>
1 day ago Friday, July 10 2020 Jul 10, 2020 Friday, July 10, 2020 10:42:31 AM CDT July 10, 2020 in News
Columbia, MO
Broken Clouds 94°
4pm 90°
5pm 90°
6pm 89°
7pm 87°