More than 900 colleges and trade schools stand to lose their eligibility to participate in the federal student loan program because too many of their students have defaulted.
The Education Department released figures Tuesday showing the default rates for every school in the United States that participates in the Federal Family Education Loan program, formerly called the Guaranteed Student Loan program. (Utah list on A4.)Most of the schools in danger of losing their eligibility are one- or two-year, profitmaking career schools. They commonly have much higher default rates than more traditional academic institutions.
The Education Department, armed with a 1989 law designed to drive down the number of defaults, has been dropping schools with default rates of at least 30 percent for three consecutive years from federal aid programs, including the Pell Grant program. The cutoff default rate drops to 25 percent next year.
In 1991, taxpayers lost an estimated $3.6 billion on bad student loans.
The department announced last month that overall default rates were decreasing because of the tougher collection methods.
The number of defaults declined from 22.4 percent in the 1990 fiscal year to 17.5 percent in 1991, the latest year for which figures are available.
Last year, about 1,000 schools were handed suspensions, which can last a year or more depending on the school's corrective actions.
The government bases a school's default rate for a particular year on the number of borrowers scheduled to begin paying on their loans who defaulted either in that year or the following year.
Students apply for loans through the schools, which verify the student's eligibility. Banks furnish the money.
The government pays the interest on the loan while the student is in school. If the student defaults, one of 47 guarantor agencies repays the lender and then tries to collect. If they are unsuccessful, the government pays off the loan.
Schools, faced with the loss of a major - sometimes primary - source of revenue, have been using collection agencies to go after the delinquents.
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ADDITIONAL INFORMATION
Loan default rates for Utah schools
Loan default rates in 1991 for Utah schools under the Federal Family Education Loan Program. The Education Department classifies each school according to the length of its program and its ownership, either public ("pub"), private ("priv") academic institutions or proprietary ("prop") trade schools.
Continental College of Beauty, Salt Lake City, 1 yr-prop, 35.9.
Stacey's Hands of Champions Beauty College, Ogden, 1 yr-prop, 30.9.
American Technical Center, Salt Lake City, 1 yr-prop, 30.2.
Certified Careers Institute, Salt Lake City, 1 yr-prop, 21.5.
Sevier Valley Technical Association, Richfield, 2 yr-pub, 19.8.
International Institute of Hair Design, Midvale, 1 yr-prop, 16.8.
Bryman School, Salt Lake City, 1 yr-prop, 16.0.
Phillips Junior College Salt Lake City Campus, 1 yr-prop, 16.0.
Universal Academy of Hair Design, Salt Lake City, 1 yr-prop, 15.8.
Snow College, Ephraim, 2 yr-pub, 14.1.
Fran Brown College of Beauty, Layton, 1 yr-prop, 12.2.
Dixie College, St. George, 2 yr-pub, 11.6.
Evans Hairstyling College, Cedar City, 600 hr-prop, 11.1.
College of Eastern Utah, Price, 2 yr-pub, 10.9.
Intermountain College of Court Reporting, Murray, 1 yr-prop, 10.0.
Salt Lake Community College, Salt Lake City, 2 yr-pub, 9.9.
Hairitage Hair Academy, West Valley, 600 hr-prop, 9.8.
Hairitage College of Beauty, Salt Lake City, 600 hr-prop, 9.7.
American Institute of Medical & Dental Technology, Provo, 600 hr-prop, 9.3.
ITT Technical Institute, Murray, 4 yr-prop, 9.1.
Southern Utah University, Cedar City, 5 yr-pub, 8.8.
Beau La Reine Beauty College, Logan, 1 yr-prop, 8.0.
Evans Hairstyling College, Provo, 1 yr-prop, 7.7.
Stevens-Henager College of Business, Ogden, 2 yr-prop, 7.5.
Weber State University, Ogden, 5 yr-pub, 7.3.
Von Curtis Academy of Hair Design, Salt Lake City, 1 yr-prop, 7.1.
Utah Valley Community College, Orem, 2 yr-pub, 6.7.
Mary Kawakami College of Beauty, Provo, 1 yr-prop, 6.1.
Bon Losee Academy of Hair Artistry, Provo, 1 yr-prop, 5.3.
University of Utah, Salt Lake City, 5 yr-pub, 5.1.
Utah State University, Logan, 5 yr-pub, 4.9.
Provo College, Provo, 2 yr-prop, 4.5.
Westminster College of Salt Lake City, Salt Lake City, 5 yr-priv, 4.5.
Latter-day Saints Business College, Salt Lake City, 2 yr-priv, 3.5.
Brigham Young University, Provo, 5 yr-priv, 1.9.
Evans Hairstyling College, St. George, 1 yr-prop, 0.0.
Fran Brown College of Beauty, Ogden, 1 yr-prop, 0.0.
Utah College of Massage Therapy, Salt Lake City, 1 yr-prop, 0.0.
Von Curtis Academy of Hair Design, Provo, 1 yr-prop, 0.0.