Center for American Progress

RELEASE: New CAP Analysis Reveals Troublingly High Student Loan Default Rates Among Colleges Accredited by National Accreditors
Press Release

RELEASE: New CAP Analysis Reveals Troublingly High Student Loan Default Rates Among Colleges Accredited by National Accreditors

One out of every five borrowers at a college accredited by ACICS—the largest accreditor of the now-defunct Corinthian Colleges—defaults within three years of entering loan repayment, new CAP analysis finds.

Washington, D.C. — A new analysis from the Center for American Progress reveals troublingly high student loan default rates among colleges accredited by national accreditors, including the Accrediting Council for Independent Colleges and Schools, or ACICS—the largest accreditor for the now-defunct Corinthian Colleges.

CAP’s review of U.S. Department of Education data finds that one out of every five borrowers at an ACICS-accredited college defaults on his or her loans within three years of entering repayment, a mark that is 50 percent higher than the national average. That figure—known as the three-year cohort default rate, or CDR—is particularly troubling because students at ACICS-accredited colleges take out student loans at higher rates and in greater amounts than those at colleges accredited by other agencies. The analysis from CAP also shows that the issue of high default rates is not limited to colleges accredited by ACICS, which may suggest that larger structural flaws exist in the national accreditation space.

“The U.S. Department of Education disburses billions in loans each year to students attending accredited colleges, so the high levels of defaults on loans sent to schools verified by national accreditors indicate that our current system is missing the mark—by a long shot—on financial quality,” said Ben Miller, Senior Director of the Postsecondary Education policy team at CAP and author of the analysis. “With reauthorization of the Higher Education Act approaching—and especially following the collapse of Corinthian Colleges—it is clearer than ever that policymakers must pay close attention to the effectiveness of the accreditation system.”

The majority of schools with national accreditation are private, for-profit colleges—often those that offer career-focused programs. When CAP examined the three-year CDR by type of accreditor, a full 20 percent of borrowers at nationally accredited institutions defaulted within three years of leaving the institution, compared to 12 percent of borrowers at regionally accredited institutions, according to the most recent data. These figures are particularly troubling given that 60 percent of undergrads at nationally accredited institutions borrowed federal student loans, compared to 39 percent of undergraduates at regionally accredited institutions.

When examining the most recent data for the five national accreditors and the seven regional accreditors, CAP found that institutions accredited by the national agencies had three-year CDRs averaging between 17 percent and 21 percent. By comparison, all but one of the regionally accredited institutions had three-year cohort default rates averaging between 9 percent and 14 percent. The only regional accrediting agency to have a default rate similar to the national agencies is the Accrediting Commission for Community and Junior Colleges, whose own effectiveness has been questioned out in California. To put these numbers in perspective, if regionally accredited colleges were to default at the same rate as nationally accredited colleges, more than 293,000 additional students would be in default each year than is currently the case, according to CAP’s analysis.

Click here to read “Up to the Job? National Accreditation and College Outcomes” by Ben Miller.

For more information or to speak to an expert, contact Allison Preiss at [email protected] or 202.478.6331.