For many students, the U.S. system of higher education works very well. Even with rising tuition, most four-year and community colleges still offer a good -- even great -- deal for bright young people with the fundamental skills necessary to graduate.
For others, however, our college system offers more debt than education. More than 13 percent of students who began repaying their loans in 2009 defaulted within three years, according to a recent Department of Education report.
Here is a chart showing loan-default rates across different kinds of colleges -- from two-year public colleges to four-year for-profit institutions. Overall, those institutions serving marginal and lower-income students fared the worst. The most miserable performers of all were for-profit schools, shown in green, where around one out of every five borrower defaulted.
What this tells us isn't merely that for-profits are a problem (though they are). Rather, they tell us that higher education for certain borderline students is a dicey bet to begin with. By failing to offer better options than for-profit schools, we're simply encouraging them to bet bigger than they can afford.
Borrowers at community colleges, for instance, don't have a much better default rate than their for-profit-attending counterparts. But only 23 percent of community college students have to borrow for their educations.* By comparison, 96 percent of for-profit students take out loans, as the cost of attendance can reach tens of thousands of dollars year. The striking result: even though they only make up about 13 percent of all undergrads, students at for-profits accounted for 47 percent of all defaulters. Of those who went into repayment in 2009, about 230,000 of them failed to keep up with their payments, compared to about 98,000 at community colleges.
You can blame the for-profits for aggressively recruiting students who often have little to no chance of making it through school. But the fact is that higher education is becoming more and more of a pre-requisite for any kind of economic security in this country, and many of the people who attend these default-mills would still be looking for a degree even if they'd never heard of the University of Phoenix or Corinthian Colleges. We simply lack the public education infrastructure to serve their needs. Our community colleges are over-crowded and technologically backward. They're not set up as well to fit into the lives of working students, whether they're single mothers or just kids from low-income families. These learners see the for-profits as at least providing a shot at earning a degree -- albeit an expensive and narrow one.
If a school's default rate remains over 30 percent for three years running, it does risk losing its eligibility for federal student loans. But punishing the worst offenders won't fix the fundamental problem of affordable, convenient educational access. In that respect, there are two things we can do. We can invest more in low-tuition community colleges to make more seats available in classrooms and bring more courses to students conveniently online. Or we can finally start building true vocational training programs in high school, so that young people can get skills that make them employable without a higher degree. We need to pick one -- or both! -- because the current system is most hurting the people who need the most help.
*An earlier version of this story incorrectly stated that only 13% of community college students had to borrow for their educations.