The American Enterprise Institute’s Preston Cooper reported Wednesday on data he obtained from the U.S. Department of Education showing that more than 1000 colleges and universities are at risk of losing access to taxpayer-funded student aid — because too many of their ex-students are not repaying their federal student loan debt or have already defaulted.

Under federal law, schools whose former students in a given year are defaulting (meaning they haven’t made a payment in 360 days) at a rate of 40 percent or higher lose eligibility for federal student loans, as well as grants.  Schools with default rates above 30 percent for three years in a row also face loss of access to federal aid.

This “cohort default rate” law, meant to remove from the program schools that drive former students to financial ruin, has to some extent deterred schools from piling on too much debt. But many overpriced, poor quality schools, especially for-profit colleges, have learned to game the system, including by manipulating borrowers into entering loan “forbearance” status, where interest still continues to accrue and debt mounts.  And schools have often successfully appealed to the Department of Education to reinterpret the data and shield them from penalties.

During the pandemic, the Department halted loan collections, and many borrowers became accustomed to reduced or no school debt payments. But now those loan burdens have come roaring back, and many borrowers just can’t, or won’t, pay.  

So nonpayment and default rates are now way up. And, as the new data shows, many of the schools with the worst failure-to-repay statistics — at least 90 days without a payment — are the predatory for-profit schools that have used deceptive marketing and recruiting to peddle high-priced, low-quality programs. 

The list of the largest schools with nonpayment rates over 40 percent include the following habitual for-profit abusers:

— American Intercontinental University (45 percent) and Colorado Technical University (42 percent) (both owned by awful Perdoceo Education Corp.);

— United Education Institute (43 percent), UEI College (44 percent), and now-shuttered-for-fraud Florida Career College (58 percent) (owned by abusive International Education Corp.); and

— Fortis Institute (41 percent), Fortis College (43 percent), and All State Career School (48 percent) (owned by troubled Education Affiliates).

Some of the highest nonpayment rates — 60 percent to 74 percent — belong to a number of for-profit cosmetology schools, including Texas’s K&G 5 Star Barber College, Arkansas’s GoodFellas Barber College, and Louisiana-based Ray J’s College of Hair. 

The data that AEI’s Cooper obtained show that 1,113 colleges had nonpayment rates over 30 percent, and another 656 colleges had rates dangerously close to that threshold — between 25 and 29 percent.

All of the 25 schools with the highest failure-to-repay rates, as well as many others on the list, are for-profits.

As Cooper notes, if these repayment rates hold, many of these schools could lose eligibility for federal aid the next time the Department tabulates cohort default rates — likely in 2026. 

The new Trump Department of Education, under Secretary Linda McMahon, is following the path of the Betsy DeVos-led first Trump education department — reversing federal rules and enforcement efforts aimed at protecting students from predatory colleges. Given the relentless lawbreaking of the Trump II regime, it wouldn’t be a surprise if the McMahon Department failed to enforce the default rates law, if it failed to kick out of the federal aid program these blatant abusers of students. But if that happens, it would be one more demonstration that this Trump administration stands with the predatory corporate abusers who fund the MAGA operation — and couldn’t care less about hard-working Americans who are abused by these companies.