Arizona’s Problem with Student Loan Defaults, Low Graduation Rate, and For-Profit Colleges

LBN’s Bob Donley says that Arizona has several serious college problems that are related. Item: Arizona (tied with Alaska) leads the nation with the lowest college graduation rate in the country; item: Arizona also leads the nation in defaults on student loans for tuition. “Those two are related.” This is especially true in the world of for-profit colleges.

Secretary of Education Arne Duncan recently said that colleges should offer meaningful college degrees at affordable prices. But the word didn’t get to Arizona, Donley says. Only 29% of all those attending school in Arizona graduate in six years or less—roughly half the national average. Most of the dropouts occur in the many for-profit schools in Arizona, not schools run by the state. The student loan default rate in Arizona is 18%--again, almost double the national average.

This all comes at a time when Arizona is spending less on its colleges and universities but charging more to those who attend. Since 2008, Arizona has spent 47% less, about $3,000 less per student—about half the national average—while increasing tuition costs by $4,000 per student—about double the national average increase.

The central problem, Donley says, is with the many for-profit, usually online, educational facilities. And Arizona has a lot of for-profit schools. These schools charge a high price for their services while offering very little, Donley opines, in terms of a meaningful degree. There is also no particular urgency on the part of these schools to see their students even get a degree. On the other hand, the state-owned universities and colleges all have a high graduation rate.

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