The Other Subprime Lending Crisis

From the National Center for Education Statistics: "A higher percentage of Black students (15 percent) attended private for-profit institutions than of students of any of the other races/ethnicities shown (ranging from 6 to 8 percent)."

From the New York Times: "Among bachelor’s degree recipients, for example, nearly a quarter of 2008 graduates from for-profit colleges owed $40,000 or more, compared with just 6 percent of graduates from public colleges.

According to Congressional testimony this week, the debt burden is higher because for-profit schools sometimes encourage students to borrow privately from the school, rather than from federal programs, which often have lower rates and loan forbearance for those who fall ill or become jobless. The private loans are often subprime, with high rates and almost no consumer protections.

Even though the for-profit system serves only a little more than a tenth of those in postsecondary education, it accounts for nearly half of student loan defaults."

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