U.S. College Borrowing Drops 8%; Clampdown on For-Profit Schools Contributes to Decline
Borrowing for U.S. colleges declined for the third year in a row as the federal government clamped down on for-profit schools and families became more cost-conscious.</br></br>Federal and private-loan lending totaled $106 billion for the 2013-14 academic year, down 8% from the prior year, according to a report to be released Thursday by the nonprofit College Board. The decline marks a significant reversal in borrowing, which peaked at $122.1 billion in 2010-11 after rising for years.</br></br>The drop is partly due to a decline in enrollment at for-profit colleges, where most students borrow and where default rates are generally higher. The schools have come under increased scrutiny since 2010, when a report by the Government Accountability Office found deceptive practices that ranged from promising unrealistically high pay for graduating students to not disclosing total tuition costs for students before they enrolled.</br></br>At traditional colleges, families have been cutting back on expenses, experts say. A growing share of students are commuting from home rather than living on campus, for example, according to a report issued earlier this year by SLM Corp., the largest private student lender, also known as Sallie Mae.</br></br>An improving economy and stock market are also likely contributing to families borrowing less, says Mark Kantrowitz, senior vice president at Edvisors.com, a Las Vegas-based firm that tracks financial aid and student loans. As the unemployment rate has declined and the stock market has improved, parents have been able to access more cash than during the downturn, he says.