A week ago, I wrote to share the news that a quarter of students departing the private for-profit Kaplan University are so desperate that they default on their student loans. Defaulting on student loans is a big deal: it absolutely wrecks a person’s credit rating, it leads to harassment by collecting agencies, and is almost impossible to escape from even through bankruptcy. A full quarter of Kaplan University alums have utterly failed to jump-start those supposedly vital careers that Kaplan dangles like a juicy carrot in front of its applicants. By comparison, alums of the public non-profit state universities in Iowa (where Kaplan is headquartered) have default rates of just 4-5%.
I mentioned in that post that Kaplan University is one of the top three private for-profit universities in the United States. Perhaps you’re thinking that I’ve picked the one out of the three with a dismal default rate. Perhaps you suspect that the other two of the big three private for-profit universities have pretty good default rates. Let’s check up on that suspicion by diving back in to student loan default statistics provided by the Department of Education for the other two biggest private for-profit universities: the University of Phoenix and Argosy University.
According to the Department of Education’s records, 26% of students who leave the University of Phoenix default on their student loans within three years. The University of Phoenix is headquartered in Tempe, Arizona. Right down the road in Tempe is Arizona State University, and just 8% of students who leave ASU default on their student loans within three years.
Rounding out the big three is Argosy University, which compared to Kaplan and the University of Phoenix has a relatively good 15.8% three-year student loan default rate. Argosy is headquartered in Orange County, California, where two California public state universities are also located. CSU Fullerton has a much better 7.6% three-year student loan default rate, and the University of California at Irvine has a three-year default rate of just 3.5%.
Ultra-libertarians like John Stossel are fond of claiming that business always does a better job of providing services than government. Judging by readily-available information, Stossel and his ilk appear to be living in fairy-land.