The association representing for-profit colleges expressed growing alarm that many of its students will no longer be able to pay for their educations, especially in the wake of announcements that student lenders have backed away from serving subprime borrowers.
The Career College Association said a survey of member institutions found that more than one-third of respondents said lenders have stopped offering private loans to students at their schools and two-thirds were worried about the ability of students to obtain loans, whether FFEL (Federal Family Education Loan), Direct, or private. The CCA web-based survey results, conducted this month, reflect responses from more than 60 education corporations and institutions educating tens of thousands of students.
“Access to private lending sources is absolutely critical for many working adults to be able to bridge the gap between federal grant and loan program limits and actual tuition costs,” Harris N. Miller, president of the CCA, said in a statement. “Our member institutions tell us that many lenders have stopped subprime private lending and may stop private lending altogether. Their retreat may leave many students unable to finance the balance of their educations.”
CCA said turmoil in the credit markets coupled with the College Cost Reduction and Access Act, which stripped more than $22 billion in federal subsidies from lenders and guarantors, has created financial problems for lenders, and in turn, has put its students at risk. Students at career schools, also known as for-profit or proprietary schools, typically come from different walks of life than undergraduates at traditional colleges. Career students are often working adults, often financially struggling and with low credit scores that put them in the subprime category.
The association also strongly suggested that federal action is needed to increase funding for students. It called for, among other ideas, a greater increase in the Pell Grant and a possible partial reversal of the subsidy cuts to student lenders.
“We are not at the crisis stage yet,” Miller said, “but bold action is needed to keep the lenders’ retreat from turning into a rout and taking with it the last, best chance of many students to earn a college degree.”
– Provided from Higher Education Washington, Inc