Student Loans:

Default Rates at Historically Black Colleges and Universities

HEHS-97-33: Published: Jan 21, 1997. Publicly Released: Jan 21, 1997.

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Pursuant to a congressional request, GAO updated the information it previously reported on default rates at historically black colleges and universities (HBCU), focusing on the: (1) dollar amount of major federal student loans made to students at HBCUs and non-HBCUs; (2) most current default rates and the dollar amounts of the defaults, aggregated by kind of school, such as 2-year or 4-year, public or private, for student borrowers previously enrolled at HBCUs and non-HBCUs; and (3) number of HBCUs that could lose their eligibility, in fiscal year (FY) 1998, for federal student loan programs because of default rates exceeding the statutory threshold.

GAO found that: (1) of the $26.2 billion in federal student loans made in FY 1995, $731 million, about 3 percent, in loans were made to students attending HBCUs; (2) this percentage has remained steady during FY 1991 through FY 1995; (3) for FY 1993, the average loan default rate for HBCUs was 21.1 percent, but the average for non-HBCUs was 7.2 percent; (4) these percentages remained relatively the same throughout FY 1991 through FY 1993; (5) in FY 1992, the most current year that the dollars in defaulted student loans could be measured, HBCUs averaged defaults of $464,209 and non-HBCUs averaged $119,307; (6) this difference was primarily because the aggregate default rate for HBCUs was about three times as great as the rate for non-HBCUs; (7) whether compared by kind of school or student enrollment, HBCUs had higher default rates and larger dollar amounts of loans in default per school than non-HBCUs; and (8) if the default rates for HBCUs remain the same for FY 1994 through FY 1996 as they were for FY 1991 through FY 1993, 22 HBCUs could lose their eligibility for federal student loan programs in FY 1998, after their exemption from default rate requirements expires.

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