GAO Reports on Why Proprietary Schools Have Higher Default Rates

The U.S. Government Accountability Office has issued a report exploring why student loan default rates are higher, on average, at proprietary institutions than at other postsecondary institution types.

The GAO report notes that two factors linked to higher risk for student loan defaults — low family income and parents who lack a higher education degree — are more likely to be characteristics of proprietary school students than of students attending other institution types.

GAO investigators also found improprieties at select proprietary institutions in the testing of students to determine their ability to benefit from higher education, as well as the use of diploma mills by some proprietary school students to meet eligibility for federal student loans. Although the GAO concluded the practices were limited to a few institutions and were not widespread in the proprietary school sector, the government watchdog agency recommends the U.S. Department of Education strengthen its monitoring and oversight of basic skills testing and provide additional guidance on valid high school diplomas for use in gaining eligibility for federal student aid.

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