Student debt and defaults at private equity-owned for-profit colleges
March 27, 2018
From report “Private equity’s failing grade: Private equity investment in for-profit colleges”
(Written jointly by Private Equity Stakeholder Project and Americans for Financial Reform)
In October 2017, the National Center for Education Statistics (NCES) reported that students who attended for-profit colleges were more than twice as likely to default on their loans than students who attended public educational institutions. According to the NCES report, 52% of the students who attended for-profit schools defaulted on their loan within ten years.[i]
Delta Career Education (Apollo Investment Corp)
Apollo Investment Corp, the business development company (BDC) managed by Apollo Global Management, the owner of the University of Phoenix, has equity and debt investments in for-profit college firm Delta Career Education[ii], which operates the Miller-Motte College, Miami-Jacobs Career College, McCann School of Business and Technology, and Berks Technical Institute chains.[iii]
According to Department of Education data, the average student at Miller-Motte College’s Augusta, Georgia campus graduated with $25,515 in federal student debt. Ten years after starting classes, the average Miller-Motte Augusta student earned just $23,000 a year. Just 20% of Miller-Motte Augusta students had paid down any of their federal student debt three years after leaving school, compared to a national average of 46% for all colleges and universities.[iv]
Instead, nearly a fifth (19.4%) of the 2014 cohort of Miller-Motte Augusta students had defaulted on their debt within three years of leaving school.[v] The national 2014 cohort default rate is 11.5% for all colleges and universities and 15.5% for all for-profit schools.[vi]
[i]“For-profit college students twice as likely to default on loans, report says,” PBS News Hour, Oct 5, 2017.
[ii]Apollo Investment Corp Form 2016 10K, May 18, 2017.
[iii]http://www.deltaed.com/our-brands/, accessed Nov 4, 2017.
[iv]https://collegescorecard.ed.gov/school/?460826-Miller-Motte-Technical-College-Augusta, accessed Nov 4, 2017.
[v]https://nces.ed.gov/collegenavigator/?q=Miller-motte&s=all&id=460826, accessed Nov 4, 2017.
[vi]Briefing on FY 2014 Official National Default Rates, Sept 27, 2017.