Subprime Goes to College The New Mortgage Crisis — How Students at For-Profit Universities could Default on $275 Billion in Taxpayer-backed Student Loans

New York Post:  “Until recently, I thought that there would never again be an opportunity to be involved with an industry as socially destructive and morally bankrupt as the subprime mortgage industry. I was wrong. The for-profit education industry has proven equal to the task.”

“The for-profit industry has grown at an extreme and unusual rate, driven by easy access to government sponsored debt in the form of Title IV student loans, where the credit is guaranteed by the government. Thus, the government, the students and the taxpayer bear all the risk, and the for-profit industry reaps all the rewards. This is similar to the subprime mortgage sector in that the subprime originators bore far less risk than the investors in their mortgage paper.”

“Though for-profit students account for 10% of all college students, they represent 44% of all loan defaults, according to the Department of Education.”