oversight

Student Loans: Default Rates at Historically Black Colleges and Universities

Published by the Government Accountability Office on 1997-01-21.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 United States General Accounting Office

GAO              Report to the Ranking Minority Member,
                 Committee on Economic and
                 Educational Opportunities, House of
                 Representatives

January 1997
                 STUDENT LOANS
                 Default Rates at
                 Historically Black
                 Colleges and
                 Universities




GAO/HEHS-97-33
          United States
GAO       General Accounting Office
          Washington, D.C. 20548

          Health, Education, and
          Human Services Division

          B-275208

          January 21, 1997

          The Honorable William L. Clay
          Ranking Minority Member
          Committee on Economic and
            Educational Opportunities
          House of Representatives

          Dear Mr. Clay:

          Historically Black Colleges and Universities (HBCUs) have a long history of
          providing higher education to black students. The first HBCUs were
          established before the Civil War. After the war, the establishment of HBCUs
          gradually continued; as of fall 1994, 104 HBCUs serve about 281,000
          students (see app. I). In 1965, the Congress stressed the importance of
          HBCUs, stating that “historically Black colleges and universities have
          contributed significantly to the effort to attain equal opportunity through
          postsecondary education for Black, low-income, and educationally
          disadvantaged Americans.”

          Our earlier reports pointed out that HBCUs participating in federal student
          loan programs generally experienced high default rates, with nearly
          one-third of HBCUs exceeding the statutory default threshold.1 HBCUs have
          been legislatively exempt from the statutory threshold requirement that
          schools with high default rates lose their eligibility to participate in federal
          student loan programs. But the exemption is to expire on July 1, 1998.
          When the exemption expires, many HBCUs with high default rates for
          student loans could lose their eligibility to participate in federal student
          loan programs. Such a loss could make it difficult for students to pay the
          cost of attending HBCUs.

          In this report, we respond to your request to update the information we
          previously reported on default rates at HBCUs. As agreed with your office,
          our objectives were to

      •   determine the dollar amount of major federal student loans made to
          students at HBCUs and non-HBCUs;
      •   identify the 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



          1
            Student Loans: Default Rates at Historically Black Colleges and Universities (GAO/HRD-93-117FS,
          Aug. 19, 1993) and Default Rates at HBCUs (GAO/HEHS-94-97R, Mar. 9, 1994).



          Page 1                                                 GAO/HEHS-97-33 Loan Defaults at HBCUs
                       B-275208




                       private—for student borrowers previously enrolled at HBCUs and
                       non-HBCUs; and
                   •   estimate the number of HBCUs that could lose their eligibility, in fiscal year
                       1998, for federal student loan programs because of default rates exceeding
                       the statutory threshold.

                       Our universe of schools comprises 98 HBCUs2 and 3,209 non-HBCUs,
                       including those that (1) are 2-year or 4-year and public or private schools
                       and (2) the Department of Education has reported as current participants
                       in the Federal Family Education Loan (FFEL) and William D. Ford Direct
                       Loan (FDL) programs.3 The 98 HBCUs represent about 3 percent of our
                       universe of 2-year or 4-year public or private schools in the FFEL and FDL
                       programs. We relied on Department information for (1) overall student
                       loan dollars through fiscal year 1995, (2) the most current default rates for
                       student loans for HBCU and non-HBCU schools during fiscal years 1991-93,
                       and (3) actual dollars defaulted in fiscal year 1992. Although we did not
                       verify the accuracy of data obtained from the Department, its databases
                       are readily available and can be used by the education community for
                       similar analyses. We conducted our review between May and October 1996
                       in accordance with generally accepted government auditing standards.


                       Of the $26.2 billion in federal student loans made in fiscal year 1995,
Results in Brief       $731 million (or about 3 percent) in loans were made to students attending
                       HBCUs. This percentage has remained steady during fiscal years 1991-95.


                       For fiscal year 1993, the average loan default rate for HBCUs was
                       21.1 percent, but the average for non-HBCUs was 7.2 percent. These
                       percentages remained relatively the same throughout fiscal years 1991-93.
                       In fiscal year 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. This difference was primarily because the
                       aggregate default rate for HBCUs was about three times as great as the rate
                       for non-HBCUs. 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.

                       2
                        The Department currently recognizes 104 HBCUs, but we excluded 6 from our review because default
                       rates were not available for them. In addition, since all HBCUs are 2-year or 4-year public or private
                       schools, we excluded from our universe of non-HBCUs all schools in the Department’s database that
                       are less than 2-year or proprietary. But data on proprietary schools are included in table 1 and app. IV
                       to provide a broader perspective.
                       3
                        These schools were reported by the Department of Education’s Default Management Section in the
                       fiscal year 1993 official statistics for the cohort default rate.



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             B-275208




             If the default rates for HBCUs remain the same for fiscal years 1994-96 as
             they were for fiscal years 1991-93, 22 HBCUs could lose their eligibility for
             federal student loan programs in fiscal year 1998, after their exemption
             from default rate requirements expires.


             Title IV of the Higher Education Act of 1965, as amended, authorized the
Background   Department of Education to bar postsecondary schools with high “cohort
             default rates” from continuing to participate in federal student loan
             programs.4 The cohort default rate is a percentage that results from two
             parts: (1) a school’s student loan borrowers who are supposed to repay the
             loan in a fiscal year, divided by (2) those borrowers who default by the end
             of the following fiscal year.5 For example, if 100 students from a school
             were scheduled to begin repaying their loans in fiscal year 1993 and 25
             defaulted on their loans by the end of fiscal year 1994, the school’s fiscal
             year 1993 cohort default rate would be 25 percent.

             Each year, the Department assesses a school’s eligibility on the basis of its
             three most recent available cohort default rates. In fiscal year 1996,
             eligibility was based on default rates for fiscal years 1991, 1992, and 1993.
             A school remains eligible if its cohort default rate is below the statutory
             threshold, currently 25 percent, in at least 1 of the latest 3 consecutive
             fiscal years. A school becomes ineligible if its default rate equals or
             exceeds the default threshold in all 3 fiscal years.

             Students get federal loans from two major programs: the FFEL and FDL
             programs, each providing both subsidized and unsubsidized loans. Loans
             made under FFEL are provided by private lenders and are ultimately
             guaranteed against default by the federal government. Loans made under
             FDL are provided through schools, and the Department services and
             collects loans through contractors. FDL was originally authorized by the
             Higher Education Amendments of 1992 (P.L. 102-325). Since the first loans
             under FDL were made in the fourth quarter of fiscal year 1994, the fiscal
             year 1995 cohort will be the first cohort that could be affected by FDL
             defaults.




             4
              Student borrowers are in default if they fail to make any scheduled payments on their loans for (1) 180
             days, if repayment is made monthly, and (2) 240 days, if repayment is made less frequently.
             5
              If less than 30 student borrowers at a school repay their loans in a given year, the cohort default rate
             is the percentage of student borrowers who repaid their loans in the most recent 3 years, but who
             defaulted by the end of the fiscal year after repayment.



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                        B-275208




                        In addition to the cohort default rate threshold specified in the Higher
                        Education Act, the Department has established—through regulation—a
                        default reduction initiative that includes default rate thresholds applicable
                        to all schools, including HBCUs. One provision of the initiative specifies that
                        if a school has a default rate exceeding 20 percent, it must submit to the
                        Department a default management plan for implementing specific
                        measures for reducing the rate. Another provision allows the Department
                        to start procedures to limit, suspend, or terminate a school’s participation
                        in all title IV federal student aid programs if the school’s cohort default
                        rate for a single year exceeds 40 percent. The exemption from the
                        statutory threshold for HBCUs does not extend to these provisions.


                        The federal loans to students at 98 HBCUs represent 2.96 percent of our
HBCUs Account for a     universe of 2-year or 4-year public or private schools participating in the
Small Part of Federal   FFEL and FDL programs. The federal government provided about $26.2

Student Loans           billion in student loans through the two programs in fiscal year 1995, of
                        which $731 million (2.8 percent) was loans to students attending HBCUs.
                        Since fiscal year 1991, the amount of loans to students at HBCUs has
                        consistently accounted for a small part of all such loans made to
                        postsecondary students (see fig. 1).




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                                         B-275208




Figure 1: Percentage of Total FFEL and FDL Dollar Amounts Awarded to HBCU Students, Fiscal Years 1991-95

Percent
3.5


 3
               2.8                                                                     2.8
                               2.7                  2.7
                                                                    2.6
2.5


 2


1.5


 1


0.5


 0
              1991            1992                  1993            1994              1995
      Fiscal Year


                                         Although the total share of federal student loans to HBCU students has
                                         remained small during fiscal years 1991-95, the dollar amount of these
                                         loans has increased by about 97 percent, from $372 million to $731 million
                                         (see fig. 2).




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                                         B-275208




Figure 2: Dollar Amount of Loans Under FFEL and FDL to Students Attending HBCUs, Fiscal Years 1991-95

Millions of Dollars


800
                                                                                               731

                                                                         624
600

                                                    473
                               403
400            372




200




  0
               1991           1992                1993                  1994                   1995
      Fiscal Year

        FDL

        FFEL
                                         Note: The 1994 amount includes $1.5 million under the Federal Direct Loan (FDL) program.



                                         In each fiscal year, from 1991 through 1993, the aggregate cohort default
Aggregate Default                        rate for HBCUs was about three times as high as the rate for non-HBCUs.
Rates for HBCUs and                      There was little variation in the rates from year to year, with HBCU rates
Non-HBCUs Show                           ranging from 21.1 to 22.3 percent and non-HBCU rates from 6.9 to
                                         7.4 percent (see fig. 3).
Large and Consistent
Differences




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                                        B-275208




Figure 3: Aggregate FFEL Default Rates for HBCUs and Non-HBCUs, Fiscal Years 1991-93 Cohorts

Percent
25
            22.2                        22.3
                                                                       21.1
20



15



10

                   6.9                             7.4                         7.2

 5



 0
                   1991                          1992                         1993
 Fiscal Year


     HBCU

     Non-HBCU



                                        For the various types of schools, HBCU default rates are lowest among
                                        4-year private schools (20 percent in fiscal year 1993) and highest among
                                        2-year private schools (42.5 percent) (see table 1). Compared with
                                        non-HBCUs, HBCUs had higher default rates for all kinds of schools (public,
                                        private, 4-year, and 2-year) and in each fiscal year from 1991 through 1993.




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                                        B-275208




Table 1: Comparison of FFEL Default
Rates by Kind of School for HBCUs                                School                               FFEL default rates (in percent)
and Non-HBCUs, Fiscal Years 1991-93     Kind                                                No.           1991            1992             1993
Cohorts
                                        HBCUs
                                        4-year public                                        40            21.7           22.2              21.4
                                        4-year private                                       49            21.4           21.8              20.0
                                        2-year public                                          6           33.4           24.4              23.8
                                        2-year private                                         3           52.9           38.8              42.5
                                        Non-HBCUs
                                        4-year public                                       518             5.9             6.3              6.0
                                        4-year private                                    1,310             5.0             5.7              5.5
                                        2-year public                                       942            14.1           14.3              14.4
                                        2-year public                                       439            12.7           12.5              12.6
                                                      a
                                        Proprietary                                       2,086            26.3           23.3              21.8
                                        a
                                            There are no HBCU proprietary schools.




                                        The total number of student loan dollars in default per school averaged
HBCUs Have Larger                       nearly four times higher at HBCUs than at non-HBCUs. In fiscal year 1992, the
Dollar Amounts in                       last year for which complete data on defaulted amounts were available,
Default Per School                      HBCU defaults averaged $464,209 compared with $119,307 for non-HBCUs
                                        (see table 2). This was primarily the result of default rates being about
Than Non-HBCUs                          three times as great for HBCUs as for non-HBCUs. The average borrower in
                                        default at HBCUs or non-HBCUs had nearly the same amount in default—
                                        $4,084 at HBCUs, $4,091 at non-HBCUs.

Table 2: Selected Characteristics for
HBCUs and Non-HBCUs, Fiscal Year                                                                                                        Non-
1992 Cohort                             Selected characteristic                                                       HBCUs           HBCUs
                                        Number of schools                                                                   98             3,209
                                        Borrower default rate                                                             22.3%              7.4%
                                        Avg. dollars in default per school                                           $464,209       $119,307
                                        Avg. dollars in default per borrower                                           $4,084          $4,091
                                        Avg. borrowers in default per school                                               114               29
                                        Avg. borrowers repaying loans per school                                           510              393
                                        Avg. 1994 fall enrollees per school                                              2,788             4,412
                                        Defaulted borrowers as percentage of enrollees                                      4.1%             0.7%
                                        Borrowers in repayment as percentage of enrollees                                 18.3%              8.9%
                                        Note: The fiscal year 1992 cohort was the latest year for which the amount of dollars in default
                                        was available.




                                        Page 8                                                  GAO/HEHS-97-33 Loan Defaults at HBCUs
                     B-275208




                     For both HBCUs and non-HBCUs, the average dollars in default for 4-year
                     schools was higher than that for 2-year schools. For example, in the fiscal
                     year 1992 cohort, defaulted dollars for 4-year HBCUs was $491,083 and for
                     2-year HBCUs, $165,243 (see app. II).

                     In addition, to determine whether larger 4-year schools might have lower
                     default rates but higher dollar volumes in default,6 for the 1992 cohort, we
                     analyzed default data by size of school enrollment. We found that at HBCUs,
                     larger schools had lower default rates and much higher volumes of dollars
                     in default than smaller schools. At non-HBCUs, larger schools had nearly the
                     same default rates as smaller schools, but much higher volumes of dollars
                     in default. However, for both the larger and smaller schools, HBCUs had
                     significantly higher default rates and more dollars in default than
                     non-HBCUs. (See app. III.)

                     In analyzing student loan dollars in default compared with loans in
                     repayment, we found that the dollar default rate for HBCUs, in fiscal year
                     1992, was 19.7 percent. This compares with a dollar default rate for
                     proprietary schools of 19.1 percent and for all other non-HBCUs of
                     5.6 percent. (See app. IV.)


                     If the high default rates for the fiscal years 1991-93 cohorts persist, 22 of
Over 20 Percent of   the 98 HBCUs (over 20 percent), after their statutory exemption from
HBCUs Could Lose     default rate requirements ends in July 1998, could become ineligible for
Student Loan         continued participation in federal student loan programs. The 22 schools
                     had cohort default rates of 25 percent or more in those 3 fiscal years.
Eligibility          Given fall 1994 enrollments, about 29,000 (11 percent) of HBCU students
                     attended these 22 HBCUs. During fiscal year 1995, students attending the 22
                     schools received about $80 million in federal education loans. (See table 3
                     for these and other possible outcomes under current law and varying
                     default rate thresholds.)




                     6
                      In our analysis of default rates by enrollment size, we defined smaller schools as those with
                     enrollments of less than 5,000 students and larger schools as those with enrollments of greater than or
                     equal to 5,000 students.



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                                          B-275208




Table 3: Varying Default Rate
Thresholds at Which HBCUs Could           Percentage at
Lose Eligibility for FFEL Participation   default rate              HBCUs that could          HBCU loan volume            Percentage of total
in Fiscal Year 1998                       thresholda                   lose eligibility        in fiscal year 1995        HBCU loan volume
                                          25                                           22              $80,030,772                           10.9
                                          30                                           11                10,163,511                           1.4
                                          35                                             6                5,380,842                           0.7
                                          40                                             1                2,280,123                           0.3
                                          a
                                           Default rates are based on fiscal years 1991-93 cohort data, which are the most recent available.
                                          If the legislative exemption expires, cohort data from fiscal years 1994-96 are likely to be the most
                                          recent data available for determining eligibility to participate in federal student loan programs in
                                          fiscal year 1998.



                                          High default rates could also have other effects on a number of HBCUs. By
                                          regulation, the Department requires that schools with default rates
                                          exceeding a 20 percent threshold must submit a default management plan
                                          for reducing their default rates. HBCUs are not exempt from this
                                          requirement. For the fiscal year 1993 cohort, 53 (54 percent) of the 98
                                          HBCUs had default rates above 20 percent. In comparison, 221 (7 percent)
                                          of the 3,209 non-HBCUs had default rates exceeding 20 percent.

                                          Further, the Department may limit, suspend, or terminate school
                                          participation in all title IV federal student aid programs if cohort default
                                          rates exceed 40 percent for a single year. For the 1993 cohort, 7 HBCUs and
                                          17 non-HBCUs exceeded the 40 percent threshold. According to Department
                                          of Education officials, of the 17 non-HBCUs, 14 no longer participate in FFEL
                                          and 3 are contesting their default rates through the Department’s appeal
                                          process. Of the 7 HBCUs, 1 recently terminated its participation in title IV
                                          student aid programs because it lost accreditation; the other 6 may
                                          continue to participate because the Department has not initiated actions to
                                          limit, suspend, or terminate these schools’ participation because of their
                                          high default rates.


                                          The Department of Education reviewed a draft of this report and had no
Agency Comments                           comments.


                                          Copies of this letter will be provided to appropriate congressional
                                          committees, the Secretary of Education, and other interested parties. If
                                          you have any questions or would like to discuss this report further, please
                                          contact me on (202) 512-7014. Major contributors include




                                          Page 10                                                  GAO/HEHS-97-33 Loan Defaults at HBCUs
B-275208




Joseph J. Eglin, Jr., Assistant Director; Daniel C. Jacobsen; Robert B.
Miller; and Charles M. Novak.

Sincerely yours,




Carlotta C. Joyner
Director, Education and
  Employment Issues




Page 11                                   GAO/HEHS-97-33 Loan Defaults at HBCUs
Contents



Letter                                                                 1


Appendix I                                                            14

Historically Black
Colleges and
Universities, by State,
Kind of School, and
Enrollment
Appendix II                                                           18

Comparison of
Selected
Characteristics at
4-Year and 2-Year
HBCUs and
Non-HBCUs, Fiscal
Year 1992 Cohort
Appendix III                                                          19

Comparison of
Selected
Characteristics at
4-Year HBCUs and
Non-HBCUs, by
School Enrollment,
Fiscal Year 1992
Cohort




                          Page 12   GAO/HEHS-97-33 Loan Defaults at HBCUs
                         Contents




Appendix IV                                                                                        20

Federal Family
Education Loans
(FFEL) in Repayment
and Default, by Kind
of School, Fiscal Year
1992 Cohort
Tables                   Table 1: Comparison of FFEL Default Rates by Kind of School for            8
                           HBCUs and Non-HBCUs, Fiscal Years 1991-93 Cohorts
                         Table 2: Selected Characteristics for HBCUs and Non-HBCUs,                 8
                           Fiscal Year 1992 Cohort
                         Table 3: Varying Default Rate Thresholds at Which HBCUs Could             10
                           Lose Eligibility for FFEL Participation in Fiscal Year 1998

Figures                  Figure 1: Percentage of Total FFEL and FDL Dollar Amounts                  5
                           Awarded to HBCU Students, Fiscal Years 1991-95
                         Figure 2: Dollar Amount of loans Under FFEL and FDL to                     6
                           Students Attending HBCUs, Fiscal Years 1991-95
                         Figure 3: Aggregate FFEL Default Rates for HBCUs and                       7
                           Non-HBCUs, Fiscal Years 1991-93 Cohorts




                         Abbreviations

                         FDL        Federal Direct Loan
                         FFEL       Federal Family Education Loan
                         HBCU       Historically Black Colleges and Universities


                         Page 13                                 GAO/HEHS-97-33 Loan Defaults at HBCUs
Appendix I

Historically Black Colleges and Universities,
by State, Kind of School, and Enrollment


                                                                                                           Fall
                                                                                                    enrollment
HBCUs included in the review             State            Kind of school                                  1994
Alabama A&M University                   Ala.             4-yr. public                                   5,543
Alabama State University                 Ala.             4-yr. public                                   5,037
J.F. Drake State Technical College       Ala.             2-yr. public                                     768
Miles College                            Ala.             4-yr. private                                  1,068
Oakwood College                          Ala.             4-yr. private                                  1,534
Selma University                         Ala.             4-yr. private                                    206
Stillman College                         Ala.             4-yr. private                                    913
Talladega College                        Ala.             4-yr. private                                    976
Trenholm State Technical College         Ala.             2-yr. public                                     785
Tuskegee University                      Ala.             4-yr. private                                  3,322
Arkansas Baptist College                 Ark.             4-yr. private                                    225
Philander Smith College                  Ark.             4-yr. private                                    841
Shorter College                          Ark.             2-yr. private                                    282
Univ. of Arkansas at Pine Bluff          Ark.             4-yr. public                                   3,823
Howard University                        D.C.             4-yr. private                                 10,115
Univ. of the District of Columbia        D.C.             4-yr. public                                  10,599
Delaware State University                Del.             4-yr. public                                   3,381
Bethune-Cookman College                  Fla.             4-yr. private                                  2,345
Edward Waters College                    Fla.             4-yr. private                                    782
Florida A&M University                   Fla.             4-yr. public                                  10,084
Florida Memorial College                 Fla.             4-yr. private                                  1,320
Albany State College                     Ga.              4-yr. public                                   3,062
Clark Atlanta University                 Ga.              4-yr. private                                  5,193
Fort Valley State College                Ga.              4-yr. public                                   2,823
Interdenominational Theological Center   Ga.              4-yr. private                                    398
Morehouse College                        Ga.              4-yr. private                                  2,992
Morehouse School of Medicine             Ga.              4-yr. private                                    164
Morris Brown College                     Ga.              4-yr. private                                  1,894
Paine College                            Ga.              4-yr. private                                    721
Savannah State College                   Ga.              4-yr. public                                   3,253
Spelman College                          Ga.              4-yr. private                                  1,977
Kentucky State University                Ky.              4-yr. public                                   2,563
Dillard University                       La.              4-yr. private                                  1,675
Grambling State University               La.              4-yr. public                                   7,610
Southern University and A&M College at La.                4-yr. public                                   9,904
Baton Rouge
Southern University at New Orleans       La.              4-yr. public                                   4,302
                                                                                                    (continued)

                                                Page 14                   GAO/HEHS-97-33 Loan Defaults at HBCUs
                                               Appendix I
                                               Historically Black Colleges and Universities,
                                               by State, Kind of School, and Enrollment




                                                                                                                                      Fall
                                                                                                                               enrollment
HBCUs included in the review            State                                        Kind of school                                  1994
Southern University at                  La.                                          2-yr. public                                   1,267
Shreveport-Bossier City
Xavier University of Louisiana          La.                                          4-yr. private                                  3,463
Bowie State University                  Md.                                          4-yr. public                                   4,896
Coppin State College                    Md.                                          4-yr. public                                   3,380
Morgan State University                 Md.                                          4-yr. public                                   5,766
University of Maryland Eastern Shore    Md.                                          4-yr. public                                   2,925
Lewis College of Business               Mich.                                        2-yr. private                                    245
Harris-Stowe State College              Mo.                                          4-yr. public                                   1,757
Lincoln University                      Mo.                                          4-yr. public                                   3,512
Alcorn State University                 Mo.                                          4-yr. public                                   2,742
Coahoma Community College               Miss.                                        2-yr. public                                     969
Jackson State University                Miss.                                        4-yr. public                                   6,224
Mary Holmes College                     Miss.                                        2-yr. private                                    327
Mississippi Valley State University     Miss.                                        4-yr. public                                   2,182
Rust College                            Miss.                                        4-yr. private                                  1,055
Tougaloo College                        Miss.                                        4-yr. private                                  1,105
Barber-Scotia College                   N.C.                                         4-yr. private                                    432
Bennett College                         N.C.                                         4-yr. private                                    655
Elizabeth City State University         N.C.                                         4-yr. public                                   2,099
Fayetteville State University           N.C.                                         4-yr. public                                   4,109
Johnson C. Smith University             N.C.                                         4-yr. private                                  1,413
Livingstone College                     N.C.                                         4-yr. private                                    836
North Carolina A&T State University     N.C.                                         4-yr. public                                   8,136
North Carolina Central University       N.C.                                         4-yr. public                                   5,692
Saint Augustine’s College               N.C.                                         4-yr. private                                  1,673
Shaw University                         N.C.                                         4-yr. private                                  2,432
Winston-Salem State University          N.C.                                         4-yr. public                                   2,915
Central State University                Ohio                                         4-yr. public                                   2,763
Wilberforce University                  Ohio                                         4-yr. private                                    976
Langston University                     Okla.                                        4-yr. public                                   3,408
Cheyney State University of Pennsylvania Pa.                                         4-yr. public                                   1,357
Lincoln University                      Pa.                                          4-yr. public                                   1,371
Allen University                        S.C.                                         4-yr. private                                    256
Benedict College                        S.C.                                         4-yr. private                                  1,501
Claflin College                         S.C.                                         4-yr. private                                  1,023
Denmark Technical College               S.C.                                         2-yr. public                                     840
                                                                                                                               (continued)



                                               Page 15                                               GAO/HEHS-97-33 Loan Defaults at HBCUs
                                              Appendix I
                                              Historically Black Colleges and Universities,
                                              by State, Kind of School, and Enrollment




                                                                                                                                       Fall
                                                                                                                                enrollment
HBCUs included in the review           State                                        Kind of school                                    1994
Morris College                         S.C.                                         4-yr. private                                       889
South Carolina State University        S.C.                                         4-yr. public                                      4,693
Voorhees College                       S.C.                                         4-yr. private                                       716
Fisk University                        Tenn.                                        4-yr. private                                       872
Knoxville College                      Tenn.                                        4-yr. private                                       728
Lane College                           Tenn.                                        4-yr. private                                       667
LeMoyne-Owen College                   Tenn.                                        4-yr. private                                     1,436
Meharry Medical College                Tenn.                                        4-yr. private                                       726
Tennessee State University             Tenn.                                        4-yr. public                                      8,180
Huston-Tillotson College               Tex.                                         4-yr. private                                       613
Jarvis Christian College               Tex.                                         4-yr. private                                       382
Paul Quinn College                     Tex.                                         4-yr. private                                       667
Prairie View A&M University            Tex.                                         4-yr. public                                      5,849
Saint Phillip’s College                Tex.                                         2-yr. public                                      6,571
Southwestern Christian College         Tex.                                         4-yr. private                                       182
Texas College                          Tex.                                         4-yr. private                                       262
Texas Southern University              Tex.                                         4-yr. public                                     10,078
Wiley College                          Tex.                                         4-yr. private                                       584
Hampton University                     Va.                                          4-yr. private                                     5,769
Norfolk State University               Va.                                          4-yr. public                                      8,667
Saint Paul’s College                   Va.                                          4-yr. private                                       763
Virginia State University              Va.                                          4-yr. public                                      4,007
Virginia Union University              Va.                                          4-yr. private                                     1,525
University of the Virgin Islands       V.I.                                         4-yr. public                                      3,095
Bluefield State College                W.Va.                                        4-yr. public                                      2,609
West Virginia State College            W.Va.                                        4-yr. public                                      4,519
HBCUs excluded from the review
Bishop State Community Collegea        Ala.                                         2-yr. public                                      4,511
Lawson State Community Collegea        Ala.                                         2-yr. public                                      1,920
                                   a
Fredd State Technical College          Ala.                                         2-yr. public                                        190
Concordia Collegea                     Ala.                                         2-yr. private                                       435
Hinds Community College, Utica         Miss.                                        2-yr. public                                        964
Campusb
Clinton Junior Collegea                S.C.                                         2-yr. private                                         53

                                                                                                                   (Table notes on next page)




                                              Page 16                                               GAO/HEHS-97-33 Loan Defaults at HBCUs
Appendix I
Historically Black Colleges and Universities,
by State, Kind of School, and Enrollment




Note: The number of HBCUs included in the review is 98; the number excluded is 6.
a
  This HBCU has not been a participant in the Federal Family Education Loan (FFEL) program
and, therefore, the Department of Education’s default rate report for the fiscal year 1993 cohort
contained no information for it.
b
 The Department’s default rate report for the fiscal year 1993 cohort contains data for Hinds
Community College, but default data for the Hinds Utica Campus are not separated out.
According to a vice-president of the college, this campus is the portion of Hinds Community
College that is recognized as an HBCU. Therefore, for review purposes, Hinds Community
College was considered a non-HBCU.




Page 17                                                 GAO/HEHS-97-33 Loan Defaults at HBCUs
Appendix II

Comparison of Selected Characteristics at
4-Year and 2-Year HBCUs and Non-HBCUs,
Fiscal Year 1992 Cohort

                                                       4-year schools            2-year schools
               Selected characteristic                  HBCU Non-HBCU             HBCU Non-HBCU
               Number of schools                           89        1,828            9       1,381
               Borrower default rate                      22.0%         6.0%        30.8%         14.0%
               Avg. borrowers in default per school       120            34          54            23
               Avg. borrowers in repayment per
               school                                     544           568         174           161
               Avg. dollars in default per school     $491,083    $162,715      $165,243    $61,203
               Avg. dollars in default per borrower     $4,101      $4,758        $3,085     $2,720
               Avg. 1994 fall enrollment per school      2,935       4,667         1,339      4,046
               Borrowers in default as a
               percentage of all enrollees                 4.1%         0.7%         4.0%         0.6%
               Borrowers in repayment as a
               percentage of all enrollees                18.5%         12.2%       13.0%         4.0%




               Page 18                                       GAO/HEHS-97-33 Loan Defaults at HBCUs
Appendix III

Comparison of Selected Characteristics at
4-Year HBCUs and Non-HBCUs, by School
Enrollment, Fiscal Year 1992 Cohort

                                                               Larger enrollmenta            Smaller enrollmentb
               Selected characteristic                            HBCU Non-HBCU                  HBCU Non-HBCU
               Number of schools                                       17            474              72            1,303
               Borrower default rate                                 20.4%            6.1%         23.3%              6.0%
               Avg. borrowers in default per school                   259             91              87              14
               Avg. borrowers in repayment per
               school                                              1,271           1,503            372              236
               Avg. dollars in default per school            $1,148,151       $424,965        $335,942         $68,419
               Avg. dollars in default per borrower               $4,427         $4,673          $3,871            $4,875
               Avg. 1994 fall enrollment per school                7,556         13,566           1,843             1,430
               Borrowers in default as a
               percentage of all students                             3.4%            0.7%           4.7%             1.0%
               Borrowers in repayment as a
               percentage of all students                            16.8%          11.1%          20.2%             16.5%
               Percentage of total HBCU or
               non-HBCU enrollment                                   49.2%          77.5%          50.8%             22.5%
               a
                “Larger enrollment” includes schools with fall 1994 enrollments of greater than or equal to 5,000
               students.
               b
                   “Smaller enrollment” includes schools with fall 1994 enrollments of less than 5,000 students.




               Page 19                                                    GAO/HEHS-97-33 Loan Defaults at HBCUs
Appendix IV

Federal Family Education Loans (FFEL) in
Repayment and Default, by Kind of School,
Fiscal Year 1992 Cohort

                                                      Dollars in millions                                             Dollar
                                                                                                                     default
                                                              Loans                  Percentage of total             rate (in
Kind of school                                     Repayment           Default Repayment              Default       percent)
HBCU                                                      $ 228            $ 45             2.8            7.0           19.7
Non-HBCU, proprietary                                     1,134             217            13.8           33.6           19.1
Non-HBCU, all others                                      6,853             383            83.4           59.4             5.6
Total                                                    $8,215           $645           100.0           100.0             7.9
                        Note: The Department of Education’s database provided information on fiscal year 1992 dollars in
                        repayment and in default for only 5,670 of the 5,855 schools in our universe of schools, as follows:
                        HBCU, 97 of 98; Non-HBCU, proprietary, 1,988 of 2,086; Non-HBCU, all others, 3,585 of 3,671.




(104855)                Page 20                                                 GAO/HEHS-97-33 Loan Defaults at HBCUs
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