500 Colleges Where Taxpayers Often Foot the Bill

Five hundred U.S. colleges and universities now share one alarming distinction: At least 40% of their recent federal student loan borrowers are not repaying their loans, according to new nonpayment-rate data published by the U.S. Education Department. The overwhelming majority of those schools are for-profit career colleges — and because they depend heavily on federal aid, taxpayers are left holding the bag when students can’t pay.

What the Data Shows

The figures, first reported by NPR, cover roughly 17 million borrowers who first entered repayment between January 2020 and May 2025. A “nonpayment rate” reflects the share of those borrowers whose loans are more than 90 days delinquent, including those already in default.

Of the 500 schools with nonpayment rates of 40% or higher, only 15 are public institutions. A total of 424 are private, for-profit schools, and about 61 are private nonprofits, according to the Education Department’s own file. Average nonpayment rates track the same pattern: roughly 16% at public colleges, 15% at private nonprofits, and 33% at for-profit institutions — about double the others.

“These numbers are really jaw-dropping,” said Eileen Connor, head of the Project on Predatory Student Lending, a nonprofit that advocates for borrowers and reviewed the data.

The Triangle of Federal Aid

The story is not simply one of borrowers falling behind. It is a structural problem in which federal dollars flow directly into school coffers. Many of the for-profit colleges on the list rely on the federal government for more than half their revenue. At UEI College, federal aid accounts for between 79% and 85% of revenue; at Miller-Motte College, nearly 86%; and at the American InterContinental University System, 89% — just under the 90% threshold that federal law penalizes.

“If the federal student loan program did not exist, these schools would not exist,” Connor said. She called awarding loans under those conditions “the definition of predatory lending.”

An analysis by Get Out of Debt Guy, which verified NPR’s figures against the Education Department’s raw spreadsheet, confirmed the school-level numbers, including 28,000 borrowers at Florida Career College with a 61% nonpayment rate and 19,700 borrowers at Tulsa Welding School with 54%. The American Council on Education, which analyzed the same data by institutional type, noted that nonpayment rates are not calculated for schools with fewer than 100 evaluated borrowers.

One Student’s Story

Behind the statistics are borrowers like Lisa Collenbaugh, who enrolled at a Los Angeles-area UEI campus in 2015 to become a computer systems technician. Tuition was $19,500, according to her old receipts. She was sleeping in her car at the time and saw the program as a path to stability.

The coursework felt oddly easy, and the school struggled to place her in a required externship. The only option it eventually offered was on the other side of Los Angeles. “I just couldn’t afford the gas,” she told NPR. Nearly finished, she dropped out. She still owes the U.S. government $10,389.47.

“It’s almost like this school is preying on the vulnerable,” Collenbaugh said.

UEI spokesperson Joseph Cockrell said the school discontinued the computer systems training program in part because of poor completion and job placement rates. Darcy Schnuth, vice president of student finance at UEI’s parent company, International Education Corp., attributed part of the repayment problem to the pandemic-era payment pause and Biden-era forgiveness promises, which she said left borrowers confused. “We’re not fully sure why ours is higher than the rest within our sector,” she added.

Why Accountability Has Lagged

The nonpayment rates themselves do not trigger federal penalties. That is the job of the cohort default rate, which counts borrowers who reach the nine-month default threshold. Federal law allows a school to lose access to federal student aid if its default rate reaches 40% in a single year or 30% for three consecutive years.

But that test has been effectively dormant for years, because pandemic-era policies made it nearly impossible for borrowers to default. It is now set to resume — and experts are watching closely.

“If a private lender were looking at a school that has a 40%, 50% delinquency rate on past loans, they would probably say, ‘We’re not going to lend to that school,’” said Preston Cooper, who studies higher education at the American Enterprise Institute. “Why does it make sense for the federal government and for taxpayers?”

A separate “do no harm” earnings test, created under the One Big Beautiful Bill Act, will flag programs whose graduates do not out-earn workers without college degrees. The Education Department says it will begin calculating first-year graduate earnings in early 2027, with the earliest loss of loan eligibility around 2028.

Undersecretary of Education Nicholas Kent framed the standards bluntly. “If a program cannot show that it leaves its graduates financially better off than if they had never enrolled, it should not be underwritten by federal taxpayers,” he said.

What to Watch

The new earnings test considers only graduate earnings — not the debt students take on. That omission worries some analysts. “It is a big gap in the new accountability rules,” said Jordan Matsudaira, an American University professor and former Education Department chief economist. “There are a fair number of programs that have earnings that are modest but high enough to clear the pretty low bar of the high school earnings test — but that have really high debt and students are struggling.”

Cooper’s preliminary analysis for NPR found that roughly 500 schools could be caught under both measures, but an equal number with high nonpayment rates may still pass the earnings test.

As the cohort default rate test resumes and the earnings rule takes effect, the central question remains unresolved: whether a system that routes billions in federal aid through schools with poor repayment records can be reformed — or whether more schools will simply fold, leaving students like Collenbaugh to shoulder the debt alone.