Ever since the end of the Great Recession, college enrollment—and the student loan borrowing that goes with it—has been dropping every year. (See Figure 1.) The steepest declines in new student debt over the past decade were at the schools where enrollment was also declining: for-profit colleges. These schools, which had grown rapidly before and during the recession—frequently, by using manipulative recruiting tactics and providing a substandard education, since the bulk of their funds are typically dedicated to marketing—shrank as the economy recovered over the past decade.

But the decline in new student debt in the for-profit college sector has now reversed, according to TCF’s analysis of federal student loan data through March 31, the end of the third quarter of the 2019–20 academic year. A 7 percent increase in federal student loan disbursements—that is, in the dollar value of new loans issued to students—at for-profit colleges is the first year-over-year increase since 2010. At nonprofit and public schools, in contrast, borrowing continued a trend of modest declines, dropping 2 percent and 3 percent, respectively.

Given the repeating history of abuses by for-profit colleges, this spike in new student debt is ominous.

Figure 1

New Student Debt at Covert For-Profits Spikes Upward

The largest increase in new student debt was at Grand Canyon University, where loan disbursements increased by $119 million through March 31 compared to the same period the previous year, a jump that is more than double that of any other college in the country. Grand Canyon is a covert for-profit; that is, it has been marketing itself as a nonprofit university, but the U.S. Department of Education last year found the school to be a “captive client” of a for-profit company that is also run by the school’s president. The CEO had boasted to shareholders that “Being out there a million times a day saying ‘we’re nonprofit’ has had an impact.”

Grand Canyon, which reported enrolling 90,253 students in the fall of 2018, spends less than 20 cents of every tuition dollar on instruction. The school has a physical campus in Phoenix, but the bulk of its students, pre-pandemic, were enrolled exclusively online (94 percent of its 36,114 graduate students and 67 percent of its 54,139 undergraduates). Because one student may receive multiple loans (including a loan to a parent), the available data on total dollar volume and number of loans do not allow for analysis of the number of unique borrowers and the amounts borrowed. Grand Canyon students borrowed 25 percent more dollars, but took out only 11 percent more loans, suggesting the increase in total debt stems from two factors: more students are borrowing, and students are borrowing more.

Other schools with sketchy claims to nonprofit status also grew new student debt. Stevens Henager College and its online Independence University disbursed 15 percent more student loan dollars so far this academic year compared to last year. Borrowing at Keiser University rose 12 percent, while loan volume at Ultimate Medical Academy grew a more modest 6 percent.

Growth in Online Schools and Programs

Of the large, well-known schools enrolling students in exclusively online programs, Florida-based Full Sail University, owned by a private equity company, had the highest loan growth rate, a 34 percent increase in loan dollars and 32 percent more loans—suggesting a big upward spike in enrollment. The for-profit University of Phoenix and Strayer University both grew their loans at a 12 percent clip, nonprofit Liberty University showed a 10 percent increase in loan volume, public Arizona State University increased student borrowing by 8 percent, and for-profit Walden University’s loan volume increased by 2 percent. The nonprofit Southern New Hampshire University, which has grown rapidly in recent years, had a 5 percent decrease in loan volume, while total student loan funds at the nonprofit Western Governors University, for-profit Capella University, and public-for-profit Purdue Global were essentially unchanged.

What is especially troubling is that a new version of hazardous for-profit education has emerged in recent years, as reputable public and private colleges rent out their names to third-party, for-profit online program management companies (OPMs). OPMs run many aspects of colleges online programs, including marketing, and in exchange frequently take half or more of the tuition revenue charged to federal student loans. The contracts are likely illegal, but both the Obama and Trump education departments have allowed them anyway.

The federal student loan data are showing some large increases in graduate student loans at public and nonprofit universities that are known to be contracting with OPM companies to run their online masters programs. Pepperdine University, a nonprofit Christian school in California, showed a 24 percent increase in loan volume, largely associated with growth in graduate student loans. The school contracts with the for-profit 2U, Inc. to run its online MBA program. The University of California, Davis, disbursed 20 percent more in student loan funds, with an 30 percent increase in the number of graduate student loans (and a 12 percent increase in parent loans). A year ago the school launched an online MBA program, managed by 2U, Inc.

Baylor University, a nonprofit Christian school in Waco, Texas, had a 16 percent increase in student loans in the latest federal data. The number of loans to graduate students is 69 percent higher than in the same period the prior year, while the number of undergraduate loans is 7 percent lower and the number of parent loans is 5 percent lower. Baylor’s online graduate programs are managed by 2U, Inc. The public Lamar University of Beaumont, Texas, had a 27 percent increase in graduate student loans as of March 31. The for-profit OPM company Academic Partnerships runs the school’s online programs and is paid a higher share of tuition for graduate students, according to the contract obtained by TCF. Loan volume overall at Lamar increased by 14 percent even as undergraduate volume declined.

The beleaguered University of Southern California had a 13 percent drop in student loan volume. Despite the Varsity Blues scandal, however, the number of undergraduate loans was stable. Instead, the data suggest graduate student loans account for the decline, possibly associated with a 2U-operated online Masters of Social Work program that “went terribly wrong,” according to the Los Angeles Times.

Rising Debt at For-Profit Medical and Health Care Career Schools

Some of the largest increases in student loans were at for-profit medical and allied health training schools. Rocky Vista University, a new for-profit osteopathic medical school in Colorado, grew its student loan volume by 23 percent. The school’s cloaked ownership structure was among those featured in TCF’s recent report on for-profit medical schools, which revealed weak oversight by medical school accreditors. Ponce Health Sciences University, also discussed in the TCF report, increased student borrowing by 13 percent.

Ross University School of Medicine’s student loan borrowing increased 36 percent, while borrowing at its sister Ross University School of Veterinary Medicine rose by 40 percent. Located offshore in Barbados and the West Indies, respectively, the schools are owned by Atdalem Global Education, Inc. (the publicly traded company that previously owned DeVry University). While most offshore medical schools must maintain an enrollment that has a majority of non-U.S. citizens and meet minimum medical exam passage rates to be eligible to use federal student loans, Ross is one of five schools that Congress has exempted from those quality checks.

Student loan volume at another of the exempt offshore medical schools, St. George’s University, increased by a modest 5 percent. However, in early 2019, the private equity firm that owns St. George’s purchased the University of St. Augustine for Health Sciences north of San Diego. Student loans at that school, which offered masters and doctoral degrees in physical therapy and nursing, have spiked by 24 percent. Compared to family-owned and publicly traded companies, private equity firms have a much worse record of consumer abuses, because the firms notoriously seek very high returns on their investments.

The owner of another California allied health training school, San Joaquin Valley College, purchased another health training chain, Carrington College, at the end of 2018. The company’s colleges, combined, increased new student debt by 33 percent through March 31 of the 201920 academic year.

Consumers and Students Need Protection

In the coming months, millions of unemployed Americans will be seeking ways to improve their chances of getting a secure, well-paying job. Unfortunately, recessions bring out the worst in some college marketers, especially those at for-profit colleges and programs. Prospective students need honest advice about whether available programs at a school fit a student’s skills, background and goals. Instead, consumers are most likely to interact with a recruiter driven by sales targets rather than an advisor. Usually the prospect ends up in a program that invests very little of students’ tuition money on their education because the funds instead go to marketing and profit.

While student debt at for-profit colleges as a share of all student debt is still well below Great Recession levels (see Figure 2), it is rising swiftly—at a time when debt at nonprofit and public colleges is still declining or staying flat. Now is the time to prevent a resurgence of the predatory for-profit sector and avoid all the problems that it would bring.


One key to preventing the rise of predatory schools is to adequately fund public higher education—as explained in TCF’s analysis of the HEROES Act—especially community colleges. At the same time, the Trump administration’s cuts to oversight should be reversed, and important consumer protections such as the Gainful Employment rule should be reinstated. In the CARES Act, Congress prohibited the payment of emergency funding to contractors that are engaged in marketing. Congress should now take that concept further, prohibiting the use of any federal student aid funds, including the GI Bill, from being used for marketing and recruiting.

Finally, the Department of Veterans Affairs and the Department of Education should require colleges to notify the agency if any student using federal aid is being charged more in tuition than the amount the school is spending to actually teach the student in the program in which they are enrolled. The agency should issue a public warning about the apparent poor value, and reach out to those students with other options they could consider.

Methodological Note

Data for each quarter of Direct Loan originations, disbursements, and recipients are published by Federal Student Aid (FSA). TCF merged quarters of data, matching by OPEID. In the event that an institution changed its name or sector, institution name and sector were retrieved from the most recent quarter of data in which the institution existed with the same OPEID. Data on loan disbursements and loan recipients were totaled and compared as described. In prior years the first-three-quarter trends have been consistent with the full-year trends. Given the COVID-19 emergency, new debt in the current fourth quarter (April 1 to June 30) will likely diverge from trends, affecting the annual total. Of the four quarters, the fourth is typically the smallest for nonprofit and public institutions (about 15 percent of their full-year total) but the largest for the for-profit schools (about 40 percent of their full-year total).

Loan disbursements are frequently processed as institutional income (for example, for tuition, fees, and on-campus housing), but also include dollars distributed directly to students for eligible expenses (such as textbooks, transportation, food, and off-campus housing). Recipient counts are not a precise count of students enrolled and receiving loans, as a single student may be the recipient of more than one type of loan (for example, an undergraduate student might be the “recipient” of a subsidized loan, an unsubsidized loan, and a Parent Plus loan).

Data regarding the attendance online or in-person of students at institutions was obtained from the Integrated Postsecondary Education Data System (IPEDS). Where institutions were designated by a single OPEID in FSA data but as multiple institutions in IPEDS, data were matched and summed by OPEID.

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