New numbers from the Education Department reveal that at least 40% of recent borrowers at 500 colleges and universities across the country are failing to repay their federal loans. The statistic is drawn from the most recent nonpayment-rate data, which follows the approximately 17 million borrowers who started making payments for the first time between January 2020 and May 2025.
The danger sign is real: at numerous institutions, well over half of recent borrowers are either at least three months behind on their payments or have reached the nine-month mark, which puts them in default.
Eileen Connor, who leads the Project on Predatory Student Lending and serves as its chief advocate for borrowers, reviewed the data and stated her opinion without hesitation: “These numbers are really jaw-dropping.”
The Schools Behind the Numbers
The data shows a stark divide between public institutions and private, for-profit schools. Just 15 of the 500 schools with nonpayment rates of 40% or higher are public institutions. Most, 424, are private, for-profit schools — the same kind that the Obama administration famously cracked down on, pressuring two large chains to close.
Tulsa Welding School is among the worst performers. As of May, it had nearly 20,000 recent students with federal loans in repayment, but more than half weren’t actually making payments.
A career training institution with locations in Tennessee, Georgia, North Carolina and Oklahoma had 37,000 borrowers, though only roughly half of them were actually making payments on their loans.
Cosmetology Schools Are Overrepresented
The list features numerous cosmetology and barbering schools, including the small Legends Barber College in Texas, which reports that a mere 81% of its roughly 100 borrowers fail to make payments. Public institutions and private, nonprofit colleges and universities, by contrast, averaged nonpayment rates of only about 15%.
Legends Barber College issued a statement in which it said it “takes student loan repayment and borrower education seriously. … We are reviewing the underlying data and our current repayment-support procedures so that we can identify where additional outreach may be needed.”.
Miller-Motte’s parent company told NPR in a statement that “the student loan landscape in recent years has presented unprecedented external challenges for borrowers across higher education” and that Miller-Motte is using “data-driven default management strategies to identify at-risk borrowers early and offer targeted intervention.”
Tulsa Welding School did not respond to NPR’s requests for comment.
What the Data Shows About For-Profit Schools
Jordan Matsudaira, a professor at American University who was the Education Department’s inaugural chief economist in the Biden administration, says the cosmetology schools’ struggles are predictable.
“Cosmetology schools are notoriously programs that tend to deliver students who have lower earnings. It’s not surprising that they’re struggling to repay their debts,” Matsudaira said.
Many of these institutions are quite small, with only a handful of students borrowing money each year. Several larger institutions stand out, however, with UEI College having nearly 32,000 borrowers represented in the dataset.
The Borrower Who Was Left Behind
More than a decade ago, Lisa Collenbaugh signed up for a brief training course at UEI College with the goal of becoming a computer systems technician. The price tag was nearly $20,000, and she expected to gain the skills she needed. Instead, the program fell short of her expectations.
“I thought that I was gonna actually be prepared for a career path and my life was gonna change because of that. And looking back, it’s like, ‘Oh, they got me,'” Collenbaugh said.
The University of the East, with 22 campuses mostly in California, reports a nonpayment rate that hovers near 55%.
The Taxpayer Cost
Federal student aid isn’t a bonus for these schools — it’s what keeps them running. Preston Cooper, who researches higher education at the conservative-leaning American Enterprise Institute, says the numbers raise questions about whether some schools should be cut off from federal aid entirely.
“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.’ Why does it make sense for the federal government and for taxpayers?”
The Federal Warning
When asked to comment on this story, the Education Department did not respond. Instead, it pointed NPR toward a press release from February, which showed the administration was already raising concerns.
“Institutions cannot benefit from taxpayer dollars while ignoring the fact that a significant share of their students are not well-prepared to repay their loans. It’s time for institutions to step up or risk losing access to federal student aid,” said Nicholas Kent, undersecretary of education, in a statement.
What the Data Actually Tracks
| Metric | Number |
|---|---|
| Borrowers entering repayment (Jan 2020–May 2025) | ~17 million |
| Schools with nonpayment rates ≥ 40% | 500 |
| Public institutions on the list | 15 |
| Private, for-profit schools on the list | 424 |
The Pattern
According to the numbers, for-profit institutions, especially those providing brief training in areas with limited earning power, aren’t equipping their students to manage their loan payments. The cosmetology schools stand out here, known for sending graduates into jobs with low pay, which is reflected in their default rates.
A warning from the Education Department implies the issue affects many institutions. The schools named do not equip their students with the skills needed to earn wages sufficient to repay their loans.
Failure is measured by the nonpayment rate. A reading of 40% or above means the outcome is negative.
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