Student Loans

Of the $26.2 billion in federal student loans made in fiscal year 1995, $731 million--or about three percent--was made to students attending historically black colleges and universities. This percentage remained steady during fiscal years 1991-95. For fiscal year 1993, the average loan default rate for historically black colleges and universities was 21.1 percent. The average for other colleges and universities was 7.2 percent. These percentages remained relatively constant throughout fiscal years 1991-93. If the default rates for historically black colleges and universities remain the same for fiscal years 1994-96 as they were for fiscal years 1991-93, 22 of these institutions could lose their eligibility for federal student loan programs in fiscal year 1998, after their exemption from default rate requirements expire.

GAO found that: (1) of the $26.2 billion in federal student loans made in FY 1995, $731 million, about 3 percent, in loans were made to students attending HBCUs; (2) this percentage has remained steady during FY 1991 through FY 1995; (3) for FY 1993, the average loan default rate for HBCUs was 21.1 percent, but the average for non-HBCUs was 7.2 percent; (4) these percentages remained relatively the same throughout FY 1991 through FY 1993; (5) in FY 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; (6) this difference was primarily because the aggregate default rate for HBCUs was about three times as great as the rate for non-HBCUs; (7) 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; and (8) if the default rates for HBCUs remain the same for FY 1994 through FY 1996 as they were for FY 1991 through FY 1993, 22 HBCUs could lose their eligibility for federal student loan programs in FY 1998, after their exemption from default rate requirements expires.