Recent federal data from the U.S. Education Department shows that at 500 colleges and universities, at least 40% of recent borrowers are not repaying their federal student loans. The data tracks approximately 17 million people who entered their loan repayment period for the first time between January 2020 and May 2025. At many of these institutions, more than half of borrowers are at least three months behind on payments or have reached nine months of nonpayment, which constitutes a default.
The majority of the schools on the list—424 out of 500—are private, for-profit institutions. By contrast, only 15 public institutions appeared on the list, and the average nonpayment rate for public and private nonprofit colleges was approximately 15%. Many of the for-profit schools specialize in short-term career training for fields such as cosmetology, medical assisting, and HVAC repair. Schools on the list include Miller-Motte College, Tulsa Welding School, and UEI College, the latter of which has a nonpayment rate of roughly 55%.
Representatives from some for-profit schools attributed the high nonpayment rates to confusion caused by the pandemic-era payment pause and federal discussions regarding loan forgiveness. Darcy Schnuth, vice president of student finance at UEI's parent company, International Education Corp., stated that reconnecting with students after years of paused communication has been challenging. Conversely, advocates and researchers, such as Eileen Connor of the Project on Predatory Student Lending, argued that the schools often charge high tuition for programs that do not provide sufficient earnings for students to manage their debt.
This data affects approximately 17 million federal student loan borrowers who began repayment between 2020 and 2025. At the 500 identified schools, thousands of former students face the long-term consequences of delinquency and default. For example, at UEI College, more than 17,000 borrowers are currently late on payments or in default. For one student who reported owing over $10,389 for an unfinished $19,500 program, this can mean a significant debt burden.
The financial impact extends to federal taxpayers, as many of these institutions rely on the federal government for revenue. Of the 424 for-profit schools on the list, the vast majority receive more than 50% of their revenue from federal student aid. Some institutions, such as the American InterContinental University System, receive up to 89% of their revenue from federal sources.
What happens next depends on several federal accountability measures. The "cohort default rate" test, which can cut off federal aid to schools where more than 30% of students default for three consecutive years, is set to resume following its suspension during the pandemic. Additionally, a new federal accountability test will begin calculating graduate earnings in early 2027. Under this rule, programs could lose access to federal financial aid starting in the 2028-2029 award year if their graduates do not earn more than individuals who never attended college. Information regarding how many of the 500 schools will fail this new test is not yet known.