Loan defaults may cost schools

July 17, 1991|By Kate McKenna | Kate McKenna,States News Service

WASHINGTON -- Nearly 180 institutions across the country with high student-loan default rates may be barred from participation in the Guaranteed Student Loan (GSL) program, the U.S. Department of Education listing said today.

Four Maryland schools were among the 178 post-secondary institutions -- most of which are business colleges, beauty academies or other trade schools -- found to have loan-default rates of 30 percent or higher. Schools with high default rates involving fewer than 30 borrowers will not face disciplinary action.

Topping the list for Maryland was the Ron Thomas School of Cosmetology in the 5600 block of Bowleys Lane in northeast Baltimore, which had a 59 percent default rate in fiscal 1989. The school also showed default rates of 57 percent and 47 percent in the previous fiscal years.

Other institutions on the Education Department's list were the Eldorado Academy of Cosmetology on Eastern Avenue, which showed a 47 percent student loan default rate in fiscal 1989, the Strayer Business College on Light Street, at 37 percent, and the Potomac Academy of Hair Design in Lanham at 41 percent.

The schools have already been notified of their potential loss of eligibility, according to the U.S. Department of Education, and have 30 days in which to appeal.

These institutions will be able to participate in the GSL program again if they can prove "exceptional mitigating circumstances" or demonstrate that inaccurate data was used to calculate the default rate.

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