A short article in the Wall Street Journal today confirmed our worst fears: Student loan repayment simply isn’t happening for millions of borrowers. We knew it was bad, but it’s much worse than we thought.
Evidently, some of the Department of Education’s statistics were completely off, and they readily admitted in a memo that “it had overstated student loan repayment rates at most colleges and trade schools.” Following the admission of a statistical blunder, they provided updated stats that paint a picture of a much more distressed picture of the student debtor population.
The error affected the results of the College Scorecard, a website that helps students make smart financial decisions when choosing a place to study. A great deal of the information on College Scorecard shows potential students their Return on Investment (ROI) on their education, based on a given school’s postgraduate outcomes.
Key statistics include average salary after graduation, average indebtedness, and average loan repayment rates. As mentioned, the embarrassing error revolved around loan repayment.
Just how off were the numbers?
According to the Wall Street Journal’s analysis, the Department of Education had “inflated the repayment rates for 99.8 percent of all college and trade schools. No college saw its repayment rate improve under the revision, and some schools saw their seven-year repayment rates fall by as much as…