college grads have been leaving the workforce every month at an equal, if not faster, rate than workers without a high school education since the end of the recession.
And without a job, there’s no way they can make payments on their student loans. So default rates are bound to spike even higher.
How high?
One of ITT Educational Services’ (ESI) private loan pools, the Peaks Private Student Loan Program, carries an eye-popping default rate of 59%.
If that’s a harbinger of things to come, we could be in store for a mega-default before long, which would put a meaningful dent in economic growth.
Profit educators like ITT, Apollo Education Group, Inc. (APOL), Corinthian Colleges Inc. (COCO) and DeVry Education Group Inc. (DV) could be the hardest hit, as access to lending freezes up and/or the value of a college education (at current prices) comes increasingly into question.