Hundreds of colleges could lose federal student loans due to default rates, economist says
Conor Hernon
October 14, 2025
Key Takeaways
Over 1,000 colleges are at risk of losing access to federal student loans due to high default rates, with 400 having rates above 40 percent and another 700 between 30-40 percent.
An economist says colleges in the ‘danger zone’ have time to take proactive measures to reduce default rates, such as advising recent alumni on loan repayment options, before facing potential loss of federal aid.
Hundreds of colleges are in the “danger zone” of potentially losing access to federal student loans, according to an analysis by a higher education economist. However, it seems unlikely all will be sanctioned by the Department of Education, Preston Cooper told The College Fix.
The Cohort Default Rate measures the percentage of borrowers who default on their loans, and require a repayment plan, within a three year period. If the percentage gets too high, meaning graduates are taking on more debt than they can afford, the school can lose the ability to offer taxpayer-backed student loans. Because of approximately four years of paused payments due to COVID measures, colleges have not had a default rate for several years now. That could be changing, Cooper said.
