500 Colleges Now Have Nonpayment Rates Above 40%. Here Is How to Check Yours Before You Enroll.

New federal data released this month shows that at 500 colleges, at least 40% of former students who borrowed federal loans are not repaying them. Most of those schools are for-profit institutions, and the list includes some names families may already be considering for career training programs this fall. If you are comparing schools right now, this data is worth five minutes of your time before you sign anything.

What the Data Actually Shows

The U.S. Department of Education's Federal Student Aid office publishes something called the "nonpayment rate" for every school that participates in federal student aid programs. It tracks roughly 17 million borrowers who entered repayment between January 2020 and May 2025, and it measures how many of them are more than 90 days behind on their federal loan payments.

Reporting on the newest release, published this month, found that 500 schools now have nonpayment rates of 40% or higher. Of those, 424 are private, for-profit institutions, and only 15 are public colleges. For-profit schools average a 33% nonpayment rate overall, compared to roughly 15% at public and nonprofit schools.

A handful of examples from the reporting put the scale in perspective:

• UEI College, a for-profit chain, has a 55% nonpayment rate among nearly 32,000 borrowers. Federal aid makes up 79% to 85% of the school's revenue.
• Miller-Motte College has about 37,000 borrowers, and only half are keeping up with payments. The school relies on federal aid for 86% of its revenue.
• Tulsa Welding School has nearly 20,000 borrowers, and more than half are not paying.
• Florida Career College had a 67% nonpayment rate among roughly 28,000 borrowers before it closed after losing access to federal aid in 2023.

One former UEI College student told reporters she still owes more than $10,000 and described feeling that "the school is preying on the vulnerable." That is one borrower's experience, but the pattern in the data, heavy reliance on federal aid combined with a high share of borrowers who cannot keep up with payments, shows up again and again among the schools on this list.

Nonpayment Rate Is Not the Same as Default Rate

It is easy to confuse this new number with the official Cohort Default Rate, or CDR, which has been used for decades to decide whether a school stays eligible for federal aid. They measure different things, and the difference matters.

The CDR tracks the share of borrowers at a school who default, meaning they go roughly 270 days or more without a payment, within a set window after leaving school. A school that hits a 30% CDR for three years in a row, or 40% in a single year, can lose access to federal student aid entirely.

The nonpayment rate is broader and more current. It includes both borrowers who are seriously delinquent (more than 90 days late) and those who have already crossed into default. Because pandemic-era payment pauses and forbearances kept many official CDRs artificially low for years, the Department itself has said nonpayment rates are "a more reliable indicator of how successful current borrowers are in repayment" right now. Federal Student Aid's own February 2026 announcement noted that more than 1,800 institutions already have nonpayment rates at or above 25%, which it called a warning sign for CDRs that could rise sharply in the next few years.

In plain terms: nonpayment rate is an early warning. CDR is the number that can actually cut off a school's federal funding. A school can look fine on its official CDR today and still be flagged as high-risk on the newer measure, because the newer measure moves faster.

Why This Connects to a Bill Congress Is Also Debating

This data release lands at the same time the Department is rolling out a new accountability standard from last year's tax and spending law, sometimes called the "do no harm" test. Starting with earnings data collected in early 2027, the Department will begin checking whether graduates of a given program are earning more than a typical high school graduate with no college. Programs that fail this test repeatedly could be cut off from federal aid starting with the 2028-29 academic year.

That rule targets earnings after graduation. The nonpayment rate targets whether people can actually make their loan payments in the meantime. Together, they are part of a broader shift in how Washington is trying to hold schools accountable for outcomes, not just enrollment. For a family deciding between schools this fall, both numbers are worth knowing before enrollment, not after.

The 90/10 Connection

Several of the schools named in the reporting depend on federal student aid for 79% to 86% of their total revenue. That is not a coincidence. Federal law bars for-profit colleges from drawing more than 90% of their revenue from federal education funding sources, a rule commonly called the 90/10 rule. Schools that sit just under that 90% line have a strong financial incentive to keep enrolling federal aid recipients, even when a large share of those borrowers go on to struggle with repayment.

None of this means every for-profit school is a bad choice, or that every public or nonprofit school is automatically safe. It does mean that a school's dependence on federal aid dollars is a data point worth checking alongside its outcomes, the same way you would check a car's maintenance history before buying it.

A Short History of How Washington Has Tried to Police This

Accountability rules for career-focused schools are not new. Congress created the 90/10 rule in the 1990s specifically because it worried that some schools would enroll students mainly to collect federal aid dollars rather than to educate them. A separate rule from the 2010s, known as gainful employment, tried to cut off aid to programs whose graduates carried debt payments too high relative to their earnings, though it was repealed and reinstated more than once as administrations changed.

The "do no harm" test in the current law is the latest version of that same idea, applied more broadly across both for-profit and nonprofit programs. The nonpayment rate data released this month is not itself a new rule. It is existing data, refreshed on a regular schedule, that happens to be getting more public attention now because it lines up with the broader default crisis and the rollout of the new earnings test.

A Quick Timeline of What Comes Next

• Now through 2026: Nonpayment rate data continues to be published and updated by Federal Student Aid, and more than 1,800 schools already sit at or above the 25% early-warning level.
• Early 2027: The Department begins collecting the graduate earnings data used for the "do no harm" test.
• 2028-29 academic year: The earliest point at which a program could lose federal aid eligibility for failing the earnings test.
• Ongoing: Official Cohort Default Rates are released annually and remain the metric that can cut off a school's aid eligibility today, at 30% for three consecutive years or 40% in a single year.

A Short Checklist Before You Sign Anything

Before a student commits to a school, especially a career-training or for-profit program, it helps to work through a short list of questions rather than relying on the admissions pitch alone:

• What is this school's nonpayment rate and official Cohort Default Rate, and how do they compare to similar programs elsewhere?
• What share of the school's revenue comes from federal student aid?
• What percentage of graduates pass any required licensing exam?
• What percentage of graduates are working in the field within a year of finishing?
• What is the total cost of the program, including fees, and how does that compare to the typical starting salary in the field?
• Is the accreditor recognized by the Department of Education, and has the school had any recent accreditation issues?

A school with strong outcomes will usually be glad to answer these questions with specific numbers. That itself is useful information.

How to Check a Specific School Before You Enroll

You do not need to read a government spreadsheet to get a sense of a school's repayment outcomes. A few practical steps:

Look up the school on College Scorecard

The Department's College Scorecard tool lets you search any school by name and see repayment rates, typical earnings after graduation, and average debt by program, side by side with graduation rates and cost. It is free, public, and built for exactly this kind of comparison.

Ask the financial aid office directly

It is a completely reasonable question to ask an admissions or financial aid officer: "What share of your recent borrowers are keeping up with their loan payments?" A school with strong outcomes should be able to answer this without hesitation. Hesitation, vague answers, or redirecting you to marketing materials is itself useful information.

Compare the program, not just the school

Nonpayment and default rates are usually reported at the institution level, but outcomes can vary a lot by program within the same school. A respected university can still have one weak certificate program, and a for-profit school can still have one genuinely strong program. Ask specifically about outcomes for the program your student would actually enroll in.

Weigh the accreditation and licensure track record

For career-focused programs especially, check whether graduates are passing licensing exams and finding jobs in the field the program trains for. A high nonpayment rate combined with a weak job placement record is a much stronger warning sign than either fact alone.

Who Is Most Exposed to This Risk

Families with the least cushion to absorb a bad outcome are often the ones targeted hardest by aggressive recruiting at high-nonpayment schools. First-generation students, working adults returning to school for career training, and families with less time to research every option before an enrollment deadline are common targets of for-profit recruiting, and they are also the families with the least room to recover if a program does not deliver on its promises. If that describes your family's situation, treat the extra ten minutes it takes to check College Scorecard and ask pointed questions as time well spent, not an inconvenience.

Groups that show up most often in reporting on aggressive for-profit recruiting include:

• Working adults returning to school for a career change, often recruited through ads promising fast job placement.
• First-generation college students without a family member who has been through the financial aid process before.
• Military veterans and their families, whose GI Bill benefits have historically been a target for some for-profit recruiters.
• Parents juggling childcare and a job who need a flexible schedule and may have less time to compare options carefully.

What the Data Does Not Tell You

A high nonpayment rate is a warning sign, not an automatic disqualifier, and a low one is not an automatic green light either. Schools that serve larger numbers of low-income students, working parents, or career-changers may show higher nonpayment rates even when the education itself is solid, simply because their students face more financial pressure after graduation for reasons that have nothing to do with the quality of instruction. The data is most useful as one input alongside cost, program reputation, job placement rates, and your own family's ability to manage the debt involved, not as the only factor in the decision.

The Bottom Line

New federal data shows 500 colleges, most of them for-profit, where at least 40% of recent borrowers are not keeping up with their loan payments. This number is different from, and often more current than, the official default rate that determines whether a school can keep offering federal aid. Before your family signs an enrollment agreement or takes out a loan for any school, especially a for-profit or career-training program, look up that school's numbers on College Scorecard and ask the financial aid office directly about repayment outcomes for the specific program you are considering.

If you want help weighing the true cost of a specific school against your family's financial aid package, you can create your free CollegeLens plan to see the full picture side by side. And if you have not yet filed for the 2026-27 or 2027-28 school year, you can start at the FAFSA.

For more on how official default rates factor into comparing schools, see our guide to comparing colleges by student loan default rate. For the bigger picture on the national default crisis behind this story, see Student Loan Defaults Just Hit a Record 9.5 Million.

-- Sravani at CollegeLens