A recent College Board report showed tuition and fees at non-profit, private universities rose 4.5% year-over-year.  The data for state-funded U.S. public universities was worse as tuition and fees rose 8.3% more than doubling the rate of general inflation.  The typical graduate leaves college with $20,000 of debt to go along with his or her degree.  Aggregate college debt recently topped $1 trillion.

It should come as no surprise that federal student loan defaults are on the rise.  According to the U.S. Department of Educationborrowers whose first loan repayments were due during the year ending Sept 30, 2009, showed an 8.8% default rate up from 7% a year earlier.  Default is defined as being at least 270 days late on a payment.

For-profit colleges showed particularly troubling results.  Their 2008 default rate of 11.6% rose to 15% in fiscal 2009.  Borrowers who attend these schools defaulted at more than twice the 7.2% rate for those at public colleges and more than three times the 4.6% rate at private, non-profit institutions.

Typically the strongest link exists between default rate and unemployment rate but one has to wonder if the outsized default rate at for-profit institutions correlates with the onslaught of annoying TV commercials designed to induce those who may not be able to afford college to enroll anyway.  Is this a ‘subprime crisis’ waiting to happen?  As the youngsters nowadays like to say, “I’m just sayin’.”  Student loans, unlike credit-card debt or mortgages, can rarely be discharged by U.S. bankruptcy laws.  Defaults often subject borrowers to government confiscation of paychecks and tax refunds.

To aid students in digging a hole, err, obtaining financial aid the Consumer Financial Protection Bureau is proposing a standardized ‘shopping sheet’ so prospective students could compare offers from U.S. colleges offering financial aid.