What responsibility do colleges have for poor success rates when students fail to graduate but still have outstanding loans?  About 36 million Americans have some college education, but no degree yet many of them still owe money on their student loans. 

Years before President Joe Biden announced his student debt-relief plan, which is estimated by the Congressional Budget Office to run about $400 billion, both Republicans and Democrats said colleges should assume some responsibility for students who default on those loans. 

“We should be asking more of these institutions, both to protect the students and also to protect taxpayer resources,” said Beth Akers, who researches higher ed finance at center-right think tank American Enterprise Institute. Akers says the government should raise the bar for schools.

“I’d much rather we look at who’s producing results and then use that as the gatekeeper for federal funding,” she said.

The government rarely kicks colleges out of the student loan program for high default rates.

And for-profit colleges account for more than 11% of those who default on their loans within three years, even though those schools enroll only about 7% of students.

“If you don’t graduate or help graduate students, you as a college should have a responsibility for that debt,” said Claudio Martinez, executive director of the non-profit group Zero Debt Massachusetts. He works with families who are struggling to repay their loans.

“Colleges and universities have gotten carte blanche,” he said.

Colleges say forcing them to share the risk of student loans will only increase costs.

“Many schools will simply pass the cost of the risk-sharing onto the borrower,” said Terry Hartle, a senior advisor with the American Council on Education, which represents hundreds of colleges. 

He said it’s a basic law of economics. Risk-sharing could discourage colleges from accepting marginal students who might default on loans, he said, hurting those schools that serve the most vulnerable students.

“Externally imposed increases in the cost of doing business get passed on to consumers, and that is what will happen here at an awful lot of places,” Hartle said.

This story was first reported as a collaboration between GBH and The Hechinger Report.