Crackdown on Student Loan Defaults Defended

A federal education official, defending a crackdown on student loan defaults, said Friday that some profit-making business schools recruit barely literate students out of unemployment lines.

That charge at a Senate hearing by Bruce Carnes, deputy undersecretary of education, drew an angry retort from Sen. Edward M. Kennedy (D-Mass.), who accused the Reagan Administration of aiming its budget ax at “the most vulnerable young people in our society.”

Kennedy accused Carnes and Education Secretary William J. Bennett of making “an indictment of all the proprietary schools in this country.”

Bennett, defending his plan to expel colleges and trade schools from the federal student aid programs if their students’ loan-default rates exceed 20% by 1990, called Kennedy’s statement “nonsense.”

Defaults at Trade Schools

Carnes said 80% of the institutions with default rates above 20% are trade schools run for profit, including beauty colleges, travel schools and data-processing programs.

The defaulters “tend to be low-income students. They tend to be students who are divorced or separated,” Carnes said. “There is a high proportion of minorities.

“They are often indeed recruited right out of unemployment lines. Schools will send recruiters right into unemployment offices to drag people out and go into their academic programs, sign them up for federal student aid,” he said.

Kennedy contended there has been “a dramatic reduction” in grants during the Reagan years. “We’re moving in on the most vulnerable young people in our society--minorities, divorced kids, children of divorced families,” he said.