Correspondence School Dropped by State’s Student Loan Program

A Los Angeles study-by-mail school was banned Monday from the state’s guaranteed student loan program after federal auditors found that the school’s students were borrowing $1 million a month but only 3% of them were graduating.

National Technical Schools, which offers a correspondence course in personal computers, is no longer eligible to receive new student loans guaranteed by the California Student Aid Commission, said Samuel Kipp III, executive director of the commission.

The correspondence school suffered a second blow Monday when the Higher Education Assistance Foundation decided to temporarily stop backing new loans to the school’s students. The foundation, a private, nonprofit organization based in Minnesota, has guaranteed more than $20 million in loans to students at the school.

If the decisions by the two agencies are made permanent, California students may find it extremely difficult to borrow money from banks and other lenders to enroll in the school’s home study courses.