For many young hopefuls the American Dream to attain a college degree, retain a position at an upstanding company and purchase a home have become more like an American Nightmare. Long term college and career planning is integral to success, but what happens when the college of choice undermines student aspirations to become financially independent?

During the last week of September the Department of Education released data concluding the educational system has failed to protect students and is now grimmer than what previous studies have concluded.

Much of the financial crisis hits colleges with students from low-income backgrounds who enroll at for-profit trade schools and community colleges. Research also suggests some wealthier, private non-profit colleges are also feeling the stress of loan defaults within their former student body. Many of these students are not only under the heavy burden of student debt, but also are unable to land a well paying job with their newly earned degrees.

The new data released by Adam Looney of the Treasury Department and Constantine Yannelis of Stanford University finds student loan defaults are highly concentrated to students previously under economic hardship and who already face obstacles to life success.

During the early 1990’s Senator Sam Nun led an investigation to uproot colleges practicing under fraudulent activity. It is now widely known that some of these for-profit colleges, like the former Corinthian Colleges, lured in individuals standing in welfare lines, signing them up for student loans without their consent.

Congress has since established a rule known as the “cohort default rate,” annually calculating the percentage of borrowers who have ceased attendance and defaulted on federally backed loans. Criteria implemented under this rule states if a default rate soars above 30 percent for three consecutive years, or above 40 percent in one year, the school will be booted from the federal financial aid system.

Although these percentages are reasonable on the surface, some have found ways around the red tape. Schools with students who default on loans in excess to three years after graduation or who cease attendance altogether will not count as a defaulter, nor will those who make irregular payments toward debts.

As of September calculations are performed based on two criteria: defaulters and those who have never paid anything toward principal. The latter category are those who are strictly paying interest toward their loans and are calculated on a one, three, five and seven year term after leaving college.

It has been reported that over 700 colleges have over half of their borrowers in default even after a seven year time frame.

Many student borrowers are desperately yearning for reform of the Department of Education due to low paying jobs disabling any sort of payment toward principal. Hopes to fulfill their American Dream are becoming atrophied under the heavy constraints of student debt with many graduates putting off large purchases, such as homes and new cars—and furthermore, a mere savings account.

Investing in college is a tricky business, although thorough research and long term planning may help students find a positive return on their investment.