For 50 years, Empire College has carved a niche as a smaller, more attentive alternative to two-year public schools, such as nearby Santa Rosa Junior College.
Nearly 80 percent of undergraduates who started at Empire in fall 2006 finished their studies within the "normal time" for their program, according to federal figures. Just 11 percent of SRJC students did.
But recently released student loan default rates have put the college afoul of new state regulations and have raised questions about how much value Empire's $16,000 to $20,000 annual tuition provides.
According to federal numbers, more than 26 percent of Empire students who started repaying federal student loans in fiscal year 2008 defaulted by the end of last September, more than double the national average. The data is for students of Empire's business school, not its law school.
By comparison, 16.29 percent of SRJC students in the same position defaulted and just 3.72 percent of Sonoma State students did, according to the data.
That places Empire squarely in the middle of an intense nationwide debate about the merits of for-profit schools whose wide-ranging ranks include Empire, the worldwide University of Phoenix, online colleges and any variety of culinary and other trade schools that often leave students with high debt and low-paying jobs.
Empire President Roy Hurd insists his school is an excellent deal, providing students with an intimate, real-world education, including internships at 150 area businesses.
More than 80 percent of Empire graduates get jobs, he said. And biannual student surveys regularly find satisfaction rates of more than 90 percent.
Still, he acknowledged the economy has made it harder on some students, especially those who drop out.
"Every school is dealing with some very difficult times," he said. "If you can't find a job, you're going to have this kind of problem."
Officially, the study was to be a trial bringing greater focus to default rates while the U.S. Education Department switches from its current method of using two-year default rates to a hopefully more accurate measure using the three-year spans. This three-year measure is a starting point for future federal loan policy.
But that didn't stop California legislators from putting the three-year rates to immediate purpose, which has put Empire — and 75 other California schools — on the wrong side of new legislation that restricts participation in the $1 billion Cal grant program at institutions with default rates of 24.6 percent or above.
New students eligible for Cal grants this fall will be unable to use those funds at Empire, a school of more than 700 students receiving associate degrees and certificates. And returning recipients to the college may see their awards cut by 20 percent.
"There are far too many for-profit, private, post-secondary education institutions which are all too eager to take students who qualify for Cal grants and Pell grants and other federal programs then do very little to actually provide any education," said state Sen. Mark Leno, D-San Francisco, who represents part of Sonoma County and is chairman of the Budget and Fiscal Review Committee that authored the new state law.
Hurd, college president, said the actual loss of Cal grant funds wouldn't cause a major problem for students at Empire. In 2009-2010, only 17 Empire students received Cal grants for a total of $51,000, according to state figures. Forty-five percent of the student body received federal loans during the default measurement period.