About seven years ago and for many years earlier, there were two loan sources for Carib med students: Fannie Mae, a quasi-governmental financial institution, and TERI (The Educational Resource Institute), a loan broker who stood between the banks and the students.

Fannie Mae withdrew from the Carib loan market because the default rate was very high, leaving TERI as the sole lender. I have two loans from them. Then, in 2007, TERI declared bankruptcy, causing chaos in the Carib med school system. Curiously, they declared bankruptcy the day after the contract was signed transferring Xavier's ownership to the current owners; this placed enormous strain on the owners, who had to make some radical changes in how the school is marketed. Although TERI still exists as an entity, they have not resumed operations.

TERI was not a lender; they were a broker, a go-between. The reason they failed was due to the unusual agreement they had with the banks, which was that TERI agreed to buy all nonperforming loans. In other words, if a student defaulted, TERI had to pay the loan off and assume responsibility for collections. The default rate for Carib med students was extraordinarily high, and TERI ran out of cash, so they declared bankruptcy.

The reasons for the high default rate are complex, but are due in part to the low (or no) standards for admissions, and also to the poor preparation of students for the Step exams. A study was done relating the loan default rate to the pass rate on Step 1; students who persistently fail Step 1 eventually leave medicine, owing sometimes $150K to the banks. Without other assets or the means of making a living sufficient to repay those loans, students defaulted. Also, a formal study was published in 2007 showing the Step 1 failure rate, broken down by Caribbean island. The average failure rate on the first try was 30%, but for Aruba (data for the two Aruban schools was combined) was 50%. Things should be better now, because the faculty at Xavier is much better than it was under the former ownership, and raising the quality of education has been a top priority of the school's vice president.

Therefore, it is unlikely that loans will appear until lenders can be convinced that the default rate will be at reasonable levels. A rising trend in Step success would certainly help, but that won't affect current students. It may be possible to obtain loans after passing Step 1, but no one seems to be organizing an effort to arrange that on a grand scale.

Another factor which I have seen mentioned in this forum is that Xavier is not organized as an educational institution, but as a simple business, and that this excludes them from loan sources designed only for such institutions. I have also read that the school will not organize as an educational institution in order to sidestep certain regulations that may be imposed as a consequence. I have no hard evidence of any of this; it is all speculation. Historically, the administration has resisted answering inquiries regarding these matters, claiming it was none of our business, but there is a new ownership, so maybe answers may be more forthcoming. The vice president and academic chief may or may not respond to inquiries, but I'm confident he won't b.s. anyone because he seems to be a no-nonsense guy who is working hard to improve the school.