Obama Administration Proposes Rules for For-Profit Colleges


New rules are set to be implemented this week by the Obama administration requiring any school that offers a career-training program to ensure that their graduates make enough money to be able to pay back their student loans.  If the new rules are not complied with, the school could lose their access to federal financial aid.

In general, student loan payments should not be more than 20% of a graduate’s income, or 8% of the total yearly income.

While the Education Department estimates that the new rules will close 1,400 programs that enroll a total of 840,000 students, consumer advocates expect them to at least shut down the schools that are in clear violation, such as criminal justice and medical training programs that charge as much as $75,000 but are not valued by employers.  However, they argue that most of the problem will not be solved, as many poor youth are still reaching adulthood without an education, making their attendance at a four-year university unlikely.

Despite this, Congress and the White House have shown little interest in determining which programs are of any value, as the White House recently announced it will be taking a step back from implementing its college ratings plan.

“This is a civil rights issue, plain and simple,” said Maura Dundon, senior policy council at the Center for Responsible Lending, which estimates that 28 percent of black students studying for a four-year degree are enrolled at a for-profit college compared to only 10 percent of white students.

Meanwhile, the for-profit colleges that the new rules would target remain insistent that they are providing students with an education they can use to find a career upon graduation, writes Anne Flaherty for The Star Tribune.  The schools argue that argue that the regulations and investigations that are causing the financial decline they are facing.

“Who else in higher education is educating these students? I have yet to get a cogent answer to this,” said Noah Black, a spokesman for the Association of Private Sector Colleges and Universities, or APSCU, a group that represents the $30 billion-a-year industry and sued unsuccessfully to block the regulations.

However, department officials say that although these schools enroll only 11% of the entire student population across the country, they are responsible for 44% of federal student loan defaults, writes Allie Grasgreen for Politico.

Reflecting on the recent closures, Education Undersecretary Ted Mitchell said: “I do think that’s a positive sign, and I think it’s a sign that the industry is taking outcomes seriously, just as we’re saying we’re going to take outcomes seriously.”