Proposed career college regs would impose financial requirements
Proposed regulations unveiled today by the U.S. Department of Education would tighten requirements on career colleges with a goal of protecting students.
The proposal has three main components:
• Institutions must certify that all gainful employment programs meet applicable accreditation requirements and state or federal licensure standards.
• All gainful employment programs must pass metrics to continue eligibility in the student financial aid program, including the following: The estimated annual loan payment of typical graduates does not exceed 20 percent of their discretionary earnings or 8 percent of their total earnings and the default rate for former students does exceed 30 percent.
• Additionally, institutions must publicly disclose information about the program costs, debt, and performance of their gainful employment programs so that students can make informed decisions.
“To qualify for federal student aid, the law requires that most for-profit programs and certificate programs at non-profit and public institutions prepare students for gainful employment in a recognized occupation,” the release said. “Some of these programs, whether public, private, or for-profit, empower students to succeed by providing high-quality education and career training. But many of these programs, particularly those at for-profit colleges, are failing to do so — at taxpayers’ expense and the cost of students’ futures.”
Students at for-profit colleges represent only about 13 percent of the total higher education population, but about 31 percent of all student loans and nearly half of all loan defaults, the department said; in the most recent data, about 22 percent of student borrowers at for-profit colleges defaulted on their loans within three years, compared to 13 percent of borrowers at public colleges.
Most students at for-profit gainful employment programs who graduated with an associate degree were also left with federal student loan debt, which averaged $23,590, while the majority of students at community colleges did not borrow. And, the department said, of the for-profit gainful employment programs it could analyze and which could be affected by today’s proposal, 72 percent produced graduates who on average earned less than high school dropouts.
The department said for-profit colleges can receive up to 90 percent of their revenue from taxpayer dollars, with the additional revenue frequently coming from veterans’ benefits and private student loans.
The public comment period on the proposal will last 60 days, after which the department will consider the feedback and finalize the rule in the following months.