U.S. Department of Education tightens reins on for-profit colleges
The U.S. Department of Education is bumping up its regulation of for-profit career colleges, introducing rules that may halt federal funding to institutions that leave students saddled with enormous debts that they are unable to repay.
The efforts by Obama’s administrations show that federal and state authorities are ramping up their examination of the for-profit college industry, which includes colleges such as the University of Phoenix and Everest College and ITT Technical Institute.
Opponents believe that many for-profit colleges charge a hefty price, yet target low-income consumers, resulting in students who have massive loans to repay and few job prospects.
U.S. Secretary Arne Duncan said, “Today too many of these programs fail to provide the training (students) need, while burying them in debt they cannot repay.”
The for-profit college industry boomed during the Great Recession as colleges targeted the increasing number of unemployed American’s.
The Education Department’s new rules intend to penalize schools that cost their students too much debt compared to their earnings post graduation. In order to be eligible for federal student loans and grants, schools must meet debt-to-income requirements for two out of three consecutive years.
The department estimated about 1,400 programs out of 5,500 covered by the regulations would fail the debt-to-income test.
Students at for-profit schools default on federal loans at a higher rate than students at traditional public colleges: over 19% after three years, compared with less than 13% at public institutions.
While I like to see students gain education after high school, I do not think for-profit colleges are the best place for students to obtain a degree in most situations. Students will benefit from attending a traditional public college where their income after graduation will make paying their loans feasible and don’t leave them buried in and struggling to pay off their debts.