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.
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While I am not sure that we can blame this entirely on the for-profit schools, I agree that they do tend to inundate students with astronomical amounts of debt. We have to remember, though, the students who attend these schools are the ones making their own choices – to in fact attend a for-profit college. I can’t wait to see how many schools fail the debt-to-income ratio requirements.
For-profit schools should not be able to get away with charging outrageous tuition to their students. It makes me so mad they these colleges even intentionally seek out the unemployed and probably know that their graduates aren’t going to get paid enough to pay back their tuition. I’m so glad that the government had mandated the debt-to-income test.
Good, I am glad for-profit schools are under scrutiny. It is wrong to charge students a tuition that is above a beyond what will be feasible for them to pay back. Great job, Obama administration, for picking up on what for-profits were getting away with.
As a current student and a mother of 5, I whole heartedly agree with putting the stop to enormous educational debt. These kids “no not what they do”. I have heard horror stories of students graduating with a business degree and owing $100,000+ while being unable to find a job–hello? Doesn’t take a rocket scientist to figure this one out. It isn’t all the for-profit schools either. I think the government should rethink the “loan” thing. Maybe only loan tuition (or like the insurance companies put a cap on how much the government will pay).
Students are borrowing the “max” and spending the extra like it was some windfall allowance. They graduate and 30 days later get this huge bill. It has to stop. This will be the cause of the next economic downturn in our economy.