Proposed federal rules crack down on for-profit schools


For-profit colleges are bringing in record amounts of federal aid money, according to government officials.
For-profit colleges are bringing in record amounts of federal aid money, according to government officials.

The Education Department proposed much-anticipated regulations July 23 that would cut off federal aid to for-profit college programs—including many of the nation’s largest online schools— if too many of their students default on loans or don’t earn enough after graduation to repay them.

“Some proprietary schools have profited and prospered but their students haven’t, and this is a disservice to students and to taxpayers,” Education Secretary Arne Duncan said in a briefing with reporters. “And it undermines the valuable work, the extraordinarily important work, being done by the for-profit industry as a whole.”

To qualify for federal student aid programs, career college programs must prepare students for “gainful employment.”

The Obama administration, amid intense lobbying from both for-profit college officials and consumer and student advocates, is proposing a complicated formula that would weigh both the debt-to-income ratio of recent graduates and whether all enrolled students repay their loans on time, regardless of whether they finish their studies.

Early reaction was mixed, with a Republican senator and a for-profit college lobbying group panning it and advocates for tougher regulation questioning whether it does enough to protect students and taxpayers…

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