Department Of Education Targets For-Profit Colleges
Career College Central summary:
As many as 20% of programs at for-profit colleges would lose revenue from student aid under a draft proposal the Obama administration is developing to rein in tuitions. The plan, which the Education Department has spent months drafting, targets for-profit schools whose students end up deep in debt or default on their student loans at exceptionally high rates. The rules would also apply to community colleges that offer career training, and technical schools. Public and nonprofit four-year colleges and universities wouldn't be affected.
The department is set to meet with representatives of schools and student advocates Friday in hopes of winning broad support for the proposal, which could still be modified in the coming months.
For-profit schools have already voiced alarm about the emerging plan. The proposal would threaten revenues at major education companies such as DeVry Education Group Inc., Corinthian Colleges Inc., Education Management Corp. , which runs the Art Institutes; and Apollo Education Group Inc., which owns the University of Phoenix. At most for-profit schools, so-called Title IV funds—generally Pell grants and federal student loans—are the biggest source of revenue. The funds are awarded to students who use them to cover tuitions at the schools.
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