Federal education officials are tightening oversight of the burgeoning for-profit higher-education sector with the release Thursday of a new regulation they say will require career preparatory programs to yield "gainful employment."
The action culminates a lengthy debate between the Obama administration and for-profit college leaders and includes several concessions to the industry meant to soften the regulatory impact. The most important change from a previous draft introduces a multiyear grace period before deficient programs are shut down
The rule could face a legal challenge in courts and is likely to draw close scrutiny from Congress. Republican lawmakers and some Democrats have voiced support for the industry.
The rule effectively would shut down for-profit programs that repeatedly fail to show, through certain measures, that graduates are earning enough to pay down the loans taken out to attend those programs. Advocates say it addresses the chief complaint against for-profit schools, that students emerge from them with too much debt and too little earning power.
“The quality here has been very uneven,” Education Secretary Arne Duncan said of the industry Wednesday in a conference call with reporters. “There have been some absolute superstars. And there have been some players whose intentions, quite frankly, we doubt.”
The 3 million students in for-profit schools have already felt an impact. In anticipation of the rule, large for-profit providers have slowed enrollment, tightened entry standards and warned students against excessive debt.
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