For-Profit Colleges Fight Rule Requiring Programs use Income Formula

For many college graduates, gainful employment might mean simply landing a job after finishing school.

But the federal government has a different definition in mind. The new gainful employment rule instituted by the U.S. Department of Education this summer aims to ensure graduates from for-profit colleges make enough money to pay off their tuition bills.

For-profit colleges in Minnesota and across the country are working to overturn the rule, which would require them to prove their students will find good jobs after they graduate and won’t be saddled with too much debt.

Tuition bills can be expensive. Jan Tacheny will pay $40,000 in tuition for a two-year program at Globe University in Woodbury, Minn. that will train her to be a medical assistant.

Tachney, 49, of St. Paul, started the program when she returned to Minnesota after five years in Tennessee.

"I couldn’t find a job when I came back here so I decided to go back to school," she said.

"Expensive? If you want to look at that way, yes. But what you will receive after you’re done and you graduate makes it all worth it. (It’s a) very good investment."

Determining whether a program is a good investment is at the heart of new federal oversight of for-profit colleges like Globe.

Under the gainful employment rule, on average, graduating students can’t pay more than 12 percent of their annual income toward student loan payments.

In the case of medical assistants who graduate from Globe, that means the average student loan payment can’t be more than about $270 a month. That’s because the typical starting salary of a Globe medical assistant is around $27,000 annually.

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