For-profit Colleges Soon Subject to New Regulations

The Education Department on Thursday issued regulations governing for-profit colleges, a rapidly expanding education sector that has been criticized in Congress for allegedly providing students with poor educations while saddling them with excessive debt.

Issued after a year of negotiations, the new regulations are intended to improve the Education Department’s ability to monitor the institutions, including compensation for recruiters, and the ability to take action against schools that engage in deceptive advertising and marketing. The regulations will take effect in July.

The department delayed releasing one of the more controversial proposals concerning "gainful employment," which would eliminate federal aid to programs that create high student debt and have low loan repayment rates.

Although the Education Department postponed finalizing regulations on gainful employment, Thursday’s announcement did include a provision that requires for-profit colleges to provide prospective students with program graduation and employment rates, provide the department with reports on student debt and incomes, and provide notice when introducing a new program.

"These new rules will help ensure that students are getting from schools what they pay for: solid preparation for a good job," Education Secretary Arne Duncan said in a statement.

Students enrolled in for-profit colleges account for 26% of all student loans and 43% of loan defaulters, the department said.

Pauline Abernathy, vice president of the Institute for College Access and Success, a nonprofit that works to make higher education more affordable and supports tighter regulations, praised the rules. "This important change closes loopholes that led to boiler-room-style sales tactics at some colleges, with recruiters doing and saying whatever it took to get students to sign on the bottom line," she said in a statement.

Lanny Davis, attorney and spokesman for the Coalition for Educational Success, a group that lobbies for 78 for-profit schools, said that the regulations were a step in the right direction but that he was disappointed Duncan rushed into negotiating a portion of the gainful employment regulation.

Sen. Tom Harkin (D-Iowa), who spearheaded a Senate investigation into for-profit colleges, welcomed the changes.

"This first package of regulations from the Department of Education closes the Bush-era loopholes that allowed this industry to expand predatory recruiting practices that mislead students," Harkin said in a statement. "These rules are an important first step toward ensuring that both students and the billions of dollars invested by taxpayers in for-profit colleges are protected."


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