JURIST: US court upholds regulations on loans at for-profit colleges
Career College Central Summary:
The US District Court for the District of Columbia on Tuesday ruled in favor of tight regulations pointed at the for-profit college industry. The court ruled that the Education Department has the right to demand that schools show that their graduates are financially dependent enough to repay their student loans. Fraudulent colleges have been the subject of scrutiny by the department for over a year now as they seek to limit the ability of these institutions to target low-income students and receive federal student loans and grants in the process.
After the new rules go into effect on July 1, a college program will be required to show that the estimated annual loan payment of a standard graduate does not exceed 20 percent of his or her discretionary income or 8 percent of their total earnings. Programs that fail to pass the new standards will be at risk for losing access to federal funding.
The Association of Private Sector Colleges and Universities (APSCU) unsuccessfully sued to prevent the rules from taking effect. The APSCU, a trade group that represents roughly 1,400 for-profit colleges, argued that the regulations were at odds with existing law.
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