US Proposes Test For Career Colleges

Career College Central summary:

The Obama administration took new steps last week to hold "for-profit" colleges and other career-training programs accountable for producing graduates who can earn enough money to pay back student loans. The proposed “gainful employment” regulations would take away a program’s eligibility for federal student aid if too many of its students defaulted on student loans or had debts too high relative to earnings.
Students at for-profit colleges represent about 13 percent of those enrolled in higher education programs but account for about 31 percent of student loans and nearly half of loan defaults, the Department of Education reports. About 22 percent of borrowers who attend for-profits default within 3 years, compared with 13 percent at public institutions and about 8 percent at private non-profits. The administration estimates that about 1 million students attend schools that would either fail to meet the proposed “gainful employment” standards or fall into a “zone of improvement,” which starts the clock ticking for losing aid if they don’t do better.
The career education industry has fought such regulations for years, and its representatives criticized the administration Friday for unfairly targeting their institutions. “Millions of prospective students, particularly working adults, minorities, and people with scarce financial resources, will see their access to higher education and prospects for better employment dramatically reduced” if these regulations are implemented, said Steve Gunderson, president and CEO of the Association of Private Sector Colleges and Universities (APSCU) in Washington, in a call with reporters. If such regulations are needed to protect students, why are they not applied across the board to nonprofit and public four-year institutions where students earning a bachelor’s degree in journalism, for instance, may struggle to pay back loans as well, Mr. Gunderson said.
The burden of the rule falls more heavily on for-profit colleges partly because they tend to have more students borrowing. At for-profits, 85 percent of undergraduates in 2012 had taken out loans, both federal and private, compared with 37 percent at community colleges, says Judith Scott-Clayton, an economics professor and a researcher at the Community College Research Center at Columbia University’s Teachers College in New York.

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