New Student Aid Regulation Proposal Delayed

It seems like everywhere you turn there’s an advertisement for for-profit colleges making promises of increased income. And every year, more and more people respond to these sales pitches which is leading them into increased debt and very little else.

For this reason, the Education Department takes aim at for-profit colleges, proposing a number of rules designed to protect college student who do not earn enough to repay their loans. The new regulations will protect students from aggressive or misleading recruitment tactics and other abusive practices that allowed ineligible students to enroll and receive aid.

All colleges that receive aid will be affected by the changes; however for-profit college seems to be receiving more scrutiny because most of their students are far more likely to default on their loans than those at nonprofit or public colleges. In a 2007 Federal data report showed that 44 percent of for-profit college graduates had defaulted on their loans.

Because most career colleges and training programs get the bulk of their revenues from federal aid, they will now have to show that their graduates will be able to repay their student loans with 8 percent of their income within 10 years and that they are preparing students for gainful employment upon graduation in order to qualify for federal aid.

“This is about accountability, and protecting students,” said Education Secretary Arne Duncan. “We have many areas of agreement where we can move forward. But some key issues around gainful employment are complicated, and we want to get it right so we will be coming back with that shortly.”

Pauline Abernathy of the California-based Institute for College Access and Success said, “There’s a real concern that taxpayers are subsidizing programs that are overpromising and under-delivered.”

• Require colleges to disclose graduation job placement rates and the effectiveness of their programs.
• Tighten paying recruiters by the number of students they enroll.
• Institutions to establish procedures for evaluating the validity of high school diplomas.
• Federal aid0 will be given to students without a high school diploma if they complete six credits of college coursework.
• Improve the agency’s ability to take action against institutions that have misleading advertising and sales tactics.
• Clarify state authorization requirements for institutions to receive federal student aid.
• Provide a standard definition of a credit hour.

Many are in agreement with the new proposal and think that the rules will protect students from taking expensive student loans, that is simply not preparing them for gainful employment thus leaving the student to struggle in dead-end jobs with no way of repaying their loans.

Naturally, strong resistance came from for-profit institutions who argued that the rule would force them to shut down many of their current programs. Harry Miller, president of the Career College Association, which represents for-profit institutions said they do not agree with all the proposal, but “We agree that students need to be protected at all times from schools that color outside the lines.”

The Education Department will publish final rules by Nov. 1, to take effect beginning July 2011, but in the meantime I’d like to hear your opinions on this important topic. We all know that for-profit education is big business in America. Will the Education Department really crack down on for-profit colleges? What do you think?