Tags: Barack Obama | Education | For-Profit Colleges | Student Loans | Debt | itt technical

WH Targets For-Profit Colleges Whose Graduates Fail at Job Market

By    |   Wednesday, 01 July 2015 11:10 AM

The Obama administration is preparing to go after for-profit colleges for leaving their students with high debt while they struggle to find work with decent pay.

Such colleges only enroll about 11 percent of students, yet 44 percent of those students default on their federal student loans, Politico is reporting.

To combat this problem, the Education Department will impose the "gainful employment" rule. This will require that colleges monitor and collect data about how their graduates perform in their careers, and for colleges with low performance rates, their funding will be cut.

The Education Department says that this rule, which was upheld by a recent court ruling, will likely mean that about 1,400 programs that affect about 840,000 students will shut down, according to U.S. News & World Report.

Almost all of these programs, 99 percent, are at for-profit colleges.

The Consumer Financial Protection Bureau, the Federal Trade Commission, the Securities and Exchange Commission, and the Justice Department, in addition to other investigations, lawsuits and fines from states, have also hit for-profit colleges. This has resulted in some colleges closing down and selling campuses in the wake of the intense scrutiny.

While some say the rule should have been implemented a long time ago, others call it a witch hunt.

"We've come to expect these unjust assaults," ITT Technical Institute President Gene Feichtner told Politico. ITT is one of the largest for-profit college chains.

"Let there be no presumption here that we believe we'll be treated fairly," he said.

The industry faults the increased regulations for causing the financial strain the colleges are facing, which wasn't a problem under the George W. Bush administration, when there were looser rules.

It claims that the reason their students struggle more to pay off their debt is because they are higher risk borrowers to begin with — who are more likely to default on loans but benefit from the type of flexibility they are able to get at for-profit colleges.

However, according to Politico, critics and regulators say that the practices by for-profit colleges are the reason for the strain the colleges are facing.

The gainful employment rule applies to traditional universities and community colleges, but graduates from for-profit colleges have a higher debt-to-earnings ratio.

"Our goal is not to close institutions and programs. Our goal is to improve them. And we see that happening," a White House official told Politico.

"At the end of the day, if a program is unable to meet the gainful employment standard after being given every opportunity to do so … that's not acceptable."

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The Obama administration is preparing to go after for-profit colleges for leaving their students with high debt while they struggle to find work with decent pay.
For-Profit Colleges, Student Loans, Debt, itt technical
Wednesday, 01 July 2015 11:10 AM
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