Feds Put For-Profit Colleges on Notice: Do Better or Lose Student Aid

colleges to lose fundingBy CHRISTINE ARMARIO

Former students in career-training programs at dozens of for-profit institutions have had so much trouble paying off their loans that the schools could lose access to federal student aid if they don't improve, new data from the Department of Education finds.

The Education Department reported that at 193 programs at 93 schools, students were unable to meet any of three measures under the agency's new "gainful employment" rule. The new regulations, announced by the Obama administration last year, are aimed at making sure students in career-training programs at for-profit, nonprofit and public institutions are able to get a job and pay off their student loans when they graduate.

The programs include Everest College's paralegal training in Salt Lake City and more than 40 other programs operated by Corinthian Colleges (COCO), one of the nation's largest higher education companies; chef training at Le Cordon Bleu College of Culinary Arts in Austin, Texas; and the medical assistant program at Sanford-Brown College in McLean, Va.

"Career colleges have a responsibility to prepare people for jobs at a price they can afford," Education Secretary Arne Duncan said. "Schools that cannot meet these very reasonable standards are on notice: Invest in your students' success, or taxpayers can no longer invest in you."

The Education Department considers former students "gainfully employed" if the program they participated in meets one of three metrics: The estimated annual loan payments for a typical graduate does not exceed 30% of his or her discretionary income or 12% of total earnings; or at least 35% of former students are repaying their loans.

"These aren't the strictest standards to live up to," said Stephen Burd, a senior policy analyst at the New America Foundation, a nonpartisan public policy institute. That there are programs at 93 schools that don't meet any of the three "should raise alarms, and the fact we aren't doing anything about them for a long while from now is worrisome."

Currently, 12% of all students in higher education attend a for-profit institution, yet they represent 46% of all student loan dollars in default. While students who attend community colleges usually do not have to borrow money to enroll, the median federal student loan debt for a student earning an associate's degree at a for-profit was $14,000.

Meanwhile, for more than a quarter of for-profit schools, 80% of their revenue consists of federal student aid, the Department of Education said in announcing the finalized rule last year.

The department estimated 8% of all career programs would fail to meet the three benchmarks at some point in time, while only 2% would eventually lose student aid eligibility.


The data being released Wednesday covers 3,695 programs in 1,335 schools over a two-year period. Of those, 35% met all three measurements; 31% met two; 29% met one and 5% did not meet any of the three metrics.

Burd said many had expected the number who failed all three of the benchmarks to be much higher. Nonetheless, he said the data raises serious questions about the quality of training that students are receiving at institutions that didn't meet any of the benchmarks.

"If we're seeing they're failing all three metrics and we're not taking any action related to that, it's putting students in harm's way," he said.

All of the data to be released Wednesday is strictly for informational purposes and to give the schools an opportunity to review and work on improving their student outcomes, the department said. Enforcement will begin this fall, though schools would need to fail for three out of four years in order to lose access to federal student aid.

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gainder2

FEDs should be warning ALL for profit schools as well as PUBLIC schools, especially Community Colleges.
Ramming through as many students as possible and bringing in that revenue has become a priority that has clearyl replaced the importance of academics at all.
If you want to see an administrative nightmare at work, come and visit Reno , Nv.! See how complicated a CC can make things on students! Better yet, pretend you are transferring into the school and ask the same question on 5 different days to 5 different people and you will get your choice of 5 different answers!
oh and when you apply for a program, when they tell you where you are on the waiting list! well, don't fall asleep because your postion on the waiting list can change dramatically! So much so that your life plans will be altered! Of course when you find our 6 to 12 months later that you didn't make the cut, you can always re-apply for the program but wait a minute! Don't forget to take those TWO NEW pre-requisite courses before you re-apply!
Now you are trapped in the whirl-wind of CC land on your very own magical mystery tour! its exciting because its never certain! You see, the administration can change the requirements, mess up on your transcripts, any number of Murphy oriented events can occur to keep you travelling in the CC magical mystery tour!

is there any common sense in academia? I remember the disjointed (no pun intended) school demonstrations loved by the media and only slightly more defined with purpose than the occuy wall street crowd.

The completion rates at CCs is OUTRAGEOUSLY LOW......to be fair, for many reasons; however, the main reason commonly is that students become completely frustrated with incompetent administration etc.
Frankly, I am surprised Homeland Security hasn't raided every CC across this nation for failure to inventory and therefore account for hazardous chemicals, security of such etc. OUTRAGEOUS.

June 26 2012 at 2:13 PM Report abuse +2 rate up rate down Reply
sbramlav

Public colleges and universities should get the same warning!
This isn't about for profit colleges - they are just the ones being targeted by the political friends of public colleges and universities.

June 26 2012 at 12:22 PM Report abuse +1 rate up rate down Reply
jdykbpl45

Government schools should get the same warning for producing graduates who can't get a job.

June 26 2012 at 11:28 AM Report abuse +1 rate up rate down Reply
Matt

We learned nothing from the housing bubble. Instead of blaming the zookeeper who opened the gates (the government), we've blamed the animals who ran amuck (the banks) with the blessing of the zookeeper.

Stop subsidizing education. It is creating a bubble. Just as people thought they could buy a home with money they didn't have and sell it at a profit in a few years, so too people today think they can buy an education with money they don't have, and "sell it" (work) for a few years to pay it off and make a profit. Government: get out. Let economic democracy (the free market) decide who goes to college, and which degrees are actually worth the debt.

June 26 2012 at 10:46 AM Report abuse +3 rate up rate down Reply
seeker2be

Sounds like the fierce warnings to Iran and Syria. When is the administration going to get some balls and fix this student loans to phoney online colleges scams with inflated degraded degrees and high failure rate with no refund to the government. of exagerated funds?

June 26 2012 at 10:33 AM Report abuse +3 rate up rate down Reply
1 reply to seeker2be's comment
jacksjill

I was unable to like your remark so I am replying. As you stated-oooH...warning! However, the main problem is all people do not belong in college and Obama has pushed this. IMHO... the push should be on high school education. Anyone with a decent high school education is qualified for most jobs With Obama's stupid push for the college education, employers want a Bachelor's Degree to work as a stock boy at Waubaums and this is NOT needed for the job. Everyone loses --the person with the appropriate skills and the over educated person who is unhappy with the job.

June 26 2012 at 11:30 PM Report abuse +1 rate up rate down Reply
pdbliz

PEOPLE,,,,,,KEEP YOUR EYE ON THE FEDERAL GOVERMENT..!!!!!!!! The last 4 years,,this goverment has been taken over....more so,,than ever before..........
.......Our leaders talk about the rich ,,,,Well,,,,,cut college cost and help the average person,!!!!!! Cut the high cost of college.........Cut into the autrogious saleries of teachers in college.......Cut,,,benifits like avergae companies are doing...
AMERICA IS BROKE,,,,WE BORROW MONEY TO PAY ............WAKE UP.!!!!!

June 26 2012 at 10:28 AM Report abuse +4 rate up rate down Reply
ilm9p

Diploma mills for scum who can't otherwise get into a real college. These "institutions" are the modern day equivilent of getting a divinity degree off the back of a match book cover.

June 26 2012 at 10:15 AM Report abuse rate up rate down Reply