Protecting Americans from Predatory and Poor-Performing Career Training Programs

Students at for-profit colleges represent only about 13 percent of the total higher education population, but about 31 percent of all student loans and nearly half of all loan defaults. Of the for-profit gainful employment programs analyzed by the Department of Education, the majority—72 percent—produced graduates who on average earned less than high school dropouts.

Debt Graphic

The Obama Administration announced new steps on Friday to address growing concerns about burdensome student loan debt.

In an effort to reduce the number of American families with enormous debt loads, and to encourage responsible actions by colleges and programs, the Obama Administration announced new steps on Friday to address growing concerns about burdensome student loan debt by requiring career training programs to do a better job of preparing students for gainful employment.

The regulation proposed by the Department will help to strengthen students’ options for higher education by giving all career training programs an opportunity to improve, while stopping the flow of federal funding to the lowest-performing programs where the debt of former students in comparison to their earnings or the rate at which they default on their student loans consistently fail to meet minimum standards. Institutions will also be required to make public disclosures regarding the performance and outcomes of their career training programs.  The disclosures include information on costs, earnings, debt, loan repayment rates, and completion rates.

While this proposal applies equally to public, private and for-profit programs, students at for-profit colleges have had particularly concerning outcomes.

After the proposal released last week publishes in the Federal Register, the public will have 60 days to comment on the draft regulations. The Department will take that feedback and finalize the rule in the following months.

Read more about the gainful employment announcement.

Cameron Brenchley is director of digital strategy at the U.S. Department of Education

10 Comments

  1. I agree with most of the comments but what about students who parents income falls right above the limit. So their child don’t received no scholarships and their GPA is over 3.5. I know parents who fell on hard times during the depression from 2008 – 2013 and they are still struggling to help their child pay tutition. Furthermore, colleges have you take classes that you will never use in your career which is a rip off.

  2. I agree with Jim. There wouldn’t be as much student debt at Community Colleges if the government didn’t dangle thousands of extra dollars in available loans, above and beyond what it costs for the classes and books. I have seen MANY students take out those loans (5,000-20,000) plus pell grants, only to purposely drop out after they’ve received their checks. One student told me he was only going to college to get a free laptop. Sure enough, after checks were cut, he was gone! I’m sure people like him are the ones defaulting on their loans!

    • The title of this article should be “Protecting American Taxpayers against Predatory Poor Performing Students and Fraudent borrowing.” The abuse is rampant at CC’s as mentioned above and continues to graduate school where is no limit to the amount of debt a student can borrow with the Graduate Plus loan due to pursuit of consecutive degrees. The stafford loan limit for grads is already arguably too high at $138,500. Whether the debt is $5k, $50K or $300K, this can be included in an income based repayment plan.

  3. Sounds good but why is the administration meddling in higher Ed? Will this lead to Obama picking winners and losers under the guise of protecting consumers? People should do their own research and be held to their loans. Does the POTUS believe that he has to protect us from ourselves? Deal with Putin Mr President and let Americans make their own decisions and live with their own outcomes.

    • “There is roughly somewhere between $902 billion and $1 trillion in total outstanding student loan debt in the United States today. The Federal Reserve Bank of New York reports $902B while the Consumer Finance Protection Bureau reports $1T”

      Additionally 1 in 10 people default within the first two years. This is a huge problem for our economy and therefore a huge problem for everyone. Considering most people in their 20s will be facing a Social Security crisis when they’re older and reduction in lifetime wealth (due to a the stagnant economy and student loan debt) means the problem of loan debt will be exacerbated.

  4. What are the actual numbers of students enrolled in for-profits across the U.S.? “Students at for-profit colleges represent only about 13 percent of the total higher education population, but about 31 percent of all student loans and nearly half of all loan defaults.” What number makes up that 13%?

    Thanks!

  5. The interesting fact is that the gainful employment regulation being so widely touted does not apply to public institutions…why do you think that is?

    Also, it is interesting that the ED would talk about debt when they do nothing to stop any student, even those that they put in the at-risk category from taking out money above and beyond what they need for their tuition and books. If a program is 10,000 and then the student can take more than twice that in “stipends” which is calculated into their debt, interest, and repayment…and there is nothing a college can do to stop those students from taking there “entitled” money.

    • I totally agree with you, Jim! See my comment, above! The “entitled” money is a huge waste of tax payers’ money. I am almost ready to graduate with my Associate’s from my local community college, which has been the highlight of my life. It frustrates me to no end to hear students, who desperately need the education to make a better life for themselves, say to each other (while standing in the bookstore line), “Yeah, as soon they cut those checks, I’m outta here! I’ve got $5,000 coming to me…” It makes the government look foolish to be throwing away money like that. There should be no more money issued that it takes to pay for classes and buy books and supplies. And the money should go straight to the school – not to the students!

      • Some students do use that extra money responsibly, though. I took out “extra money” so I could buy necessities like food and rent while I finished my degree; I’ve been working for 14 years now and they are almost paid off.

  6. Do you have this information in Spanish? These for-profit institutions are targeting the Latino community like never before. Promises of quick solutions are given everyday, just to see our youth get in debt before they start their careers. We need this information in Spanish.

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