Volume 46, Number 4
New rules promise more accountability
By Mary Ellen Flannery
Those for-profit colleges that take in millions of federal tax dollars but turn out graduates with mountains of debt and worthless degrees will have to do better for their students.
Long awaited regulations released in early June by the Department of Education make it clear that those “career colleges” risk losing their Title IV funding if they don’t actually provide a path to gainful employment. The rule, which modestly ramps up over the next four years, requires colleges to maintain specific repayment rates and debt-to-income ratios among their graduates.
CCA President Ron Norton Reel, who serves on an NEA taskforce as a community college representative, was pleased action had been taken, but said it doesn’t go far enough.
“It’s a start, but I worry that the for-profit college industry will continue to hurt our most needy students,” Reel said. “Many students who receive loans end up assuming large amounts of debt that can throw them into bankruptcy. I would have preferred to have seen an earlier version of the legislation passed, enabling the government to withdraw federal funding next year, instead of waiting until 2015.”
High default rates
In California, for-profit colleges top the list of institutions with the highest rates of federal student loan borrowers who defaulted within three years of beginning payment, according to California Watch, a program of the Center for Investigative Reporting, which examined U.S. Department of Education data.
And Inside Higher Ed reports that overall, a quarter of California borrowers who went to for-profit colleges and entered repayment on their loans in 2008, defaulted within three years.
NEA is hopeful
National Education Association President Dennis Van Roekel was hopeful that the regulations would be successful. “We must promote the use of federal student aid for programs that give students hope for a brighter future,” he said, adding that college students should gain “real prospects without excessive debt.”
For years, government investigators have been sniffing a long and wide trail of misdeeds in the for-profit industry, which relies on federal aid to operate. (About 25 percent of the schools get 80 percent of their funding from taxpayers.) According to government reports, some campuses have aggressively deceived students and federal authorities about the value of their academic programs and the true costs of enrollment. Frequently, their victims are low-income students, women, students of color, and veterans.
The facts are that students at for-profit institutions represent just 12 percent of all higher-education students – but 26 percent of all student loans and 46 percent of all student loan dollars are in default. Their students carry a median debt of $14,000, while most of their counterparts at public community colleges don’t borrow a single penny.
The new regulations go into effect on July 1, 2012. For more information on the regulations, see www.ed.gov/news/press-releases/gainful-employment-regulations.