New For-Profit College Rules – Are They Enough?

New rules proposed last week by the Obama Administration are designed to protect students and federal dollars from abuse at for-profit colleges.

Data uncovered in the past several years has shown that students attending for-profit colleges have the highest post-graduation default rates of any higher education group. According to Senator Tom Harkin (D-Iowa), students at for-profit colleges receive roughly 25 percent of government student aid account for 46 percent of all defaults. And students of for-profit colleges only make up 10 percent of the nation’s total graduates.

Senator Harkin has led five panels on this issue in the past year. He accuses many for-profit colleges of taking advantage of the poorest citizens and failing to provide them with the skills they need to get meaningful jobs afterwards.

“When you have a business model out there that says you’ll make more profit by getting the poorest people in, obviously because they get the most Pell grants and the most student loans, and so you target vulnerable people, and you bring them in because that’s how you increase your profit and if they default after three years, who cares? It’s no skin off their teeth. They keep the loans, they keep the Pell grants, and we’ve seen the profit structure of some of these schools — tremendous,” Harkin said as quoted in a CNN article.

The new rules should help those students be more aware of the costs and risks of for-profit schools. Under the proposed guidelines, schools are required to have at least 35 percent of their graduates repaying their loans or must prove that the average graduate’s annual payments are no more than 12 percent of their total earnings.

While Harkin may not be completely pleased with the new rules, there are some who believe they are adequate to do the job. Education Undersecretary Martha Kanter, for example, wants to make sure both the schools and the students can win.

“We want the sector to succeed,” Education Undersecretary Martha Kanter said at the hearing. “I think that was one of the fundamental tenets of the (new) rule. We’ve got 11 percent of our students in this (type of) program. We’ve got to create a model that is going to help them improve and actually target the worst-performing programs and either have them improve or eliminate their eligibility for federal student aid.”

One Response to “New For-Profit College Rules – Are They Enough?”

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