Critics give new college regulations an 'F'

The Obama administration is cracking down on for-profit colleges and universities that do not prepare students for their chosen careers, but critics are giving the rules an "F."

The Department of Education on Thursday announced so-called "gainful employment” regulations to ensure students are not being “buried in debt” to obtain degrees that do not adequately prepare them for life after college. 

These schools will be required to show that their students are earning enough money upon graduation to pay for their student loans. Graduation rates, how much money their former students are earning and how much student debt they have will be monitored.

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The Education Department estimates nearly 1,400 college programs serving 840,000 students will fail the new requirements, which could ultimately lead to lost federal aid unless schools take steps to correct the problem.

“Career colleges must be a stepping stone to the middle class. But too many hard-working students find themselves buried in debt with little to show for it,” Education Secretary Arne DuncanArne DuncanLoosely regulated, charter schools pose fiscal risk Proposed Department of Education rule runs counter to ESSA's restrictions In search of the surest Common Core exit route MORE said in a statement. "That is simply unacceptable. These regulations are a necessary step to ensure that colleges accepting federal funds protect students, cut costs and improve outcomes. We will continue to take action as needed.”

But the Education Department is taking heat over the new rules from colleges and student groups alike.

Rory O’Sullivan, deputy director of Young Invincibles, a nonprofit focused on higher education, healthcare and jobs, says the new rules will let “drop-out factories off the hook,” because they do not account for students who leave before graduation.

“By failing to include a default rate standard, the administration ignores the most vulnerable students: those who withdraw from failing programs with debt but no degree,” he said.

Steve Gunderson, president and CEO of the Association of Private Sector Colleges and Universities, said the rules target private schools while letting community colleges off the hook.

"In this case, the department favored public institutions that benefit from generous taxpayer operational subsidies, but have lower graduation rates and higher default rates, over programs at private sector institutions where graduates are achieving real earning gains and successfully repaying their loans,” Gunderson said in a statement.

He also complained that the gainful employment regulations measure students' earnings shortly after they graduate when they are making less money, rather than waiting for them to establish their careers.

The unintended consequence, critics say, is that many popular programs at these colleges — like medical assisting and network systems administration — will be canned, because students don’t earn enough money immediately upon graduation.

The regulations go into effect on July 1, 2015, the agency said.