The Education Department has submitted to the White House highly anticipated regulations meant to crack down on colleges that saddle students with debt without preparing them for the job market.
The agency’s final “gainful employment" rule, aimed squarely at for-profit college programs seen as predatory, must undergo review within the Office of Information and Regulatory Affairs before it is formally issued. Records posted by the office Friday indicate that would happen by next month.
First, the estimated annual loan payments for graduates must not exceed 20 percent of their discretionary earnings. Second, the default rate on loans taken out by former students must not exceed 30 percent.
Additionally, colleges would be required to certify that all gainful employment programs are accredited and have the proper state and federal licenses. And they would be subject to new public disclosures to better inform students about the costs of the programs.
Industry critics argue that the rules unfairly target private institutions, and are likely to backfire.
The Association of Private Sector Colleges and Universities (APSCU) has cited research showing the regulations could deny as many as 7.5 million students access to post-secondary education by 2020.
The Department of Education originally proposed its gainful employment rule in 2011, but a federal judge tossed it out after a legal challenge.
Advocate groups and a host of congressional Democrats fear the final language in the forthcoming revised rule would be too weak to hold for-profit schools accountable.
While only 10 percent of students attend for-profit colleges, they account for almost half the country’s student loan defaults, note the proponents of stronger restrictions, who point to schools like the University of Phoenix and Corinthian Colleges.
“When it comes to the facts of the matter, this sector of higher education is disgraceful and scandalous.” Sen. Dick DurbinDick DurbinTrump Treasury pick to defend foreclosure record Senate Democrats brace for Trump era Senators introduce dueling miners bills MORE (D-Ill.) said in May.