Administration proposes tough standard on for-profit colleges

For-profit schools complained that the rule imposed costly compliance and reporting requirements, though student and consumer advocates supported it as attempt to make sure that students were ready for a job when they graduated.

The draft Education Department rule would mandate that, for two out of three years after graduating, students have less debt than 12 percent of their annual income or 30 percent of their discretionary income. Otherwise, schools risk losing federal aid.

The proposal would also create a cautionary "zone” for schools with graduates who have slightly less debt.

Unlike most rules, the regulation is being developed in negotiations with outside groups, including representatives from traditional and for-profit colleges and consumer advocates and state offices. The first meeting on the rule is scheduled for Sept. 9.

“The Department welcomes a robust debate on the draft regulatory language and also encourages the negotiators to present any and all ideas for how to best define and evaluate whether a program prepares students for gainful employment in a recognized occupation,” it said in an overview of the proposal.