With the release of the Obama administration's final "gainful employment" regulations, students looking to attend for-profit colleges will now have greater insight into the value of their investment before enrolling.
In a statement from the United States Department of Education, it was announced that career colleges may risk losing access to federal student aid if they are not in compliance with the new standards.
The goal is to provide students with greater information regarding their prospect for employment following gradation, helping to avoid large amounts of student loan debt in a hazardous job market.
Under these new regulations, a program would be considered to lead to gainful employment if it meets any of the following requirements:
- Former students repaying their loans at a rate of 35% or more
- Estimated annual loan payment of a typical graduate does not exceed 30% of discretionary income
- Estimated annual loan payment of a typical graduate does not exceed 12% of total earnings
These new regulations, and the initial proposed rules were introduced last July, to considerable public debate.
The Association of Private Sector Colleges and Universities has said, "We remain very concerned that the gainful-employment regulation, while reflecting the fact that the department has listened to the sector and made changes to its initial proposal, is still using the same ill-advised metric approach to this matter and is clearly outside of its statutory authority."