For-profit colleges face new rules

Under new rules, they must prove their former students can earn enough to cover their students loans.

CORRECTION: The story below incorrectly reports on new rules that would require for-profit colleges and vocational programs to show that former students are able to repay their student loans or risk losing federal financial aid. The article was posted after a federal judge had overturned the rules, saying they were arbitrary and capricious. For a corrected version of this story, follow this link: New rules on for-profit colleges overturned

David Brancaccio: Now that it's July, new regulations are in for for-profit colleges and other vocational programs. Programs that don't comply risk getting cut off from federal financial aid. From the Marketplace education desk at WYPR, Amy Scott reports.

Amy Scott:Starting this week, career training programs must show that their former students earn enough to pay off their loans. Programs that fail three out of four years will become ineligible for federal student aid. At some for-profit colleges, 90 percent of revenue comes from that aid.

Kevin Kinser: There was some concern that institutions were providing education for students that wasn’t worth the price they were charging.

That’s Kevin Kinser. He teaches higher education policy at the State University of New York at Albany. In a recent test run, 5 percent of programs failed to meet the new requirements. Many were at beauty schools. Anthony Fragomeni is with the American Association of Cosmetology Schools.

Anthony Fragomeni: In a difficult economic time, unfortunately sometimes the repayment of that student loan might slide down the priority list a little bit.

Fragomeni says beauty schools have been counseling their students on the dangers of debt and working with employers to line up jobs for graduates. I’m Amy Scott for Marketplace.

For a corrected version of this story, follow this link: New rules on for-profit colleges overturned

About the author

Amy Scott is Marketplace’s education correspondent covering the K-12 and higher education beats, as well as general business and economic stories.


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