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Kai Ryssdal: We know this much about consumer behavior in this still-shaky economy: That when people do spend, they want to be sure they get their money's worth. That applies whether people are buying a new refrigerator, or a pair of sneakers or a college degree.
Enrollment at for-profit colleges has spiked since the economy's gone south. They generally promise graduates they will find solid careers and more money, while most students are paying tuition with taxpayer-backed student loans. State and federal regulators have been eyeing low graduation rates and heavy debt. So the Obama Administration is set to propose some new rule for career colleges to make sure graduates end up in jobs that pay well enough to cover their student loans.
From the Marketplace Education Desk, Amy Scott reports.
Robin Garnett: Did you finish your reading log for the library yet, Ian?
Amy Scott At her home in St. Louis, Robin Garnett checks her 12-year-old son's progress in a summer reading program.
Garnett: Look, Autumn's already done with her, second part of hers. What's up, slacker?
Garnett knows a lot about the value of education. She worked as director of graduate placement at for-profit Allied College in St. Louis. It's now called Anthem College. Here's a clip from one of its promotional videos.
Allied College video: We can help you break into that career you've always dreamed of, and your future starts right now!
It was Garnett's job to help students start those careers as pharmacy technicians or dental assistants.
Garnett: We sent resumes on their behalf, we called potential employers on their behalf, we called the graduates every week, sometimes every day, to say "have you followed up on this, have you talked to anyone, what have you been doing?"
All that effort paid off. Garnett says more than 70 percent of graduates found the kinds of jobs they went to school for. But she says a lot of those jobs paid just $8 to $10 an hour. And the students often took on a lot of debt.
Garnett: A lot of it would depend on what program the student was in, how hard they were willing to work, the effort that they were willing to put in. But just being honest, if you're making $10 an hour and you have $15,000 in student loans, that would be pretty difficult to pay back, for anyone.
It's that difficulty that has regulators asking if for-profit colleges are making good on promises of career skills and success. The law says career training and vocational programs have to prepare students for quote "gainful employment in a recognized occupation." Otherwise, the programs aren't eligible for federal student aid. But until now, no one's defined what gainful employment means. The Department of Education is drawing up new rules meant to protect students from taking on more debt than they can expect to pay off.
Pauline Abernathy is with the nonprofit Project on Student Debt.
Pauline Abernathy: Students should have confidence when they are considering a program that if it's eligible for federal student aid, that they're going to be receiving marketable skills that will enable them to repay any loans they have to take out to get that education.
New regulations could force some programs to lower their tuition or even go out of business. But the gainful employment rule doesn't apply to traditional four-year colleges or liberal arts programs. Abernathy says that's because career colleges and vocational programs exist to train people for jobs. There may be other reasons people go to Vassar or UCLA.
Sara Goldrick-Rab teaches education policy at the University of Wisconsin, Madison. She says nonprofit colleges and public universities deserve a closer look too. Plenty of students graduate from those schools with piles of debt and slim job prospects.
Sara Goldrick-Rab: The fact is that when you talk to students these days, no matter where they are, their main focus is on getting a job -- and its on getting a good-paying job. And that's what they tell you that they're there to do.
That's what John Duffy of Crewe, Va., wanted. Several years ago, he tried out community college and a state university. But when he decided to go back to school while working full-time, an online program made the most sense. He recently finished a degree in logistics management from the for-profit American Military University.
John Duffy: With an online private college, I was able to go to school on my schedule, still work, still take care of my wife and children, our responsibilities, and still finish my degree. It just took me longer, and of course cost more money.
About $23,000 total, all of it in federal student loans. But Duffy says he'll make about $500 more a month this year in his job at a shipping company, thanks to a bonus for finishing college. And he says he's now qualified for jobs that pay at least $10,000 more a year than he makes now.
Duffy: You know I got a college degree for the same price most people pay for a car. I don't see that as a bad deal.
He'll soon find out what that degree is really worth in the job market. He's sending out resumes.
I'm Amy Scott for Marketplace.