New for-profit college loan rules consider students’ earning potential

Amy Scott Jul 23, 2010

New for-profit college loan rules consider students’ earning potential

Amy Scott Jul 23, 2010


Steve Chiotakis: The Department of Education is proposing some controversial new rules for for-profit colleges. Places such as the University of Phoenix and Devry. The industry’s been under attack for heavy
student debt loads. From the Marketplace Education Desk, Amy Scott reports.

Amy Scott: Appropriately, the proposed rules are a two-part test. Education officials will look at the debt graduates take on relative to how much they earn, as well as their loan repayment rates.

Schools that exceed certain thresholds would face restrictions on enrollment or become ineligible for federal student aid. The industry says the proposed rules would hurt student access to education. Career colleges say they serve people who don’t go to traditional colleges.

Donald Heller directs the Center for the Study of Higher Education at Penn State. He says limiting access may be appropriate in some cases.

Donald Heller: If it’s gonna mean that students aren’t going to be able to enroll in programs that are dead-end and don’t lead them to gainful employment, then I’m not sure that that’s necessarily a bad thing that they no longer have that as an option.

Education officials estimate under the new rules 5 percent of for-profit and vocational programs would become ineligible for federal aid. More than half would face restrictions on enrollment and have to warn prospective students about potential debt loads.

The public now has a month and a half to comment on the proposal. The Obama Administration hopes to finalize the rules by November 1.

In New York, I’m Amy Scott for Marketplace.

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