The first government-issued report card evaluating for-profit colleges is in, and it’s none too pretty. Five percent of the vocational schools tested under the Department of Education’s “gainful employment” rules failed to pass all three metrics of new rules aimed at ensuring taxpayer-funded government aid is spent effectively. More disturbingly, 35 percent failed to pass at least one out of three requirements.
The rules are designed to ensure that schools that derive the bulk of their revenue from federal aid can prove that they are preparing their students for jobs that offer a decent chance of paying down student loan debt. The principle makes logical sense, particularly when applied to for-profit schools. Why should the federal government be paying the private sector to provide students with terrible educations and crippling debt?
The minimum standard requirements : At least 35 percent of the program’s former students must be repaying their loans; the estimated annual loan payment of a typical graduate cannot exceed 12 percent of his or her total earnings; and the estimated annual loan payment of a typical graduate does not exceed 30 percent of his or her discretionary income.