Feds Take Action to Safeguard Students from Unaffordable For-Profit Colleges

Last Updated on September 29, 2023 by Robert C. Hoopes

Title: Biden Administration Implements New Federal Regulations to Hold For-Profit Colleges Accountable

The Biden administration has unveiled its plan to introduce strict regulations aimed at ensuring for-profit colleges are held responsible for student outcomes. The newly announced regulations, known as the gainful employment rule, aim to safeguard students from making poor investment decisions in pursuit of education at for-profit institutions and non-degree, certificate programs.

Under the gainful employment rule, federal funding may be withheld from programs that fail to produce graduates with adequate pay or burden them with insurmountable debt. Effective from July 1, 2024, these programs will be required to exhibit that their graduates can meet their student debt payments while earning a higher income than a non-college educated adult in their respective state.

In case a program fails to meet either of these metrics, students will be provided with a warning prior to obtaining federal student loans. If a program fails the same metric twice within a three-year period, it will forfeit its eligibility to receive federal student aid. According to data from the Education Department, approximately 1,700 programs are projected to fail under the thresholds outlined in the new regulation, with for-profit schools expected to be disproportionately impacted.

While the gainful employment rule encompasses all for-profit programs, it notably excludes bachelor’s degrees and the majority of graduate programs offered at traditional public and nonprofit colleges. This decision has faced criticism from some quarters.

It is worth noting that the gainful employment rule was initially introduced during the Obama administration but was delayed and eventually scrapped by former Secretary of Education, Betsy DeVos, under the Trump administration. However, with its reintroduction by the Biden administration, these regulations are set to have a significant impact on the future of for-profit colleges and the quality of education they offer.

Although the new rule has been hailed as a positive step towards safeguarding student interests, it may face challenges in the future due to potential political changes. For instance, by 2026, the first programs may lose their eligibility to collect federal student aid, subject to the prevailing political circumstances.

The final version of the rule is scheduled to be published in the Federal Register on October 10, signifying a major milestone towards ensuring greater accountability and transparency within the for-profit college sector.