Several for-profit institutions may no longer have access to federal student aid if their students continue to struggle with loan repayment.
The U.S Department of Education reported that in 193 programs at 93 schools, students could not meet any of the measures in regards to the agency's new "gainful employment" rule. Announced by the Obama administration in 2011, the rule aimed to assure that students in career-training programs at for-profit, nonprofit, and public universities are able to pay off their student loans once they have graduated.
The department predicted that close to 8 percent of all career programs would not meet the standards at some point, and that only 2 percent would lose student aid eligibility.
The Education Department considers students employed if the programs they have completed meet one of the three standards: the estimated annual loan payments for a typical graduate is no more than 30 percent of his or her income or 12 percent of total earnings, or at least 35 percent of former students are making payments on their loans.
Some of the for-profit programs include Everest College's paralegal training in Salt Lake City and over 40 other programs through Corinthian College, chef training at Le Cordon Bleu College of Culinary Arts, and the medical assistant program at Stanford-Brown College.
"Career colleges have a responsibility to prepare people for jobs at a price they can afford," Education Secretary Arne Duncan said to NPR. "Schools that cannot meet these very reasonable standards are on notice: invest in your students' success, or taxpayers can no longer invest in you."
12 percent of all students attend for-profit institutions however they only represent 46 percent of student loan dollars currently in repayment.
Although strict enforcement of the new rule will start in the coming fall, schools with the potential to fail will have an opportunity to meet the three benchmarks, as they are given ample time to do so. Institutions must fail three out of four years in order to lose access to federal student aid.
