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  • Time for further regulations by Obama administration to regulate for-profit college student debts
  • Posted By:
  • Karen W.
  • Posted On:
  • 04-Jul-2013
  •  Efforts are underway to identify any abuse of students by for-profit colleges by the Obama administration. Only litigations and bitterness continues from the two year battle that is aimed at protecting students from going deeper into debt with no hope of finding decent jobs.

    Examining the extent to which students are able to manage debts after school, the gainful employment regulations intends to judge vocational programs and for-profit colleges. Sanctions would be imposed on programs that leave students with debts they are unable to sustain. These institutions would also be disqualified from grant programs and federal student loan programs which constitute about 90 percent of revenue especially for for-profit colleges.

    According to a student advocacy group Education Trust assistant director Mamie Veight, this initiative will help weed out the worst players in this field. It will ensure that students choose institutions that offer value and the taxpayer dollar investment do not go in vain.

    In 2011, an effort was initiated by for-profit college industry representatives in the form of a $13 million lobbying to weaken the rules. The regulations were struck down by the federal judge as a result of these efforts. 

    When the administration announced that the regulations will be revisited, the tone stuck was defiant. Calling the effort confrontational and faulty, the Association of Private Sector Colleges and Universities chief executive and president Steve Gunderson expressed his deep disappointment.

    California based former deputy attorney general Robyn Smith said that the impending fight is inevitable and he hoped that the stand taken by the department will be firm and a rule enacted as soon as possible. There was no comment from the Department of Education on how the rule making process would go.

    According to consumer advocates, federal aid dollars were disproportionately allocated to for-profit colleges. At least one fourth of the federal grant and loan money go to for-profit colleges though they educate only around ten percent of students. An interesting fact is that these colleges account for at least 47% of defaults on federal loans.

    Department of Education stipulated that programs that led to excessive debt burdens in students and that produced high number of students defaulting on loans will face sanctions and under certain situations could also be disqualified from the grant and loan programs.

    Our education department would now identify student group, state attorneys general and consumer advocacy organization representatives to craft rules by forming a committee. The committee will forward their decision to the department after hashing out specifics during their meeting in September and October.

    According to Iraq and Afghanistan Veterans of America chief policy officer Tom Tarantino, spreading consumer awareness on programs that fleece students is a welcome trend. He said that to bring about a systemic change in the situation, further regulations must be imposed.


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Friday, Jul 12, 2013 12:37 AM

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