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  • For-Profit Colleges in the Limelight as President Obama Aims at Stemming Rising Student Debt
  • Posted By:
  • Jamie K
  • Posted On:
  • 01-Nov-2014
  • For-profit colleges have come under the scanner with President Obama cracking down on them. The goal here is to reduce the burden of student debt for a large section of American students.
    There is a growing concern over the fact that a growing number of students graduating from for-profit colleges now feel that their diploma is not as lucrative as they thought it would be.

    Logically this means that the amount of loan they had to take to study at these colleges is definitely not worth it. Saddled with huge amount of debts, these students are crippled for most of their lives. To address this serious issue, our president has decided to crack down on some of the biggest scams in the higher education sector.

    According to the Associated Press, the government passed a rule that requires all for-profit colleges to show that the annual loan repayment of students does not exceed 8 per cent of their total earnings or is not more than twenty per cent of their discretionary income.

    For most schools, federal aid is extremely vital. Moving forward, if any school or program is unable to meet the set standard, they will not have access to this aid. In the past, many schools have been promising students’ pre-professional training and have eventually left them with nothing but a massive student loan debt.

    So, what is going to be the impact of this move? Well, for one, at least 1400 programs will lose funding as they will be unable to meet the benchmarks. A higher percentage of federal loans are taken by students attending for-profit schools though they form only about 11% of students.

    Studies show that public school graduates come out with a loan of $20,000 while students graduating from for-profit schools are saddled with a median debt of $32,700. Are the degrees offered by these colleges any better than what students from community colleges receive? No, that is the issue here.

    Clearly, it is time to take action against the predatory practices of greedy for-profit schools out to make money. This crackdown could reduce the number of students graduating with crippling debts. It may yet be the only way to stem the rising student loan debt in our country.

    Last year’s figures show that our student debt has crossed $1trillion. When you look at the larger picture, you can clearly see that a disproportionate portion of the debt is taken by for-profit students.

    Of course, it goes without saying that none of the for-profit institutions are pleased about this crackdown. According to Steve Gunderson, the Association of Private Sector Colleges and Universities CEO, this is a bad faith move that aims at limiting quality education access to underserved students.

    Critics are looking for more stringent measures against the for-profit predators. We will just have to wait and see if this move has any significant impact on the scenario. Irrespective of the measures we take, what we would like to see is students coming out of quality colleges and finding lucrative jobs that will help them pay off their debts quickly.







 

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