Critics and advocates of for-profit schools agree on one thing this month. Neither group is pleased with the newly released gainful employment rules. Advocates call the new rules weak. Critics filed a 77-page lawsuit arguing that the regulations unfairly target colleges that serve the low-income, demographically diverse students that the rules claim to protect. Since the start of his administration, Obama has promised to crackdown on for-profit career colleges that leave students with debt they cannot repay. The rules state that if typical graduates annual loan repayment exceeds 20% of their discretionary income, or 8% of their total earnings, then the career education programs that granted these students their degrees will lose their federal aid. The new regulations go into effect on July 1, 2015, but if they were in effect today 1,400 for-profit colleges that serve 840K students would lose their federal funding. This aid often makes up 90% of the revenue at for-profit institutions.
Taking it to the courts
Dec 05, 2014