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The Obama Administration's years-long effort to improve regulation of the nation's for-profit colleges and trade schools with new "gainful employment" rules is nearing completion.
The public comment period for the Administration's final rule-making process ends May 25, and the Administration is expected to enact a final rule later this year. 
As set forth in its proposed final rule unveiled on March 14, the Administration is enacting new requirements that will apply to nearly all for-profit colleges and trade schools and many certificate and non-degree programs at public and non-profit institutions of higher education.  In order to remain eligible for federal student aid (the lifeblood of many for-profit colleges), the new rules will require schools to demonstrate that their programs are actually preparing students for gainful employment in a recognized occupation.   In a press release, the Department of Education explained that under the proposed final rules,  "Career programs would need to meet key requirements to establish that they sufficiently prepare students for gainful employment."  Among the requirements:
  • Institutions must certify that all gainful employment programs meet applicable accreditation requirements and state or federal licensure standards.
  • All gainful employment programs must pass metrics to continue eligibility in the student financial aid program, including: the estimated annual loan payment of typical graduates does not exceed 20 percent of their discretionary earnings or 8 percent of their total earnings and the default rate for former students does not exceed 30 percent.
  • Additionally, institutions must publicly disclose information about the program costs, debt, and performance of their gainful employment programs so that students can make informed decisions. 
Education Department Secretary Arne Duncan has said about the new proposed rules, "Higher education should open up doors of opportunity, but students in these low-performing programs often end up worse off than before they enrolled: saddled by debt and with few—if any—options for a career. The proposed regulations address growing concerns about unaffordable levels of loan debt for students enrolled in these programs by targeting the lowest-performing programs, while shining a light on best practices and giving all programs an opportunity to improve."
 


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