There has been a great deal of debate lately about for profit colleges and financial aid. Many say that for profit colleges exploit poor people by promising them new careers and admitting them without making them meet any real education requirements. Once their financial aid applications are processed, the student can find themselves in over their heads, without the support they need to succeed, leaving them without the career training they wanted and deep in debt.
On the other side of the controversy are the non profit colleges who say that they provide training to people who would have been left out of traditional colleges. Because they offer flexibility and shorter time frames for graduation, they can be the solution for working adults and those who have other commitments that make it impossible for them to commit to a full-time college schedule.
Maybe they are both right, in certain situations. However, the U.S. Department of Education passed a law last year that will make post-secondary institutions demonstrate that enough of their students have gone on to find gainful employment or else they won't be eligible to receive federal financial aid dollars.
The new regulations put into place will require career training programs at public, nonprofit and for-profit institutions. These career programs will be measured on three criteria. At least 35 percent of former students must be repaying their loans, the estimated annual loan payment must not exceed 12 percent of the graduate's earnings and finally, the annual loan payment must not exceed 30 percent of the person's discretionary income.
It sounds complicated but basically, the schools will be measured by how many former students are repaying their loans and by what percentage of them are able to do so without having to struggle too hard. For example, if after the training they are only able to get low paying jobs, even if they are repaying their loans, the school would still be penalized.
Surprisingly, after the first round of evaluations, 5 percent of career training programs fell short in all three categories. Out of the 3,695 programs they looked at, only 35 percent met all of the requirements.
The regulations will take effect this fall and the schools that don't meet the requirements will have until 2015 to comply or else they will lose their eligibility for the federal student aid.
What do you think about this new regulation? Do you think it will help students or keep them from being able to attend post-secondary schools?