For-profit colleges will likely be required to disclose information about their programs’ job placement rates, graduation rates and other statistics so the U.S. Department of Education can calculate graduates’ debt load and income, a New York Times article reports this week.
Ultimately that data could make a school ineligible for federal financial aid based on graduates’ debt in relation to their income if it doesn’t meet a certain ratio (which has not been finalized). The original idea was “cutting off federal aid to programs whose graduates could not repay their student loans in 10 years with 8% of the income,” the story notes.
Wondering what exactly constitutes a for-profit school? The proposed rule would affect the likes of Harrison College and ITT Technical Institute – both based in Indiana.
I wrote about this fast growing higher education sector in a March/April BizVoice® story. Read about how for-profit schools don’t receive taxpayer dollars directly (like IU, Purdue and other public schools); instead they are large consumers of federal student aid. Nationally, for-profit schools received about one-fifth of federal financial aid each year.
It’s stats that like that have the Department of Education evaluating whether these same programs are a drain on federal aid while leaving graduates in low-paying jobs with no way to pay off the debt. The final rules are expected to be published in November and take effect in July 2011, the NYT reports.
While this regulation wouldn’t disqualify all for-profit schools from financial aid, I imagine such rules could continue to feed many perceptions about the industry. Read what leaders at Indiana for-profit schools have to say about how their programs are built around top-demand jobs in Indiana.