While the economy continues to struggle, many have decided to go back to school in order to make themselves more marketable for jobs. However, with many state universities and community colleges dealing with budget cuts, some students are turning to for-profit colleges.

For-profit colleges aim not only to educate students, but also make money for investors. According to financial expert Amy Scott, these institutions “get as much as 90% of their revenue from federal student aid.” Moreover, students at these schools tend to default on their loans twice as much as student who attend state-run colleges. Because of this, the government has instituted new rules for doling out aid to for-profit colleges.

The new rules would require for-profit colleges to make sure students are able to secure jobs upon graduation that would ensure they can pay back their loans. The so-called “gainful employment” requirement would mandate that for-profit colleges set “set benchmarks [for loaning money] based on average student earnings versus debts.”

Executives at for-profit colleges are upset over the new rules. Many claim that the government’s intervention amounts to price fixing.

Harris Miller, who represents for-profit schools at the Association of Private Sector Colleges and Universities, said:

“What the department has said repeatedly is, your students are borrowing too much. And the way to prevent that from happening, is you the school have to lower your prices.

Regardless of the side of the debate you fall on, one thing is clear: the cost of education is climbing and students are looking to get ahead any way they can.

What do you think of the new rules for for-profit colleges?

 

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  • Considering the fact that most of these companies routinely lie about the type of degrees they offer, whether or not the degrees are commonly accepted by employers, and the sort of employment such a degree will qualify you for, I hardly sympathize. Theses are barely legal scam organizations.

  • cupcakes and shiraz

    I think it’s fair. These for-profit colleges exploit students from low-income backgrounds looking for better opportunities in life. These school should be held accountable for their actions.

  • Nik

    The problem that graduates at FP colleges are facing is the inability to get a job with their degree. Add this to the fact that a FP college can be as much as 3x as expensive as a community college and you have a recipe for high student loan debt with no funds to repay. I work for a publication that covers this issue extensively and I can tell you that there are a FEW FPs that are doing good work to educate the masses. But these schools do not have the same standards as “traditional” colleges and can leave graduates without the training necessary to perform the jobs they are training for. Plus, these college invest a LOT of money into advertising telling people that this pricey degree will nearly guarantee a job making boo-koo money, which sadly is not always the case.

    The legislation is on the heels of a GAO report that showed many recruiters for these colleges lied to students about the amount of aid available to them and the types of jobs they would get upon graduation. GAO investigators went undercover and sat down with recruiters from different schools and found rampant deceit throughout the industry. The legislation also aims to do away with the commission based system these schools use for their recruiters which puts pressure on them to get bodies in the door to make their money.

    FPs offer the non-traditional student who is unable to drop everything and go back to school the opportunity to further their education, but the profit-motive that is absent from most traditional colleges and universities breeds corruption throughout the industry. There is also a stigma associated with a lot of these schools (save the Wal-Mart brands like U of Phoenix and Kaplan) about the quality of education they produce. I read an interview a long time ago from an employer that was quoted as saying something to the effect of if two resumes come across his desk with one graduate of a FP and the other of a CC, with similar experience, he’d go for the one from the CC.

    Half of these schools are just handing out degrees. A bachelor’s in 4 months? Really guy? #stopthemadness