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?