"Students at for-profit colleges represent only about 13 percent of the total higher education population, but about 31 percent of all student loans and nearly half of all loan defaults," with 22 percent of borrowers defaulting within three years, compared to 13 percent at public schools, the Education Department says. Students who graduated with an associate degree from for-profit schools with gainful employment programs have an average loan debt of $23,590, and 72 percent were hired at jobs where they made less than high school dropouts, while most students that attended community colleges didn't need to borrow money.
Proposed regulations would require career programs "to meet key requirements to establish that they sufficiently prepare students for gainful employment," the department says. As part of the proposal "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 exceed 30 percent, and institutions must publicly disclose information about the program costs, debt, and performance of their gainful employment programs so that students can make informed decisions." (Read more)
UPDATE, March 20: Kentucky Attorney General Jack Conway is proceeding with his 2011 lawsuit against Daymar College Group "after a yearlong attempt to settle the dispute failed," reports James Mayse of The Messenger-Inquirer in Owensboro. The suit accused Daymar of using "unfair, false, misleading or deceptive acts or practices" to enroll students who didn't meet its own admission standards; alleges Daymar "used similar practices to control students' access to their federal student loan funds and to prevent students from being able to purchase textbooks anywhere other than Daymar College," Mayse wrotes. "The suit also alleges Daymar officials gave 'false and misleading' statements to students that Daymar credits would transfer to other colleges and universities." (Read more)