The Department of Education has finalized its “gainful employment” rule, which will ban for-profit schools like DeVry University or Apollo Group Inc.’s University of Phoenix from accessing federal financial aid dollars if too many of their graduates are unable to find jobs that pay enough to allow them to afford their student loan payments. If graduates owe too much relative to their income, or too few former students are paying back their tuition loans on time, schools stand to lose access to Pell grants and federal student aid. Such a loss would seriously crimp schools’ ability to attract students.“These new regulations will help ensure that students at these schools are getting what they pay for: Solid preparation for a good job,” Secretary of Education Arne Duncan said Thursday. “We’re giving career colleges every opportunity to reform themselves but we’re not letting them off the hook, because too many vulnerable students are being hurt.”Most students at career colleges and vocational schools pay tuition with federal financial aid dollars — as much as 90 percent of a school’s revenue can come from government aid.via libn.com
For prospective students considering an online degree program, Federal rules will make it easier to choose a top school. Last week the Department of Education formulated new rules that could deny colleges public funding if they fail to fully disclose all the risks of obtaining a college degree.
The key provisions of the new rule are:
- At least 35% of former students are repaying their loans.
- The estimated annual loan payment of a typical graduate does not exceed 30% of his/her discretionary income.
- Or the estimated annual loan payment of a typical graduate does not exceed 12% of his/her total earnings
Both students and colleges will need to be better informed about the job prospects versus the tuition cost of certain degree programs. Besides investigating local markets for salaries, the Department of Labor’s Bureau of Labor Statistics website is a great resource for determining the viability, employment potential and wage expectations of just about every career.