The Obama administration on Friday announced it’s taking some steps to protect students from predatory job-training colleges, where some students end up with heavy loan debt but no degree to show for it.
The proposed regulations would require these schools to do a better job of preparing students for jobs or risk losing federal student aid.
The rules will “shine spotlight on those doing good work and make students aware of those that are not,” Duncan said in a conference call with reporters.
Many of the worst-performing colleges are for-profit schools, Duncan said. These institutions can get up to 90 percent of their revenues from taxpayer dollars, and on top of they receive funds from veterans benefits and private student loans, he said.
Students at for-profit colleges make up about 13 percent of the total higher education population, but about 31 percent of all student loans and nearly half of all loan defaults, Duncan said.
About 1 million students are enrolled in programs that would fail or require improvements under the new standards, the White House said in background material given to reporters.
The regulations say institutions must certify that their employment programs meet accreditation requirements and state and federal licensing standards. They also must show that the estimated loan payment of typical graduates does not exceed 20 percent of their discretionary earnings or 8 percent of total earnings, and that the default rate for former students does not exceed 30 percent.
The schools also would be required to disclose information about program costs, debt and how well their employment programs perform.
The White House said in a news release about the rules that students who attend colleges to get job training often find confusing or misleading information, excessive costs, poor quality, low completion rates and programs that train people for low-wage jobs or for fields in which there aren’t many jobs.
The regulations apply to nearly all programs at for-profit institutions and certificate programs at public and private non-profit institutions, including community colleges.
The proposed rules will be published in the Federal Register soon and then there will be a 60-day comment period. The Education Department then will have time to make any revisions. If the White House approves, the rule will be finalized.
Duncan said he hoped it would be finished in 2016.