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For-Profit Colleges Fight Back Against Feds Over Student Loan Debt

student loanMore than 1,400 for-profit colleges have partnered with a trade group to file a lawsuit against the federal government for “overregulating” abuses related to student loan debt, NPR reports.

The targeted federal regulation is known as the “gainful employment rule,” and it was recently enacted by the U.S. Department of Education as a means of restricting access to federal student-aid dollars for institutions that have “too many students who struggle to pay back their student loans.”

The goal is to crack down on colleges that offer expensive degree plans with no viable earning potential upon graduation. As the news site points out, “The Department of Education says the regulation could potentially affect up to 840,000 students, and, the trade group says, 3.5 million in the next 10 years.”

Approximately 2 million students are enrolled in for-profit colleges and universities at present.

These institutions of higher learning depend on federal aid a great deal in order to make ends meet, but now the Education Department is essentially saying, “What are we paying for?”

More from the NPR report:

“At issue in the current suit are the criteria used to determine whether, and how many, students are struggling. The Education Department is proposing to compare graduates’ student loan debt to their earnings. The schools say such a measure is unfair because how much money students make after graduating is not in their control.

“‘The gainful employment regulation is nothing more than a bad-faith attempt to cut off access to education for millions of students who have been historically underserved by higher education,’ Steve Gunderson, president and CEO of the Association of Private Sector Colleges and Universities, which brought the lawsuit, said in a statement.

“Dorie Nolt, the Education Department press secretary, said, ‘We’re confident that the department is within its legal authority in issuing gainful employment regulations that will protect students and taxpayers’ investments by bringing more accountability and transparency to career training programs.’”

Barmak Nassirian, an independent policy analyst, digested the legal fight in a quote to NPR stating that “An industry is really challenging the right of an agency to question its entitlement to free federal money.”

Outrage Against For-Profits

The Education Department’s actions stem from, as one commenter pointed out, staggering student loan debt that has crested the $1 trillion mark.

Essentially, 13 percent of students attend for-profit colleges but they account for around 50 percent of student debt and for-profit college tuitions are about double that of non-profit institutions.

Stats like these are starting to turn public opinion against for-profits as evidenced by the comments section where close to 600 were out in force against the f-p lawsuit at the time of this post.

“I teach High School,” writes Kathy Ford, “and I can’t tell you how many boys want to go into the video game field and get sucked into the worthless Art Institute schools. If I tell them the truth, I get calls from parents saying I’m bursting little Johnny’s bubble and to stay out of their school choice.”

“A large share of for-profit colleges exist to hook up to the faucet of money that is federal student aid,” writes a second anonymous commenter. “Tying those dollars to both job wages and tuition costs is a good control in theory (though a solution for low-paying professional careers like psychology and social work might still be needed). This also places responsibility for knowing the market on the federal government rather than consumers.”

“For-profit colleges shouldn’t be making a buck off vets and federal dollars,” writes a third. “I hope they get taken to the cleaners, because that’s what they’re doing to the government and their students.”

What’s A Student To Do?

As students get caught up in the debacle, it is important that they remember a few things before picking a college and a major.

One: Don’t even think about high tuition costs until you’ve got your undergraduate degree. More and more careers are turning up their nose at the bachelor’s degree, which means you’ll need at least a master’s in order to be considered a worthy hire. That means you should think about undergraduate work in more practical terms. Whereas before, it was recommended that you get your general ed requirements at a community college before going to a larger four-year university, now you should probably go to an affordable four-year in-state university for that undergraduate degree. For post-graduate work, you can aim for the more competitive institutions. (And, of course, research your chosen field before taking that advice lock, stock and barrel.)

Two: Don’t wait for the federal government to save you from your student loans. This case could break either way, and by the time it plays out, you’ll probably be into your career. While the current administration has taken some actions against these for-profits, it could easily be superseded by an opposing Congress. Therefore, be sensible in controlling your educational costs and in finding ways to pay for your education if grants and scholarships aren’t available.

Three: Choose a major that has data to prove it’s a wise career track. While your goal may be to go in to video games, realize that proven skill for such a career is more worthwhile than the letters you may get after your name. Hedge your bets by choosing a related field in which the job market is booming, then work on your game development skills in the off-time. A school will not prepare you as well as experience for this particular field. The same could be said of writing and marketing jobs. (I’ve worked for years in such fields and I could have done it whether or not I attended college thanks to disruptive technology and the drive to learn things for myself.) In other words, evaluate and scrutinize what you want to do before you ever step foot in a classroom.

In Summary

The Education Department’s new regulation could affect a lot of students for better or worse, but as a student, all you can do is look out for your best interests and know the educational environment that you’re entering. Good luck!

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's work appears regularly here at 4tests.com and across the web for sites, such as The Inquisitr and Life'd. A former high school teacher, his passion for education has only intensified since leaving the classroom. At 4tests, he hopes to continue passing along words of encouragement and study tips to ensure you leave school ready to face an ever-changing world.

Website: http://aricmitchell.blogspot.com/

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One Response

  1. Obama can push for making student loans (past and present) to be consolidated under comparable consumer loan rates (1 to 3% per annum), where Fed Rates has been zero since 2009.

    Obama should listen to Senator Warren on relieve student loan that has been major burden on countless borrowers.

    The Department of Education should release the long awaiting legislation for ‘debt forgiveness process’ for profit college student loans and the whole student loan process should be streamlined with manageable loan rates (1 to 3% max) rather than 6 to 8% rates that has been the norm.

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