The Obama Administration is moving forward in defining what it means for career education programs to “prepare students for gainful employment in a recognized occupation.” This requirement – which applies to programs at public, nonprofit, and for-profit colleges – has long been in federal law, but, without a rule defining what it means, the Department has been powerless to enforce it.
The draft rule would measure career education programs’ outcomes in two ways. First, the debt burdens of program graduates who received federal aid would be compared to their later earnings. Second, students’ ability to repay their loans – including both graduates and noncompleters – would be measured through a program-level cohort default rate. Programs where graduates’ earnings don’t justify typical levels of debt, and those where borrowers too frequently default on their loans, would lose eligibility for further federal grants and loans unless the programs improve.
The data released by the Department in conjunction with its proposed rule are alarming. They couldn’t make a better case for why the rule is desperately needed and must be strengthened to provide meaningful protections for students and taxpayers. <Read more.>