by Jeff Gore
At 10 a.m. today, the U.S. Senate Committee on Health, Education, Labor & Pensions will hold a full committee hearing entitled “Drowning in Debt: Financial Outcomes of Students at For-Profit Colleges.” (Click here for a live webcast of the event.)
In April, the Weekly reported on increased federal scrutiny on for-profit colleges by way of measuring the reaction of area for-profits to a slew of proposed new regulations. One of those colleges, the International Academy of Design & Technology, laid off 15 staffers; others, like Everest University, have tightened admissions standards and modified recruiting practices.
A large reason for the feds’ recent regulatory moves is financial: many for-profits, such as the University of Phoenix, earn nearly 90 percent of their revenue from federally-backed student loans. The Department of Education lays out the problem thusly: “Students at for-profit institutions represent 11 percent of all higher education students, 26 percent of all student loans and 43 percent of all loan defaulters.”
Last Thursday, the feds passed the most substantial and controversial regulation of all: the “gainful employment” rule. From the Washington Post:
The rule effectively would shut down for-profit programs that repeatedly fail to show, through certain measures, that graduates are earning enough to pay down the loans taken out to attend those programs. Advocates say it addresses the chief complaint against for-profit schools, that students emerge from them with too much debt and too little earning power.
The chief lobby for the for-profit education industry, the Association of Private Sector Colleges and Universities, has alleged bureaucratic overreach in the move, and has already sued the federal government over three other proposed regulations.