New “Gainful Employment Rule” Sparks Controversy
There has recently been a lot of debate in the news regarding new legislation which will further regulate for-profit colleges. This new “gainful employment rule” seeks to eradicate government funds for for-profit schools who fail to show that a certain number of their students graduate with the ability to repay their loans. Currently, many for-profit schools have a high number of graduates who are unable to obtain a job in their field, and consequently, are unable to repay their student loans. This is sparking debate within the industry as some argue that this shouldn’t be limited to for-profits, and others oppose the government being involved in the for-profit sector altogether.
Legislation Specifics
This legislation, beginning July 1, 2011 will look at a few different criteria for determining a school’s eligibility to continue participating in the federal aid program. The program will look at an average of the students’ debt to earnings ratio, debt to discretionary income ratio, or loan repayment rates. In order to remain eligible for federal funding, a school must show that their students meet at least one of these criteria. If a school fails, they would not be cut-off immediately, but rather, would then fall into the “restricted” category. This places a cap on the number of students eligible to be enrolled, limiting the allowable title IV funding.
Debate
There are many in support of this new regulation, claiming that for-profit schools are merely “diploma mills”, taking advantage of ignorant students by receiving money in exchange for a worthless degree. Supporters of the bill claim that regulating this would ensure that schools offer quality programs so that students are able to obtain employment post graduation.
Most opposition to this bill is not directed around the fact that regulation is happening, but around whom it is happening. The default rate for student loans is higher than any other sector (even credit card debt), so most agree that changes need to be made. However, many argue that it is not solely the problem of for-profit colleges, rather, the higher education system as a whole, including online schools, for profit schools, community colleges and non-profit institutions, and that the new laws should include all higher education institutions. While many argue for some sort of regulation, there are still those opposers who argue that private instituions should not be regulated by the government at all.
What do you think? Should the government allow for-profit schools access to federal funds?
We want your opinions! Feel free to elaborate on your vote in the comment section of the blog!
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Wow! I was just reading about this in my city’s paper on Wednesday! Personally, I feel this is needed because there are a lot of for-profit schools that do not explain in detail what comes w/attendance. There are institutions/schools that are overly aggressive simply because they want their money. When the focus is taken off the students and their education, it becomes greed. As a result, we as students suffer. I personally have been affected by this. Proving that a student can actually USE their degree is important. Otherwise why would one choose to go thousands of dollars in debt?
Yes, getting into the career field may take time, or you may have to work your way to the top. But I wouldn’t pursue education (for example) to end up working in retail for the rest of my life. I also have friends who aren’t in their field, but were told upon entering their program “this field is in demand!”, etc. It is important and I’m glad it’s being looked into.
Restricting funding to school based on students not getting into their field doesn’t make much sense to me. There is more to look into than just students graduating and them getting work in their field. For one, not all areas have a lot of opportunities for certain fields of study. For example if someone majors in a creative field, such as art or design, then they may have to leave their state in order to find work opportunities with a business. There is the possibility of doing freelance however this option may not be doable for most.
In addition, there are areas where obtaining a position to work is more difficult especially if you don’t have a certain degree level under your belt yet alone in-the-field work experience that the employers are looking for. Also, are these studies looking at those with degrees that are working in their chosen field or those with a degree that are working in a field not related to their degree? Cutting funding to a school based on an individuals ability to pay back a loan is ridiculous because it is just going to make the problem worse. If you want students to be more financial savvy how about providing them with resources on alternative ways to pay for school along with programs that they can sign up for that will help pay down or even pay off their loan in exchange for a service. To me, it doesn’t seem like they had students in mind when they came up with this.