For-profit colleges got more time from the Obama administration to comply with the rules aimed to reduce federal aid to institutions the students of which mostly struggle repaying their government cash advance loans. Under the new rules performed by the US Department of Education, private for-profit colleges won’t risk losing the federal funding until 2015, though, the earlier proposal was aimed to leave the companies without aid as soon as next year.
The Protection Of Students
Following the statement of the Education Department, the students will be still protected from the exploitative programs leaving them with government-backed debt that can’t be repaid, while the strict measures are being delayed. The use of federal aid that totaled $30 billion last year, default rates on loans of college students and recruitment practices of education companies are being investigated by the state attorneys general and the Congress.
The rules are called “gainful employment” as they are aimed to ensure that the graduates of for-profit colleges get jobs allowing them to pay back their student advance cash loans.
According to the rules, the programs would qualify for government aid if at least one out of three tests is met in a given year:
– yearly educational-debt payments of typical graduates account for a maximum of 12% of their entire income;
– at least 35% of former students repay their balance on loan;
– the payments account for not over than 30% of the personal discretionary income.