U.S. targets for-profit colleges that saddle students with high debt

"The quality of these programs today varies tremendously. While some are strong, today too many of these programs fail to provide the training [students] need, while burying them in debt they cannot repay. The new rules, known as "gainful employment" regulations, are intended to weed out programs that rely heavily on taxpayer subsidies but don't follow through on promises of career training."

"Critics contend that many for-profit colleges target low-income consumers and charge hefty tuition, leaving students with massive loans and few job prospects. Several major players in the industry, including Corinthian and ITT, face lawsuits and investigations by the U.S. Consumer Financial Protection Bureau and more than a dozen state attorneys general."

"Programs that fail to meet debt-to-income requirements for two out of three consecutive years would lose eligibility for federal student loans and grants - the primary revenue generator at for-profit colleges. Some for-profit schools receive up to 90% of their revenue from federal loans and grants."

The U.S. Department of Education announced regulations to penalize for-profit colleges that leave students with unsustainable debt levels compared to their earnings after graduation. Programs failing to meet debt-to-income requirements for two consecutive years out of three would lose access to federal student loans and grants, their primary revenue source. The initiative targets institutions like ITT Technical Institute, University of Phoenix, and Corinthian Colleges, which critics argue charge high tuition while targeting low-income students and providing inadequate job prospects. Education Secretary Arne Duncan stated the regulations aim to eliminate programs relying heavily on taxpayer subsidies without delivering promised career training. Some for-profit schools derive up to 90% of revenue from federal aid.

Read at Los Angeles Times