by Jonah Shepp
The Department of Education on Friday proposed new regulations (pdf) intended to address the high rate of student loan defaults among graduates of for-profit colleges. Ashlee Kieler outlines the proposal:
Programs would be deemed failing if loan payments of typical graduates exceed 30% of discretionary income or 12% of total annual income. Programs would be given a warning if a student’s loan payments amount to 20 to 30% of discretionary income, or 8 to 12% of total annual income. Discretionary income is defined as above 150% of the poverty line and applies to what can be put towards non-necessities.
Passing along the eyebrow-raising chart above, Danny Vinik praises the crackdown on for-profit colleges:
Students at for-profit colleges drop out at an alarming rate and those that do graduate have much higher levels of debt than students in public and private non-profit colleges. For-profits also receive a substantial share of their revenue—more than 80 percent to be exact—from loans and grants from the federal government. In 2012, the Senate Health, Education, Labor and Pensions Committee, led by Senator Tom Harkin, completed a two-year report into for-profit universities to investigate whether this taxpayer money was being well spent. Across the board, degrees and certificates from for-profit colleges cost significantly more than those from non-profits[.]
Those extra costs are not leading to high graduation rates though. Fifty four percent of students who enrolled during the 2008-2009 school year had withdrawn from the institution by 2010. Only 18 percent had earned their degree or certificate.
The Dish 