Obama administration Issues Student Loan Regulations For For-Profit Colleges

For-profit colleges in the United States have a new set of rules to play by, or they risk losing government aid.

This week, The Obama administration took a major step on cracking down on for-profit colleges and career training schools that saddle their students with enormous student debts, and contribute to sky-high student loan defaults.

Under the new loan regulations that are in effect in 2015, a school can only qualify for aid programs if they meet one of the following conditions, for three years in a row:

• At least 35 per cent of their former students need to reduce their debt by at least $1;
• On average, former students need to spend less than 30 per cent of their discretionary income, or 12 per cent of their total income, to pay off their loans.

“While for-profit schools have profited and prospered thanks to federal dollars, some of their students have not,” said Arne Duncan, U.S. Education Secretary.

“This is a disservice to students and taxpayers, and undermines the valuable work being done by the for-profit education industry as a whole.”

In the U.S., for-profit college students make up only 12% of the entire country’s student body. However, for-profit colleges account for a grossly disproportionate 46 per cent of student loan dollars in default.