January 26, 2011
As the Department of Education gets closer to finalizing regulations that would hold for-profit colleges accountable for saddling students with debts they cannot repay, a wide array of civil rights, student advocacy and consumer groups wrote a letter to President Barack Obama on Wednesday urging him to immediately move forward with the proposed rule.
The letter comes in the midst of an intense lobbying and advertising campaign run by the for-profit education sector, which is waging an assault on the so-called “gainful employment” regulations being considered by the federal government. The rules are proposed as a consumer protection measure, aimed at cracking down on schools that leave students unable to repay student loan debts given the low-wage jobs they tend to secure after graduation.
The for-profit sector includes a broad swath of schools, from University of Phoenix and DeVry University to more specialized schools such as Le Cordon Bleu College of Culinary Arts.
“Federal financial aid shouldn’t go to career education programs that consistently leave students buried in debt they cannot repay,” reads the letter, signed by 38 groups, including the National Consumer Law Center, the National Association for the Advancement of Colored People and the National Council of La Raza.
The stakes for the for-profit colleges are huge: Many of the publicly-traded corporations that own such institutions derive more than 85 percent of their revenues from federal student aid dollars. By not meeting the criteria of the new rules, schools could be banned from tapping into federal student aid or be forced to disclose the high average debt burdens to prospective students.