Several College Programs May Shut Down For Violation Of Student Debt Rules


Hundreds of college programs are in trouble with the Department of Education for violating student debt rules. This comes after universities and colleges reportedly have been saddling students with unaffordable debt.

According to Bloomberg, an estimated one in four career training programs at U.S. colleges may lose federal funding for its violation of student debt rules. The Department of Education made the announcement on Monday.

Moreover, the department also disclosed the number of recent graduates who are estimated to have unmanageable debt. The data is part of rules known as the gainful employment regulations.

The rules aim to take a measurement of whether graduates of said career-training programs actually earn enough in the long run to afford their student debt. Affordability, as defined by the Obama administration, is having annual loan payments that do not exceed 20 percent of discretionary income. In other words, it should just be 8 percent of total earnings.

The Department of Education studied typical student debt and earnings information. The data was collected from about 1.2 million recent graduates across over 8,000 career-training programs.

It was found that about 95 percent of 2,042 at-risk programs are at for-profit colleges. There are also over 800 career-training programs across 296 schools which have produced graduates with loan payments that exceed 30 percent of their annual discretionary income or 12 percent of earnings.

BuzzFeed News reported that the cut-off of federal loan for these programs is similar to a death sentence. Thousands of students are currently enrolled at these programs, which is mostly at for-profit schools.

It was noted that the rule was intended to stop taxpayer money from going to "poorly-performing career education colleges." The programs have produced 115,000 graduates in a two-year period.

A whopping 98 percent of the failing programs are at for-profit schools while a quarter may be shut down. A drama program at Harvard University also failed in the investigation.

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