Consumer Federation of California

The for-profit college industry lost an important legal battle today, when a federal appeals court upheld last year’s lower court ruling in favor of new regulations intended to hold these controversial schools accountable.

One of the most frequent criticisms of for-profit schools is that they charge tuitions similar to private universities, but provide training that could be obtained for significantly less money at community and city colleges. Many students at for-profit colleges take student loans to cover their costs, but these students often have significantly higher delinquency and default rates on their loans.

For nearly half a decade, the U.S. Department of Education has been battling with the for-profit education industry over the so-called “gainful employment” rules, which require schools to demonstrate that a sufficient number of their graduates are going on to earn manageable livings, ideally in their fields of study.

Industry lobbyists were able to scuttle the first attempt at drafting these rules, but in 2014 the government tried again.

In Oct. 2014, the Education folks finalized the rules. Under these guidelines, for-profit colleges will be at risk of losing their federal aid should a typical graduate’s annual loan repayments exceed 20% of their discretionary income, or 8% of their total earnings.

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Tags: For-Profit Colleges, Student Loans