The Department of Education will soon issue new rules about for-profit schools. At issue is the infamous “gainful employment” rule. The rule, if instituted, would make for-profit schools ineligible for federal financial aid if average graduates need to spend more than 8 percent of starting salaries to pay off student loans.
According to an article by Tamar Lewin in the New York Times, for-profit schools are fighting hard to prevent this. As Lewin explains:
“Shouldn’t the Department of Education have to present some facts and figures showing that there’s really a problem with students who have debt-income ratios above 8 percent?” said Harris Miller, president of the [Career College Association]. “They haven’t shown any evidence. And our own research shows that students with high debt-income ratios actually default less than students with low debt-income ratios.”
What? Now I have no particular stake in this issue and eight percent does seem like a more or less arbitrary figure but the Miller explanation seems pretty weak. Isn’t having a high debt-income ratio a financial problem by definition? [Image via]