New College Debt Rules: Not Yet

The Department of Education announced yesterday that it has not yet made a decision about “gainful employment,” the controversial proposal to 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 over 10 years. The department announced new student-aid regulations on Tuesday. According to an article by Tamar Lewin in the New York Times:

The Education Department… split off and delayed a decision on the most controversial part of proposed new student-aid regulations — the treatment of for-profit college programs whose graduates do not earn enough to repay their loans.

While a package of proposed new student-aid regulations was released Tuesday, a department official said no decision had been reached about what debt-to-income ratio would make for-profit programs ineligible for federal aid.

The regulations released Tuesday cover high school diplomas, the Free Application for Federal Student Aid, compensation for college recruiters, determining who is a college dropout, and the distribution of federal student aid.

But gainful employment is, according to Education Secretary Arne Duncan, on a separate track: “We have many areas of agreement where we can move forward. But some key issues around gainful employment are complicated, and we want to get it right so we will be coming back with that shortly.”

This comes after the for-profit college community has been spending thousands of dollars lobbying for months to pushing an alternative measure under which for-profit schools would merely have to make public graduates’ debt levels and salaries.

The department says it plans to release information about gainful employment provisions later in the summer.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer