| WASHINGTON, March 14
WASHINGTON, March 14 For-profit colleges on
Friday criticized the Obama administration's proposal to deny
federal funding to career-training institutions that students
leave with high levels of debt.
The Association of Private Sector Colleges and Universities,
which represents more than 1,400 for-profit schools, called the
proposed rules discriminatory, saying they would
disproportionately affect low-income students.
The Department of Education announced the proposed
regulations on Friday, saying students should not be buried
under mountains of debt by low-performing for-profit career
training colleges that fail to prepare them for a well-paying
"Our students are juggling work, family and school and
desperately need focused academic delivery and flexible
schedules," Steve Gunderson, president of the Association of
Private Sector Colleges and Universities, wrote in a letter to
the Department of Education.
"We should be working together to increase opportunities for
these very students, instead of creating barriers to access and
choice," said Gunderson.
The administration's proposed regulations were "nothing
short of financial discrimination," he added, speaking to
reporters on a conference call.
Gunderson's group successfully challenged a similar
crackdown on for-profit career training colleges in federal
court in 2012, but has not decided whether it would pursue legal
action against the latest rules.
Friday's proposal would impose tougher regulations than
those blocked in 2012, restricting federal loan eligibility from
for-profit programs in which the average debt for a graduate is
more than 8 percent of his or her annual income and more than 20
percent of discretionary pay.
Additionally, for-profit colleges would be ineligible for
federal aid if over a three-year period, 30 percent or more of
their former students were defaulting on student loans. Schools
would also have to publicly disclose program costs and what
graduates typically earn.
Secretary of Education Arne Duncan told reporters at the
White House on Friday that an estimated one-quarter of the 8,000
programs targeted by the proposal would have to close if the
regulation were to take effect today.
The proposal could go into effect as early as July 2015 and
schools would have until the end of 2016 to meet the
requirements, Duncan said.
The White House estimates that 1 million students are
enrolled in programs that would either lose their funding under
the new rules or face the loss of government support unless they
improve their performance.
Some of the largest for-profit colleges are run by publicly
traded companies such as Apollo Education Group, which
owns University of Phoenix, Corinthian Colleges Inc,
and Devry Education Group.
The proposal will enter a 60-day public comment process
before the Department of Education issues a ruling.
Mark Brenner, Apollo Education Group's chief of staff, said
the company plans to tell the administration the for-profit
education sector is being unfairly targeted.
"We maintain that for these regulations to meet the goal of
providing a more transparent framework for students to make
informed decisions, they should apply equally and equitably to
all students at all institutions," Brenner said.
Duncan said for-profit college students absorb a
disproportionate amount of federal student aid. According to
Department of Education data, the schools enroll only 13 percent
of higher education students but account for 31 percent of all
loans and nearly half of all defaults.
"It's a good business model," said Duncan. "But it's not
good for taxpayers and not good for the people joining it."