Edition 171 - July 2015

USA: "Career colleges" to be held accountable

The US Department of Education is tightening its grip on career training programmes, in the hopes of putting an end to “abusive practices in the career college industry.” In recent years, so-called career colleges – post-secondary, mostly for-profit institutions offering vocational education – have fallen under public scrutiny for failing to deliver on their promise to prepare students for “gainful employment in a recognised occupation.”  Too many students are enrolling at these institutions only to graduate with debt and little chance of paying it back. The new regulations by the Obama administration, which went into effect on 1 July 2015, require all programmes leading to a certificate or diploma to ‘prove their worth’, lest they lose state funding. In order to do this, programmes need to demonstrate transparency and accountability—in short, that they are worth the investment on the part of the student and the taxpayer. 

Transparency measures require institutions to make information public regarding programme costs, completion rates, graduates’ earnings, and their debt, among others. The idea is for prospective students to be better informed consumers of education.  Yet the law goes further: institutions are made accountable, in a very concrete way, for the goods delivered. They need to show that the average annual loan payment of a typical graduate does not exceed 8% of his or her total earnings, or 20% of his or her discretionary income (the money left over once basic necessities have been paid for). Poor-performing programmes – those that fail to deliver – will ultimately lose their ability to participate in taxpayer-funded, federal student aid programmes, which tend to make up the vast majority of the revenue at for-profit institutions. 

The Gainful Employment regulation, originally launched in 2011 (see ACA Newsletter – Education Europe, edition June 2011) was tightened following public hearings, negotiations and extensive feedback. While in 2012 the Department of Education estimated that 193 programmes would not pass the accountability threshold at the time, under current legislation the estimate has grown exponentially. Today, it is estimated that about 1 400 programmes (99% of them for-profit), serving 840 000 students, will need to reform over the next two to four years if they are to keep participating in federal student aid programmes.  

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