Many will fail to make a profit under the change of profit-employment rules

Under the Biden administration’s proposed profit-employment rules, 40 percent of programs at for-profit colleges will fail, potentially jeopardizing their ability to qualify for federal student aid, according to a new study released Wednesday by the Institute for College Access and Success.

Under the proposed changes, the study found, non-profit colleges will not meet almost twice the standard of profit-employment compared to the original 2014 rules.

Marshall Anthony, director of research at TICAS, said: “The basic economics of a college education, even if a student does not complete it, should be associated with higher earnings than if the student does not attend college.” “Failed GE programs, especially for-profit GE programs, are a significant part of the unequal share of failures, not really ensuring adequate returns to students in their education.”

Profitable employment proposed change

Profitable employment is a metric used by the Department of Education to measure that student loan college graduates leave college in proportion to their relative earnings. This metric is used to ensure that college graduates are not receiving student loan disbursements and to determine which programs are leading to better paying jobs.

For a program to pass the Profit-Employment Rules, it must prove that graduates pay off student loans less than 8 percent of their total income. If a program’s average graduate loan-to-income ratio is more than 12 percent, the program will fail in lucrative employment, and if the program continues to fail for two years, it runs the risk of losing eligibility for federal aid.

The first lucrative-employment rule was repealed in 2019 under the Trump administration, removing the check on the results of educational programs. Proponents of lucrative employment argued that without metrics, colleges বিশেষ especially lucrative colleges-could not be assessed to ensure that graduates were employed with the income needed to pay off their student loans.

“I think there’s a lot of concern, obviously, that there are programs that consistently lead to bad results for their students and there shouldn’t be any programs that lead to bad results for their students,” said John Fansmith, Assistant Vice President American. On official relations in the Council on Education. “So in terms of lucrative employment as a tool to prevent this from happening, I think colleges and universities support it.”

In January, the Department of Education proposed reinstating profitable-employment metrics. As part of this proposal, the department recommends comparing graduates’ earnings with their state’s high school graduates. Under this system, the income of a graduate with a general education degree will be compared with that of a 25-year-old with a high school diploma, as opposed to the loan-to-income ratio. (Research is conducted entirely on graduates, not individually.)

The Department of Education is in talks with stakeholders to reach a consensus on the final language of the new beneficiary-employment rules, through the negotiation rules-making process, which is expected to be completed by the end of the summer. The department is not expected to agree with higher education leaders on this issue.

Some have argued that the proposed changes do not provide equal accountability in all areas of higher education.

“It simply came to our notice then [Education] The department knows this, “said Jason Altmeyer, president of Career Education Colleges and Universities, which represents for-profit colleges. “We fully support accountability which applies across the board, across schools and across sectors, but we oppose profitable employment because it is currently designed.”

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  • Under the proposed new rules, half of the undergraduate certificate or diploma-level general education activities will fail compared to the previous metrics.
  • For profit, about 70 percent of general education will fail undergraduate certificate or diploma-level programs.

One concern with the study’s findings is its impact on black and Latino students, who are more likely to join for-profit institutions and have a higher debt burden.

“The crucial pass-fail rate of the 2014 GE rules, especially for profit, highlights an aspect of systemic inequality,” said Anthony. “Students of color are incongruously burdened by loans assigned to programs that do not pass the GE rules.”

During the epidemic, enrollment in general education activities at for-profit institutions in the 2019-20 academic year consisted of 90 percent black and Latino students. General education programs are usually offered by institutions that enroll unequal numbers of low-income students, such as for-profit and community colleges.

Proponents of general education argue that re-enforcement of this rule would help revive this information about accountability to the Department of Education so that a greater focus can be placed on equity with program outcomes.

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