Obama administration pushes through major college/student loan reform

[Pointedstick]

Color me surprised and happy!

http://www.ed.gov/news/press-releases/o ... e-programs

To qualify for Federal aid, the [current] law requires that most for-profit programs and certificate programs at nonprofit and public institutions prepare students for gainful employment in a recognized occupation. Under the regulations introduced today, a program would be considered to lead to gainful employment if it meets at least one of the following three metrics: at least 35 percent of former students are repaying their loans (defined as reducing the loan balance by at least $1); the estimated annual loan payment of a typical graduate does not exceed 30 percent of his or her discretionary income; or the estimated annual loan payment of a typical graduate does not exceed 12 percent of his or her total earnings. While the regulations apply to occupational training programs at all types of institutions, for-profit programs are most likely to leave their students with unaffordable debts and poor employment prospects.

[...]

The first time a program fails to meet the debt measure it must disclose to students why the measurement was missed and how the issue will be addressed. After missing the debt measure for the second time in three years, programs must inform students that their debts may be unaffordable after graduation, that the program is at risk of losing eligibility to participate in Federal student aid programs, and what their existing transfer options are. After a third failure in four years, the program loses eligibility to participate in Federal student aid programs and cannot reapply for eligibility for at least three years. Under this framework, the first year a program could become ineligible would be 2015, based on its performance in FY 2012-2014.

"We're asking companies that get up to 90 percent of their profits from taxpayer dollars to be at least 35 percent effective," Duncan said. "This is a perfectly reasonable bar and one that every for-profit program should be able to reach. We're also giving poor performing for-profit programs every chance to improve. But if you get three strikes in four years, you're out," Duncan said.

[Libertarian666]

This probably addresses as much as 1% of the problem.
By far the biggest part is the absurdly expensive four-year college degree programs that lead nowhere but to a mountain of debt, and this does absolutely nothing about those.

[Pointedstick]

This new regulation covers traditional nonprofit colleges too.