The federal government will soon start cutting off financial aid to career colleges that saddle students with excessive debt in exchange for worthless degrees or certificates.
The controversial "gainful employment" regulation, which goes into effect Wednesday, mostly targets expensive for-profit colleges, which get up to 90 percent of their revenue from federal financial aid.
"I think this sector has grown markedly and has impacted students more than it did 10 years ago, so we need to up our game and protect those students," says Education Undersecretary Ted Mitchell.
Under the new law, vocational programs must show that they are providing students with affordable training that leads to well paying jobs. They must start reporting their enrollment, tuition, and employment data to the Department of Education, which will determine if they can continue to receive taxpayer-funded financial aid for their students.
A career education program could become ineligible for student aid if graduates have to use more than 20 percent of their discretionary income to pay off student loans. About 1,400 programs that serve 840,000 students would probably fail to meet the new standards, according to a one-year snapshot of data collected by the Department of Education.