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New Rule Targets College Programs with High Student Debt and Low Pay Outcomes for Graduates

The Biden administration has proposed a new rule that would reduce federal funding for college programmes that leave graduates in debt and with low pay. The rule, which is still undergoing public comment, would mostly apply to for-profit universities. However, certificate programmes at regular universities are also available.

New Rule Sets Standards for College Programs

Programmes would be evaluated using two metrics under the new rule:

  • Loan payback rate: The proportion of graduates who pay back their student debts on schedule and in full.
  • Potential earnings: The median earnings of graduates one year after graduating from the programme. Compared to the median earnings of workers with only a high school diploma in the same state.

Programmes that fail to achieve both of these criteria risk losing federal funding.

According to the Biden administration, the new rule is needed to safeguard students against predatory universities that charge high tuition but provide little value. According to the administration, the rule will also help to ensure that students graduate. With a degree, you can get a good-paying job.

New Rule Targets For-Profit Colleges Over High Student Debt and Low Graduates Wages

For-profit colleges have been chastised for high dropout rates and for leaving graduates in debt and with low wages. According to a 2020 Brookings Institution analysis, for-profit institutions account for only 9% of all college enrollments. However, they account for 40% of all student loan defaults.

The new rule has elicited diverse reactions. The rule has been applauded by certain consumer activists and education specialists. Saying that kids must be protected from predatory colleges. Others, however, have criticised the law, claiming that it unfairly targets low-income and minority students.

The new rule is still undergoing public discussion, and it is unknown when it will be enacted. The rule, on the other hand, indicates that the Biden administration is serious about addressing the problem of predatory universities.

The new rule is a positive move, but it is insufficient. We must do more to address the underlying causes of student loan debt. For example, the high expense of college and the scarcity of affordable housing. We also need to do more to assist students who are having difficulty repaying their debts.