Gainful Employment Rule: Effect on For-Profit Schools and Graduation Rates

Gainful Employment Rule: Effect on For-Profit Schools and Graduation Rates

 

For-profit education is beginning to feel the squeeze.  July 2, 2012 marks the day that the U.S. Department of Education rule goes into effect.  This rule restricts students from using government aid to pay for schooling that doesn’t include occupations that have a strong entry-level salary.  

This isn’t the only issue that for-profits are facing.  A loophole has been close that would allow schools to financially reward admission counselors for enrolling students.  This is one of the reasons enrollment is down at some of the major for-profit universities.  This has also led these universities to increase tuition to cover their losses. 

The programs that are considered not high paying enough to meet the Gainful Employment rule will be shut down.  The New York Times reported that accounts for only about 5% of these schools’ programs. What happens to the students already enrolled in them? The Arizona Republic reported  that they are allowed to continue with the program under the “teach out” rule.

Many for-profit universities are implementing new programs to help face their new challenges including:  orientation programs to improve retention, trying to bolster brand awareness, and finding ways to comply with the July deadline to meet the Gainful Employment Rule. 

Many of the guidelines that are changing now are to protect students and to be sure that they are graduating with degrees that will be worth their expense. Politics Daily reported that a study completed by the Committee of Health Labor Education and Pensions found “94.4 percent of students attending for-profit schools take out loans, compared to 16.6 percent attending community college and 44.3 percent enrolled in traditional four-year public schools. Much of that money comes from federal Pell Grants, which help low-income applicants attend schools of higher education, but is often never returned if they don’t graduate.”

It is important that students are able to complete their programs, not only to pay back the loans, but to move ahead in their careers.  The New York Times claimed, The report, “Subprime Opportunity,” by the Education Trust, found that in 2008, only 22 percent of the first-time, full-time bachelor’s degree students at for-profit colleges over all graduate within six years, compared with 55 percent at public institutions and 65 percent at private nonprofit colleges.

For now, for-profit colleges are making some needed changes. The Arizona Republic reported that Peter Wahlstrom of Morningsar, who tracks major for-profit education companies, stated, “What you are trying to do is create a solid program based on academic quality, which, in turn, helps with student outcomes. That helps with retention, that helps with enrollment, and that eventually helps with financial results.”

College Costs . . . Good News Bad News

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image via online.wsj.com

If you are considering going back to college, you may be interested to know that tuition rates are going up.  That is the bad news.  The good news is that the Pell grants are on the rise.  I give a lot of advice about paying for college in my book, The Online Student User’s Manual.  For more information, you can also check out some of my recent articles by clicking here.   

According to an article in WSJ.com by Stephanie Banchero, “The average price of tuition and fees for in-state students at public four-year institutions is $7,605 this school year, a 7.9% increase over last year. At private nonprofit colleges and universities, the average price is $27,293, a 4.5% rise. Two-year state colleges saw a 6% rise to $2,713.”  To read the entire article, click here.