Obama Cracks Down on For-Profit Programs That Don't Help Grads Get Jobs

'Gainful employment' standards are expected to sift out unpromising degree programs at for-profit and career colleges.

(Photo: Jonathan Ernst/Reuters)

Mar 14, 2014· 1 MIN READ
Stephanie Mercado is a journalism student at Cal State-Fullerton and formerly worked at the UN High Commissioner for Refugees.

In a move to banish diploma mills that leave students with sky-high debt and a credential that can't land them a job, the Obama administration announced Friday that for-profit colleges and vocational programs will have to meet new standards or face closure.

Under a new formula from the administration, degree programs that are rated as poor-performing would be affected; the brunt of the blow is expected to land on programs that advertise on late-night television to train the jobless to become nursing assistants, air conditioner repairmen, and other jobs that don't require a four-year degree.

“We want to protect students from enrolling in poorly performing programs that leave them with debt they cannot pay and a degree they cannot use," Education Secretary Arne Duncan said to Politico about the rule, which is expected to affect about 8,000 programs, including some at community colleges and state universities.

This isn't the first time the Obama administration has worked to advance a gainful employment rule, and analysts expect lawsuits from the for-profit education industry.

The for-profit college industry vowed to fight the president's regulation a day before it was even announced.

In a letter to Duncan on Thursday, Steve Gunderson, president of the Association of Private Sector Colleges and Universities, said students are fully aware of the costs of education and that the programs do not create excessive debt.

“The result is nothing short of financial discrimination that will deny access and opportunity to the very students who stand to benefit the most from postsecondary education,” Gunderson wrote on behalf of the 1,400 educational programs for which his organization lobbies in Washington, D.C.

The federal government annually extends about $22 billion in federal loans and $7 billion in grants to students attending those programs.

"Too many of these programs fail to provide students with the training they need,” at taxpayers' expense and at the cost of these students' futures, Duncan said.