The Education Department recently finalized a 775-page rule that restricts federal financial aid to proprietary colleges that purportedly fail to prepare students for “gainful employment.” The Obama Administration’s first such rule was blocked in federal court, and Trump Education Secretary Betsy DeVos rolled back its redo.
For-profit college enrollment dropped to 777,400 students in 2021 from 1.7 million in 2010 amid an assault by Obama regulators and Democratic state Attorneys General. The Biden rule could shut down most of the survivors for failing arbitrary metrics that many nonprofit and public colleges couldn’t meet.
The rule’s first prong requires graduates’ debt to be equal or less than 20% of their discretionary income, or 8% of total income. The Education Department bases this threshold on a 2006 paper about student debt and mortgage-underwriting standards, which generally limit a household’s total debt payments to 43% of income.