A new proposal aimed at protecting students would see nearly two thirds of cosmetology certificates offered by for-profit colleges lose federal funding. Over a third of these programs in dental support services and massage therapy would also be at risk.
According to an Associated Press study of U.S. Education Department data, the federal government would crackdown on 22% of for-profit school programs.
The rules that the Biden Administration proposed on Wednesday are designed to punish those programs which leave graduates with low salaries or who have a lot of debt.
Borrower advocates claim that the findings reflect higher education realities -- for-profit colleges have a greater likelihood of leaving graduates with lower salaries, more debt and a greater risk of defaulting on student loans. The Obama administration also discovered that for-profit colleges were responsible for the majority of failed programs when it proposed an earlier version in 2014.
Robert Shireman is the director of higher education at the Century Foundation, and former Obama official. He created an earlier version, called gainful employment, of the rule.
People tend to believe that working in healthcare will earn them a lot of money. Shireman stated that it's true for nurses and doctors, but there are many low-paying jobs in the healthcare industry. He said that it 'does not make sense' to have students use federal loans for cosmetology school, as he believes the schools are better funded by job training programs.
The new rules will not take effect before July 2024 and only apply to for-profit schools, as well as non-degree programs offered by traditional universities. The new rules would evaluate programs on the basis of whether graduates have heavy student debt in comparison to their earnings, and whether they earn more than adults who only hold a high-school diploma.
Federal aid would be cut to programs that fall short of expectations in two out three years. This would have a devastating effect on schools that depend on students using federal financial aid for tuition.
According to the Education Department, this rule will help 700,000 students that would otherwise enroll in one of 1,800 programs with low performance.
For-profit colleges claim that the proposal is biased against them. The colleges note that because the majority of the programs offered by nonprofit colleges are small, the department does not include them in their calculations. It is therefore impossible to determine how many students would pass the test.
Nicholas Kent, Chief Policy Officer at Career Education Colleges and Universities (an industry trade group), said: 'This legislation continues to target institutions and programs that are for-profit, but the methodology allows the vast majority, even those institutions with poor performance, off the hook.'
A trade group representing cosmetology school said that the department uses flawed data, which does not take into account a problem well-known in the industry – the under-reporting income to the IRS.
Cecil Kidd is the executive director of the American Association of Cosmetology Schools.
He said that industry studies had shown the average income to be around $54,000.
He said: 'They are eliminating what we consider to be a great path to prosperity.
According to data analysis, less than 2% private nonprofit programs will fail if the proposed rules are applied to all types.
The U.S. Education Department released data that shows which programs failed in 2019 if the rules had been in place. The data does not represent all programs which would lose federal funding. Programs would have to fail in two of the last three years to be denied federal aid.
The Trump administration rescinded the Obama-era version before it went into full effect. Nevertheless, the rule prompted some programs to close or reduce costs in order to improve student outcomes. Advocates are hopeful that the new proposal has the same impact.
Aaron Ament, former Obama education official and president of Student Defense and cofounder, said: 'I believe this will go a very long way in bringing accountability to the sector.' I think some of the predatory and worst-performing programs may be closed. What I hope for is that these programs improve.
Carnegie Corporation of New York provides support to the Associated Press Education team. All content is the sole responsibility of The Associated Press.