Earlier this month, the U.S. Department of Education released the first debt-to-earnings rates for career training programs calculated under gainful employment regulations. The programs covered include most for-profit programs, as well as certificate programs at private non-profit and public institutions.
In this first year, more than 800 programs failed to meet the gainful employment standards, as defined by estimated annual loan payments for alumni that exceed 30 percent of discretionary income and 12 percent of total earnings. The vast majority of these underperforming programs—98 percent—are offered at for-profit colleges.
In addition, 1,239 more programs are in the grey “zone”, with annual loan payments between 20 and 30 percent of discretionary income and 8 and 12 percent of total earnings. After four consecutive years of failing or “zone” rates, programs will lose federal student aid eligibility.
According to the Department, “when student debt is taken into account, community colleges—where students borrow at lower rates and lower dollar amounts—perform particularly well when matched up against comparable for-profit programs.”
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