BREAKING NEWS: Online Schools will be regulated by the Department of Education

A spokesman for Senate Majority Leader Harry Reid confirmed on Saturday that the final deal will not include the rider that would have prevented the Obama administration from cracking down on the online school industry.

based on news  Huffington Post,  with additions by Ed: A bipartisan group of House members pushed for a rider in the spending bill that would block the Department of Education from implementing rules that would punish colleges and community college programs for saddling students with debts they cannot repay.  Most of the schools  involved are well known to readers of The AVE .. including places like Ashford, Kaplan and Phoenix.  

Designed as a consumer protection measure, the Department of Education’s proposed “gainful employment” rules would limit federal student aid for programs with a track record of leaving students with high debt burdens. The online  college industry, which relies on such funds for the vast majority of its revenues, has viciously fought the regulations over the past year.

Ed. the relatively lower costs of WGU may exempt it from this regulation because the current text does not require that the graduate get a job.  In other words, if WGU can offer its degrees cheaply enough, this rule .. as currently written .. would not require that they demonstrate that graduates are aided in getting jobs.

It is also important note that WGU is tied to the Republican party, an issue the Ave will discuss later in the week.

“It is imperative that the final (budget bill) retain this important funding limitation,” lawmakers backing the rider, including House Education and Workforce Committee Chairman John Kline (R-Minn.), wrote in a letter to House leaders earlier this week. “These regulations are a clear example of federal overreach into the affairs of American institutions of higher education,”

More than 40 civil rights and consumer advocacy groups wrote to Reid  saying the provision would prevent the Department of Education from doing what was needed “to protect students and taxpayers from the most toxic choices. The Department of Education’s proposed gainful employment regulation recognizes that some current career education programs are so toxic that they doom students to a lifetime of debt burden and waste millions of precious taxpayer dollars,”

Gainful employment rules would apply to career-focused programs at both for-profit and non-profit colleges, but the for-profit college industry has mounted an unprecedented lobbying campaign against the regulations. As drafted, the rules would track students after they leave college and evaluate them in two ways: whether they are paying down the principal on their student loans and whether they have attained an income that allows them to manage debts.

Far from sweeping, the draft version of the regulations would allow degree programs for-profit colleges and other vocational schools to remain fully eligible for federal aid money even if less than half of their students are repaying the principal on their loans. Some could remain eligible even if only a third of students are in repayment.

The Department of Education has not yet released a final version of the gainful employment rules, but is expected to do so within months.

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