Trade schools have to find grads jobs, or lose financial aid
Graduates have to be able to earn enough money to repay their student loans, or a school risks losing access to financial aid.
Too many poor kids, mostly minorities, are reaching adulthood with little education, no prospect of attending a four-year traditional college and not enough time, money or knowhow to figure out an alternative path through a local community college.
What these students do have is eligibility for government-backed student loans and grants, making them targets for predatory lending schemes that look much like tactics used by subprime lenders during the housing crisis.
"Who else in higher education is educating these students? I have yet to get a cogent answer to this," said Noah Black, a spokesman for the Association of Private Sector Colleges and Universities, or APSCU, a group that represents the $30 billion-a-year industry and sued unsuccessfully to block the regulations.
In addition to loan defaults, state and federal investigations have turned up widespread allegations of fraud and deceptive business practices, particularly in the case of the now-defunct for-profit chain Corinthian Colleges.
Other for-profits too are showing signs of trouble: ITT Educational Services, Education Management Corp., University of Phoenix, Career Education Corp., Kaplan and DeVry University are among those that have disclosed to shareholders that they are or have been subjects of investigations by state or federal authorities.