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Gainful Employment Rules and Financial Aid

The US Dept of Education has finalized their “gainful employment” rule for institutions providing training and education.  The rule is set to go  into effect July 1, 2012.  In brief, the rule is designed to prevent educational institutions from setting students up with enormous debt loads and little opportunity to pay them back.  The rule does this by monitoring the payback rate of students from individual institutions.  The idea is to prevent “diploma mills” from encouraging students to enter programs, pay for them with government sponsored financial aid, and then providing either inferior education or misleading information about employment opportunities post-graduation.  Institutions that fail the test limits will lose access to government sponsored financial aid. Given the reliance of some for-profit education institutions, it will be very interesting to watch the effect that it has on the business of secondary education.  There have been numerous, highly visible articles recently on student debt, so it’s unlikely to be come an unpopular bill.

A fuller explanation can be found in this Wall Street Journal article here.

Filed under: Careers, Demographics

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