The Obama administration is striking at for-profit colleges and other career-training schools, proceeding with a plan to strip federal funding from institutions whose former students default on their loans at excessive rates, The Wall Street Journal reported yesterday. The move, set to be unveiled Friday, targets schools that fail at their mission of preparing students for what the administration calls "gainful employment" and instead leaves them deep in debt and with weak job prospects. The Education Department's new rules would apply to most for-profit schools and any public-sector institutions. The Education Department proposal reflects one of the administration's boldest moves to tackle soaring student debt, which has nearly doubled since 2007 to about $1.1 trillion. The administration says a disproportionate share of students are coming from for-profit schools that it labels "predatory," luring students to hand over federal aid dollars while failing to deliver meaningful education. The proposal threatens to undermine revenues at major education firms including Education Management Corp., Apollo Education Group Inc., DevRy Education Group Inc. and Corinthian Colleges Inc. Under the plan, programs would no longer be able to accept title IV funds if they fail to meet several metrics. For-profit schools have long denied the charges, saying that they serve many students that other schools would not take.
