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Amendment could add to students’ out-of-pocket pay

A last-minute amendment to the House budget bill could result in students of for-profit schools running up more debt than they can reasonably be expected to pay back, it has been claimed.

A last-minute amendment to the House budget bill could result in students of for-profit schools running up more debt than they can reasonably be expected to pay back, it has been claimed.

The amendment was included by Rep. John Kline and Rep. Virginia Foxx during a House session that also saw a reduction in the maximum Pell Grant — the main federal grant given to college students — by $845 per student.

The amendment blocks the Department of Education from enforcing its proposed gainful employment regulation — aimed to protect college students from running up too much debt and then defaulting when they are unable to find jobs after graduation.

One supporter of the gainful employment regulation, Rep. Danny Davis, D-Ill., said the Kline-Foxx amendment “completely stops the Department of Education from any form of oversight of career colleges that educate 10 percent of higher-education students, receive approximately 24 percent of federal grants and loans and account for 48 percent of defaults.”

Opponents of gainful employment argue that it unfairly targets low-income and minority students, who make up a significant percentage of the students at these schools. They also argue that overseeing the operations and finances of for-profit schools will necessitate similar oversight of community colleges.

The budget, with the amendment barring the gainful employment rule, passed by a vote of 289-136.

Applying Wall St. to schools

Terry Connelly, dean of the Ageno School of Business at Golden Gate University in San Francisco, has been studying for-profit colleges from the perspective of someone who worked on Wall Street for 35 years.

He said: “We need a significant rebalancing of risks and rewards for the taxpayer in how these schools use federal money [from loans given to students who default].”

 
 
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