The Obama administration Friday published regulations that would require for-profit colleges to have at least 45 percent of their former students paying the principal of their loans for the institution to be fully-eligible to receive student aid. Schools with less than 35 percent of former students paying down loans would not qualify for federal aid for new students, The New York Times said.
The Career College Association, which represents for-profit colleges, issued a statement calling the proposed change "unwise, unnecessary and unproven."
About 8 percent of higher-education students currently attend for-profit colleges, but many graduates leave with punishing debt and are unable to earn enough money to repay their loans, the Times reported.
For-profit colleges, which enroll about 8 percent of post-secondary students, received nearly 25 percent of federal student aid in 2008-09 and 90 percent of students in some programs receive federal education loans.
The U.S. Education Department estimated the rules would end loans to 5 percent of for-profit college programs and that 55 percent of for-profit schools would have to warn students they may have difficulty making enough to repay their loans.
Growth of for-profit colleges increased 225 percent from 1998 to 2008, while overall college enrollment rose 31 percent. The Times said the "gainful employment" rules could effectively end programs whose students have the most debt and least likelihood of finding a good job.
The final rules will be published in November after a 45-day comment period.