Such schools have grown from 4 percent to 10 percent of full-time college enrollment since 2000, and the new rule would cover most non-degree programs in public and private non-profit colleges, The Washington Post reported.
The Obama administration had sought changes in the law regarding such educational facilities. One of the most important changes from an earlier draft introduces a multi-year grace period before deficient programs are shut down, officials said.
"The quality [of for-profit schools] here has been very uneven," Education Secretary Arne Duncan said. "There have been some absolute superstars. And there have been some players whose intentions, quite frankly, we doubt."
Leaders in the for-profit educational system weren't overjoyed by the rule changes.
They said such schools provide an education to students who otherwise wouldn't go to a traditional college, and say the gainful-employment rule will hurt students by shuttering programs.
"I want to acknowledge that the department did make changes," said Harris Miller, president of the Association of Private Sector Colleges and Universities. "But we really don't know the bottom-line impact on students and programs."
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