In 2010, the Obama administration began a concerted assault on private-sector, for-profit colleges (often called “career colleges”) by, among other means, seeking to establish so-called gainful employment regulations that would restrict students’ access to federally backed loans if students sought to attend career colleges rather than government-run or nonprofit colleges. As Craig Biddle explains in “The Government’s Assault on Private-Sector Colleges and Universities,” these “gainful employment” rules proposed in 2010
would prohibit students from obtaining federal student loans for use at career colleges if a certain debt-to-income ratio or loan repayment rates of prior students of those colleges were deemed by the government to be unacceptable.
As Biddle writes, although government ought not be involved with student loans at all, “Given the government’s legally enforced monopoly on low-price, taxpayer-funded student loans, the government cannot morally exclude students of private-sector universities and colleges from receiving these funds.”
The government’s earlier efforts to impose “gainful employment” requirements were rebuffed by the courts, but, this past October, the Obama administration renewed the assault on career colleges. According to the Department of Education:
Under the regulations . . . , a program would be considered to lead to gainful employment if the estimated annual loan payment of a typical graduate does not exceed 20 percent of his or her discretionary income or 8 percent of his or her total earnings. Programs that exceed these levels would be at risk of losing their ability to participate in taxpayer-funded federal student aid programs.
These regulations intentionally target private, for-profit colleges, as James Marshall Crotty points out in Forbes: . . .