Federal officials say hundreds of programs at for-profit colleges are at risk of losing federal funding unless their graduates start earning better wages.
On Monday, the Education Department issued its first round of data measuring whether graduates of 8,700 career programs earn enough money to repay their student loans. It stems from the Obama administration’s new “gainful employment” rule, which aims to weed out programs that leave students with heavy debt and light income.
Under the rules, programs are considered failing if their graduates on average pay at least 12 percent of their yearly earnings on student loans, or 30 percent of their discretionary income. Programs can lose access to federal funding if they fail twice within three years, or if they fall into a lower “warning zone” for four consecutive years.
In the first round of ratings, based on students who graduated between 2010 and 2012, more than 800 programs failed and 1,200 others were in the warning zone.