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Colleges in Violation of Government Protocol May Be Cut from Federal Lending Programs

Student loan debt has been a topic of much debate, as a large percentage of millennials been unable to secure work in their chosen fields after graduation. Colleges across the country are coming under scrutiny by the government, and it is being determined whether or not a large number of them will remain eligible for placements under federal assistance. This is important, because the majority of schools have to rely on government programs to supply the funding for students to attend their institution.


A Breakdown of the Numbers


Graduates of Daymar College, for example, pay an average of 30% of their earnings toward student debt, and they only earn $11,000 per year. It is because of debt-to-income ratios like this that the agencies in charge of lending are taking a closer look at the performance of schools across the country.


The universities most at risk are for-profit, and this would mean a significant loss of income for them. Nationwide, 800 institutes of higher learning are facing the prospect of being no longer being eligible for such programs. Schools gave diplomas to 115,000 people in 2015-2016 and did not meet the required criteria for continued participation.


In Violation of Lending Policy


In order to be included, schools had to qualify under the Gainful Employment Rule. This meant that students would generally be able to find gainful employment and that their debt burden would not be excessive. This also was supposed to keep taxpayers from helping to provide financing to schools that were producing poorly. The students’ monthly payments were not to exceed 20% of their income.


It is estimated that 25% of public colleges face possibly having losing their access to programs and that 98% of those with failing statistics are institutions that operate for monetary gain. It has been said that to become ineligible for federal help is “a virtual death sentence”.