The U.S. Department of Education started a firestorm a few months ago with news that it might
enact strict borrowing limits at for-profit institutions. The announced plan would cap borrowing in strictly vocational programs such that a student’s annual debt repayment would not exceed 8 percent of their expected starting salary in that field (i.e. someone pursuing a library science degree would not be allowed to borrow more than $22,600 based upon a starting salary of $38,660). Schools exceeding that threshold could be kicked out of the federal aid programs–a fatal blow for most for-profit schools given the extent to which they subsist on student aid.
But now it looks like the Department is backing down slightly from its tough talk on this matter. According to
reports published in the
Wall Street Journal, the department’s new plan is to keep the 8 percent standard, but provide a safe harbor that allows schools to avoid this penalty so long as their graduation rates are at 50 percent or above and their job placement rate is at 70 percent or above. By contrast, the last version of the proposal
