Education Department Still Pushing Debt to Income Ratio

January 28, 2010

As part of the negotiated rule making process under way this week in Washington, the U.S. Department of Education released a revised draft of regulations intended to determine whether vocational programs and most offerings at for-profit institutions prepare graduates for "gainful employment." In a plan first released this month and discussed on Monday, the department proposed that it would require that students' annual debt repayment load not exceed 8 percent of their average incomes. Several panelists had questioned the department's statutory authority to introduce a debt-to-income ratio and others voiced concerns about the new administrative burdens the proposals would create for institutions. Department officials decided to keep the 8 percent rule in place, one telling the panel that the department would never suggest a regulation that "we don’t think we have the legal authority to do." The department did, though, offer a bit of a concession, proposing that it would take on many of the responsibilities of calculating and carrying out the rule.

Also back on the table Wednesday was the issue of incentive pay for admissions and financial aid officers, which -- though it seemed to progress Tuesday -- again lagged with Elaine Neely, of Kaplan Higher Education, and Margaret Reiter, a consumer advocate, delivering suggestions for greatly differing revisions. Both issues will likely surface again Thursday, as panelists aim to reach agreement on all 14 of the rules related to the federal financial aid program under reconsideration by midday Friday.

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