When the Las Vegas (and other) media discuss excessive student loan debt held by individuals, one topic that often arises is for-profit universities. These institutions are criticized for essentially taking their students’ government debt dollars knowing full well that the students will either drop out or never find work remunerative enough to pay off the loans or justify the expense of obtaining the degree. The Department of Education (ED) addressed this problem by adopting a government regulation that’s referred to as the “gainful employment rule” (34 C.F.R. § 668.7). Non-for-profit and public higher education institutions are exempt, though that doesn’t mean they don’t suffer from high dropout rates, excessive prices, and poor employment prospects. The gainful employment rule requires for-profit universities’ programs to meet one of three requirements in three out of four consecutive years:
(1) 35 percent of the program’s former students are repaying their loans.
(2) The typical graduate’s annual loan repayment plan doesn’t exceed 12 percent of his or her total earnings.
(3) The typical graduate’s annual loan payment does not exceed 30 percent of his or her discretionary income.
If the rule’s requirements appear easy to meet, that’s because they’re meant to be. The rule isn’t designed to punish underperforming programs; rather, it’s meant to punish severely underperforming programs.
On June 26, 2012, ED released a press release informing the public on for-profit schools’ compliance rates [http://www.ed.gov/news/press-releases/five-percent-career-training-programs-risk-losing-access-federal-funds-35-percen]. Of the 3,695 programs in 1,336 schools, 3,502 programs (95 percent) were in compliance with at least one of the three requirements, leaving 193 programs in 93 schools out of compliance. They have three years to meet one metric or face denial of access to federal student loans.
Obviously, the lenient standards by which ED holds higher education will not help the 65 percent of debtors who are not in repayment, the graduates whose repayment plans take up more than 12 percent of their incomes, and the graduates whose payments are in excess of 30 percent of their discretionary incomes. If you are in these types of situations, it’s important to consult with an experienced Las Vegas bankruptcy lawyer to understand your options. Your loans might not be dischargeable in bankruptcy, but filing bankruptcy may help you get back on track with your student loans.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Freedom Law Firm Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-745-8584 to set up your free consultation.