New Rules on Title IV Student Loan Schools

As mentioned in a previous post, the federal government was planning to tighten the rules on which colleges and vocational schools are eligible to receive Title IV funding (eligibility for federal student loans).  This has been in response to issues with for-profit higher education institutions that have been accused of creating big debts for students who graduated, got jobs that didn’t pay well, and left the federal government holding the bag for student debt.  The rules have come out.  They are not as tough as originally proposed, but tougher than what is on the books now.  In order to be eligible for Title IV aid (federal student loans), schools must have: at least 35% of their graduates repaying their federal loans, grads must have a debt to income ratio of at least 12% of their total income, and 30% of their discretionary income, for the school to retain Title IV eligibility.  If not, the school loses their Title IV eligibility in 2015.  In other words, they have to have a track record of providing an education that will lead to a good job, and establish a track record of not stiffing the federal government on student loans.

Still, the burden falls on you to check it out ahead of time.  Most specifically, will the amount of debt you take on by borrowing the money to attend be worthwhile?  There’s a couple of ways to do this: check out the actual job prospects and pay levels for a job you are considering training for.  Are there other schools in the area that train you for the same jobs, but cheaper?  Will you actually get the credentials you need to practice your new occupation?  Sources of information on these questions follow.

In Ohio, you can look up which proprietary schools teach particular programs, and then compare them.  Nationally, there is the college navigator, in which you can put in your zip code, the radius you want, and the type of school (public or private, 4 year or 2, etc.), and have a list pulled up for you.  You can find tuition costs, programs, and more, and create lists of schools that you can compare.  If you are looking for retraining-oriented schools, this website will allow you to search for the schools in your state that provide education in particular fields—at least theschools that have been o.k.’d for Workforce Investment Act reimbursement.  Even if there’s no WIA money in your state (more than likely, given the bent of the current Congress), it still gives you an idea of what vocational programs are out there for you to compare.

As for good credentials, remember to check two places: find out (the Occupational Outlook Handbook is a good place to start) what organizations offers accreditation in the field you are thinking of entering, and if licensing is required in your state for the career you want.  If your state licenses this occupation, does the school have requirements that matches your state?  If not, you may spend a lot of money for training that your state--or your new profession's accrediting agencies--don't recognize.