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.

Comparing Schools for Job Training--Bonus Ohio Goodness

The last post discussed the need to research and compare schools provide training or education. In Ohio, the Jobs and Family Services site has a feature that makes it easier. It's the Site for searching Eligible Training Providers. Click "search by training provider." Then, put in the name of a program, say, for instance, truck driver, in the search box by "program name." Then, under the county search box, click the text that allows you to pick up to five counties. A map appears that allows you to click up to five counties to search for a truck driving program. Pick your counties, click "save and exit," and then click "search." It will come up with those programs, at schools in those counties. Mark the schools that you want on your comparison list, then click "view comparison list." It will show you the costs, fees, accreditation, and length of training for each program. It's a huge help in figuring out the program that best helps you.

Also, when figuring out the potential wages and career outlook for your future, Ohio Labor Market statistics provides lots of information about job pay and growth in particular areas of Ohio. It's a good way to get a realistic picture of what a job will pay and the likelihood of getting it.

For-Profit Schools and You

The Department of Education published proposals to change the rules by which for-profit secondary and vocational schools are eligible for student aid. It’s crucial because for many institution, this eligibility is their bread and butter—no federal aid, no students. The feds have been concerned about the low federal loan repayment rate from students of these institutions (at about 36%, even though the rate for nonprofit and state institutions are not anything to write home about, either—barely more than half). Even worse is a report by the Education Trust, in which they reported that for profit schools have a six-year graduation rate of about 22%.  More to the point, the feds feel that students are oversold on expensive courses of study that will not result in equally high-paying jobs, leaving the Department of Education on the hook for those loans. Under the proposed rules, institutions would have to have a track record of fairly decent repayment among their graduates, and/or their graduate would have to make money that makes them “gainfully employed,” (with a student debt/earning ratio of 12% of their total income, or 30% of their discretionary income. Schools that fall in-between may have restricted eligibility for student aid. The final rules are expected by November 1st.
In the meantime: how do you protect yourself from acquiring an overpriced, worthless piece of paper?
1) Check all the schools in your area for programs in which you are interested. See which ones may be less expensive. See which ones offer different types of aid. How much of the expenses does that aid cover? And, if the aid is in the form of a loan, it’s still not at all worthwhile unless you graduate and make the money to cover it. Could you study the same thing more cheaply at another school in your area? If your library has it, look at the College Blue Book's volume on occupational education, and the volume on college majors to find all schools that carry a particular program.
2) Check out the occupation that you want to enter. Does it require accreditation or graduation from an accredited program? Is the institution you are considering accredited? If not, your education may be entirely wasted, and your job prospects dim. Go to your library and find some national professional organizations for that profession and see if they give accreditation (for instance, the American Library Association accredits library schools. In many places, only graduates of these programs are considered for higher-ranking or even entry positions.)
3) Watch out for the hard sell and misleading information. This problem was featured prominently in the GAO report. If a person from the institution says the occupation is high-paying, there are ways of checking this out. Above all, don’t sign anything right away. If the school is a good deal, it will still be a good deal after a couple of day’s investigation. Also, use sources like the online Occupational Outlook Handbook to see what the job outlook is for that profession, and what you can reasonably expect to make.
4) Does your state require a license to practice that occupation? If so, what are the requirements? Would this school help you obtain them? A good place to start is Govspot. Click on your state and find the part re: licensing. See if your occupation needs a license. Call the state licensing board for that occupation and find out what their requirements are.

***Update***: the U.S. Department of Justice and the states of California, Florida, Illinois and Indiana have filed a massive fraud suit against Education Management, claiming that the second largest for-profit higher education company in the country: "...consistently violated federal law by paying recruiters based on how many students it enrolled. The suit said that each year, Education Management falsely certified that it was complying with the law, making it eligible to receive student financial aid."  Stay tuned.

How Can I Get Money for Work Retraining?

Many people seeking to re-career are hampered by the lack of traditional scholarship money for non-traditional, non-degree education at places that offer certificates instead of 2 or 4 year degrees. How do you get money to go to trucking school, or become a beautician? The Workforce Investment Act (WIA) was created partly to address that. One of the things that sprang out of it was the naming of trade schools around the country as "eligible training providers." This means that students attending these schools are eligible for financial assistance to attend via the Workforce Investment Act. Last week, I listed a website for Ohio.


But you can find WIA eligible schools around the country at the CareerOneStop website. Just click your state to get a search engine to identify schools for that state. Once within a state, you can find different search engines that vary in how they allow you to search: by geography, or field of study, etc.


Other options: if you are a veteran, schools that are approved by the Veteran's Administration for education and job training. Or other things previously mentioned in this blog, as well as proprietary schools (private vocational schools) approved for funding within their state, such as Ohio or Michigan.

Financial Help for Proprietary Schools

Finding money to attend proprietary school is a tough challenge. "Proprietary schools" are private schools that train you for a job or career, and often have certificate programs, as opposed to degrees. Because so many financial aid programs are bent toward a degree of some sort, tech training and trade schools are often left out. To check any school for federal financial aid eligibility, check it against this website. If you want to see if any school in your state is eligible, just go to that website and put in the state, and get a list of all the schools in your state eligible for federal financial aid.

In Ohio, you can find a list of licensed trade schools that are approved for federal benefits. It’s searchable by school or program, such as hairdressing or truck driving. The site is run by the Ohio State Board of Career Colleges and Schools.

In Michigan, a similar list is available at the state website for proprietary schools that offer financial aid.