A federal court Tuesday upheld a legislative measure requiring private universities to show that graduates were earning enough to repay their student loans.
The Washington, D.C court ruling means that the government regulations will go into effect July 1, 2015, and the Education Department estimates that 1,400 programs serving 840,000 students will fail the new standards if they do not make changes.
"Today's decision is a win for America's students and taxpayers. Far too often, so-called career colleges leave students burdened with debt they'll never be able to repay and stick taxpayers with the bill,” Education Secretary Arne Duncan stated.
Tuesday’s judicial ruling stems from a lawsuit launched last November by the Association of Private Sector Colleges and Universities, after the U.S. Education Department introduced a bill requiring for-profit universities to prove that the estimated annual loan payment of a typical graduate does not exceed 20 percent of his or her discretionary income, or 8 percent of total earnings.
The APSCU argued that the government-imposed regulations, which require for-profit schools to meet certain standards for graduates’ student loan debt, are “unlawful, arbitrary and irrational.”
However, Judge John D. Bates of the U.S. District Court for the District of Columbia ruled the APSCU "throws a host of arbitrary-or-capricious arguments against the wall in hope of a different outcome. None of them stick."
Seven in 10 students who graduated in the class of 2012 had debt at an average of US$29,400 each, according to a report by the Project on Student Debt.
The United States has one of the largest college-educated populations among developed countries, but the cost of higher education is the highest across all the Organization for Economic Co-operation and Development countries.
Across these countries, men invest about US$50,000 and women about US$40,000 in earning a college degree, counting both their direct costs in tuition and fees and indirect costs of earnings lost while in school.