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The battle over for-profit colleges, explained

At for-profit colleges, all students are welcomed—and so is their financial aid.

For-profit colleges have a long history in the US. In the late ’40s, there was an influx of veterans entering higher education institutions, including for-profit schools. In the ’90s, though there were a limited number of them, for-profit or technical schools were a good avenue to learn career skills in a school setting without the inflexibility of attending a traditional four-year university.

Enrollment in for-profit colleges increased dramatically after 2000, fueled by increases in federal student aid, higher demand for college, and slow growth of community colleges and other alternatives. By 2010, private for-profit colleges accounted for about 10 percent of student enrollment at four-year post-secondary institutions in the US — over 2 million students.

For-profit colleges target students from all walks of life, but veterans are particularly enticing. Since the 1990s, federal law has prohibited for-profit colleges and non-degree programs at community colleges from receiving more than 90 percent of their funding from federal financial aid. But a loophole in the ruling means that federal funds obtained through the GI Bill are not included in the 90 percent.

Federal regulators in the Obama administration began cracking down on for-profit schools, since a great deal of their students were defaulting on their federal student loans and investigations revealed overly-aggressive recruiting tactics. Students were dropping out with no degree or graduating without securing jobs, and all the while they still had to pay back loans taken out for school.

But struggling students do have some options to help pay off their federal student loan debt. There are income driven repayment plans or loan rehabilitation if they’ve defaulted.

Check out the video above to learn more about the business of proprietary colleges in higher education and what students need to be aware of before enrolling in college.

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