For-profit regulations, Pell Grants survive budget compromise

Experts expect lawmakers to keep Pell Grant funding at its current level.

Washington’s last-minute budget deal did not include a provision that would have killed a stringent for-profit college regulation, and Pell Grants remained intact despite deep cuts in education spending over the next six months.

The for-profit regulations pushed by the Obama administration for more than two years would affect some of the nation’s largest online colleges, such as the University of Phoenix and Kaplan University, by stripping schools of federal loan money if too many of their students maintain high loan debt-to-income ratios, among other provisions.

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Although the anti-regulation provision was pushed primarily by Congressional Republicans, a bipartisan letter was submitted April 4 that would have barred the U.S. Department of Education (ED) from implementing the new regulations on for-profit programs.

The provision – or “rider” – to the budget compromise was left out of the final agreement, however, paving the way for gainful employment rules to take effect July 1, 2012, as ED outlined last fall.

The letter supporting the end of gainful employment rules – signed by 12 House members — charged that regulating for-profit colleges would “harm job creation” and prevent 400,000 people annually from entering the workforce with “new skills.”

“These regulations are a clear example of federal overreach into the affairs of American institutions of higher education,” the letter said.