For-profit colleges face 'gainful employment' rule

WASHINGTON (AP) — For-profit colleges that don't produce graduates capable of paying off their student loans could soon face the wrath of the federal government.

Schools with career-oriented programs that fail to comply with the new rule being announced Thursday by the Obama administration stand to lose access to federal student-aid programs.

To meet these "gainful employment" standards, a program will have to show that the estimated annual loan payment of a typical graduate doesn't exceed 20 percent of discretionary income or 8 percent of total earnings.

The Education Department estimates that about 1,400 programs serving 840,000 students won't pass. Nearly all of these programs are offered by for-profit schools.

Education Secretary Arne Duncan says the department wants to make sure that programs that prey on students don't continue abusive practices.