For-profit colleges will have to prove they're worth the cost by July 2024

ATLANTA - The US Department of Education is cracking down on for-profit colleges that can cost students more than they earn. This new standard will set tighter guidelines and put the squeeze on more than 1,700 schools.

The new federal regulation is the "gainful employment rule" which means for-profit schools and non-degree programs have to be more transparent about the real world value of what students are actually getting out of these programs.

The rule addresses concerns that some of these often expensive programs, which are supposed to help students get better jobs when they graduate, actually leave them with unaffordable student debt and an education that is worth the same as a high school diploma. These schools now will have to prove their worth. They’ll be required to show students the debt they’ll incur and will have to prove to the feds that the students will earn more post-program than peers in the state without that degree or certificate.

This is what the US Education Secretary Miguel Cardona said about this nearly decade-long attempt to lock this in: "Higher education is supposed to be an invaluable investment in your future. There is nothing valuable about being ripped off or sold on a worthless degree."

Miguel Cardona, of the US Dept. of Education, says the new rule for financial transparency protects students from worthless degree programs. (Photo by Joshua Roberts/Getty Images)

If the for-profit school can’t prove its value for two consecutive years, it’ll likely get cut off from federal financial aid. The new reporting requirements take place July 2024.

The Biden Administration suspects as any as 1,700 of the education programs won’t pass the test. That would leave about 700,000 students looking for schools that will give them the post-education career they want and are willing to pay for.

READ THE FULL RULING: Financial Value Transparency and Gainful Employment