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There’s a big push behind making higher education more accessible. “Earning a post-secondary degree or credential is no longer just a pathway to opportunity for a talented few; rather, it is a prerequisite for the growing jobs of the new economy,” says the education page of the White House website.

For most graduates of for-profit colleges, that’s not working out. Even with their associate’s or bachelor’s degrees, 72% of for-profit programs studied by the U.S. Department of Education produced graduates who earned less on average than high school dropouts.

Since the value of higher education is to improve your career prospects and earning potential, students of for-profit colleges paid a lot of money for a potentially worthless degree.

Look at the numbers: Students at for-profit colleges make up 13% of college students, but they account for 31% of student loans and nearly half of student loan defaults.

Cutting Off Under-Performers

This month, the Department of Education proposed regulations that would give for-profit colleges a chance to improve their students’ ability to achieve gainful employment. Programs that fail to do so will see their federal funding cut off.

The regulations would require these institutions to show their programs meet accreditation and licensure requirements for the careers they market, keep students’ debt-to-earnings and default rates below certain thresholds and disclose to prospective students the costs, earnings, debt, default rates and completion rates associated with their programs.

This isn’t the first regulatory effort made against a for-profit college this year. In February, the Consumer Financial Protection Bureau filed a lawsuit against ITT Educational Services, the parent company of ITT Tech, for predatory student lending.

The Bigger Problem

Consider this: The majority of community college students don’t borrow student loans, but students who graduated from for-profit colleges with an associate’s degree averaged $23,590 in federal student loan debt, according to the Education Department.

But it’s not just for-profit colleges that churn out students with loads of debt. There’s $1.3 trillion of outstanding student loan debt in the U.S., and the default rates at nonprofit colleges, public and private, have continued to rise over the last decade.

Nearly 4.1 million borrowers started repaying their loans between Oct. 1, 2009, and Sept. 30, 2010 (fiscal 2010), and 14.7% defaulted by Sept. 30, 2012 — the previous fiscal year, the three-year default rate was 13.4%.

Breaking it down by institution type: 21.8% of for-profit students defaulted within 3 years, as did 13% of public school and 8.2% of private school borrowers.

Student loans can only very rarely be discharged in bankruptcy, and defaulting on your debt obligations will wreak havoc on your credit scores. It’s best to manage student loan debt from the beginning by not borrowing more than you can afford. If you’re already past that point and struggling with debt, look into an income-based repayment plan, loan consolidation or refinancing, if it’s available. If you want to see how your student loan debt is impacting your credit scores, you can use free tools on Credit.com to check two of your scores for free and see the biggest factors impacting your scores.

More on Student Loans:

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