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Senate democrats were told by an Obama administration official recently that for-profit school that leave students with huge debts even as they benefit immensely from taxpayer subsidized profits will have to follow new rules that are on the way.

The final gainful employment rule was released by the Department of Education recently. According to this rule, student loan debt standards must be met by career education programs by the year 2015. For-profit schools that do not do so will not be eligible for Federal grants and loans. These are the major sources of revenue for these schools.

At least 150,000 students are enrolled by the Education Management Corp based in Pittsburg every year. This includes many schools here including the Art Institutes. Rules are being reviewed to see the extent of impact they can have according to a company spokeswoman.

Many Democrats and advocates were hugely disappointed with the softer final rules that came four years too late. Martha Kanter, the Under Secretary for Education was pressed by Sen. Tom Harkin, D-Iowa on whether gainful employment is sufficient considering the huge debt loads carried by students of for-profit schools.

Ms. Kanter said that a good starting point has been created and some of the shady practices exposed by lawsuits, media reports and committees are being looked into. Some of the disturbing facts revealed include misrepresentation by for-profit schools to potential students about accreditation and costs apart from the illegality of recruiters being paid by companies based on the number of enrolled students.

According to Mr. Harkin, the new regulations are not effective enough. The department is now basing loan repayment scrutiny on a three year default window. Mr. Harkin suggested to Ms. Kanter to change this to a 10 year default window. This is how you can catch schools that default even to 70%, said Mr. Harkin.

For- profit schools on the other hand continue to argue that the administration and Democrats are targeting them in an unfair manner. They say that for-profit schools fill an important void in the system catering to nontraditional students. They say that students are offered career oriented classes that are very flexible.

House Republicans have pushed a bill to stop implementation of the aggressive private and public lobbying campaign initiated by these schools to weaken regulations. Republicans complain that for-profit school hearings are utterly prejudicial and disorganized and are keen on sticking to their decision to boycott them.

According to them, previous hearings show that free enterprise is not supported by the Democrats. Republicans also feel that colleges were shown in an unflattering light through tampering of a Government Accountability Report. Clearly in alliance with this industry, Republicans opine that focus must be more on setting right all areas of higher education where poor job prospects and high student debts are common.

Democrats continue with their firm determination to strictly examine the for-profit sector which educate only 12% of students enrolled and which face the maximum number of student defaults.