For-profit schools have been the target of cultural and political backlash for billions in earned profit and millions of students left in debt with low job prospects. Now, the US Department of Education is mandating that owners of these institutions will be responsible for making the federal government whole on student loan losses.
From a ED release:
Under this policy, any organization or entity with at least a 50 percent interest in a non-public college that meets certain other conditions will generally join that institution’s leadership in signing the school’s Program Participation Agreement (PPA). The additional signature will be required in cases where the institution has not met financial responsibility requirements, where the school is provisionally certified to participate in the federal financial aid programs, and for schools with significant liabilities for borrower defense or other findings, among other circumstances. This approach will also apply when a group of related owners together hold at least a 50 percent interest. Private colleges will be required to obtain the additional signature(s) when their PPAs are recertified or when undergoing a change in ownership.
US Department of Education
According to the New York Times, the ED will require schools to guarantee repayment in connection with their eligibility to receive federal funds.
