For-Profit Colleges Could Lose Lots of Federal Funding Under Education Department's New Regulations

President Obama is taking another try at punishing for-profit colleges that do not effectively help their graduates find work while leaving them in debt.

According to the Huffington Post, the new proposal would cut federal student aid funding for the schools whose evaluations are the worst. It is also another try in a series of attempts to rein in for-profit schools who use taxpayer money to provide inadequate training for future workforce members.

In 2012, leaders of several for-profit schools were on the right side of a court decision that overturned previous standards set by the Obama administration. The U.S. Education Department (ED) will release its latest regulations Friday.

"Too many of these programs fail to provide students with the training they need, at taxpayer expense and at the cost of these students' futures," Education Secretary Arne Duncan told reporters Thursday night.

For-profit colleges can cost students up to twice as much in tuition and fees than a comparable two- or four-year public school. However, for-profit college graduates make up about half of all student loan defaults.

"Colleges should open up doors for opportunity, but students in these failing programs often end up worse off than before they enrolled," Duncan said. "That's simply unacceptable."

According to data gathered by the Obama administration, three-quarters of the nation's for-profit colleges will be implicated in the new regulations. The ED said that many for-profit college graduates are no better off in the workforce than high school graduates, despite a growing earnings gap between diploma- and degree-holders.

Currently, more than a dozen state attorneys general are probing Corinthian Colleges Inc., Education Management Corp., ITT Educational Services and Career Education Corp. for allegations of false marketing practices to attract students to attend.

The new regulations will use two measurements. One will examine the percentage of students who default on their loans and the other will measure graduates' income against their debt.

The new rules will not go into effect until July 2015 and institutions in violation will be levied penalties in 2017 at the earliest. Also expected to go into effect around that time is Obama's higher education reform plan that would rate federally funded schools.