A massive jump in federal funding to for-profit colleges over the past decade has the Department of Education seriously considering some major cuts. As Bloomberg News reports, federal funding to for-profit schools (e.g. University of Phoenix) has jumped from $4.6 billion in 2000 to $25.6 billion in 2009.

In response, the Department of Education is considering tightening funding rules. The tougher rules, which are expected to be released for public comment in the next several weeks, would require ITT Educational Services Inc., Career Education Corp. and Apollo Group Inc.’s University of Phoenix to show that their graduates earn enough money to pay off their student loans. If for-profit colleges can’t meet the standard, they could lose federal financial aid, which typically makes up three-quarters of their revenue.

The new regulations would pull 300,000 students out of classes and eliminate 2,000 educational programs, according to a study commissioned by the Washington-based Career College Association, which represents more than 1,400 for-profit colleges.

The proposal would reduce opportunities for women and racial minorities who want to go to college, the group said. For-profit colleges have proposed alternative regulations that would require companies to disclose more information about students’ debt and job prospects.

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