For-Profit College Industry Continues To Bemoan Recently Enacted Gainful Employment Regulations

A month after the implementation of long-awaited regulations aimed at reining in for-profit colleges went into effect, opponents of the new rules aren’t simply backing away nicely. Instead, they continue push repeal of the new law, saying it unfairly targets the proprietary schools.

Following the failure of two lawsuits to prevent the Gainful Employment Rules, which require that schools demonstrate that its students are making livable wages after they graduate, from being implemented on July 1, for-profit college industry groups and members of Congress have turned to the legislative process to dial back the regulations, claiming the rules are unauthorized, the Charlotte Observer reports.

Appropriations bills in both the House and Senate include provisions to prohibit the Dept. of Education from enforcing the rules, that penalize for-profit colleges if too many of their graduates failed to succeed.

Lawmakers in support of the repeal contend that oversight of the for-profit education industry should be left to Congress and that the new regulations are too expensive to implement.

“It’s better handled in the higher education reauthorization than it would be in some other way,” Missouri Senator Roy Blunt, chairman of the Subcommittee on the Departments of Labor, Health and Human Services, Education, and Related Agencies, tells the Observer.

It’s worth noting that, at nearly $130,000 donated, Goldman Sachs was the second-largest contributor to Sen. Blunt’s campaign in 2014. Goldman owns around 40% of the for-profit Education Management Corporation, operator of schools like The Art Institutes, and Argosy University.

For-profit colleges, which receive about 90% of their funding from student aid, have continually come under scrutiny for failing to demonstrate that students could find gainful employment in the fields in which they had been trained.

Under the gainful employment rules [PDF], for-profit colleges will be at risk of losing their federal aid should a typical graduate’s annual loan repayments exceed 20% of their discretionary income, or 8% of their total earnings.

Discretionary income is defined as earnings above 150% of the poverty line and applies to what can be put towards non-necessities.

So for example, say the typical recent graduate of a career education program earns $25,000. That student would need to average annual student loan payments less than $2,000, or the school would be at risk for losing federal financial aid.

According to the government, about 1,400 programs serving more than 840,000 students would not pass the new accountability standards set forth in the finalized rules.

Still, opponents of the rules continue to argue that they put an unfair target on for-profit colleges’ backs.

Noah Black, vice president of public affairs for the trade group Association of Private Sector Colleges and Universities, tells the Observer that for-profit colleges must now contend with higher scrutiny while private nonprofit universities increase tuition and leave students in significant debt.

He argues that the rules should apply to all universities not just those in the for-profit realm, claiming that if the rules were enforced on every institution some well-known schools wouldn’t meeting gainful-employment standards.

Additionally, the industry says that because it’s students are often non-tradition – older, work full-time or have family to support – their success can’t be measured in a traditional sense.

Despite the industry group’s claims that the rules discriminate against for-profit colleges, those who pushed for the regulations says there’s a reason for that: the schools collect a significant chunk of government dollars through federal student aid, tend to target more vulnerable students and often leave them strapped with debt and few job prospects.

“It’s a big issue,” Connecticut Representative Rosa DeLauro tells the Observer. “They wind up in serious economic difficulty. With high debt, they default. They don’t come out with a meaningful education or degree or certificate that allows them to be gainfully employed.”

Some say the for-profit schools are simply looking at the rules in the wrong light.

Michelle Cooper, president of the Institute for Higher Education Policy, tells the Observer she sees a counterpoint to the industry’s argument, “if you make your programs so good that students who enroll do well, then that’s the biggest selling point.”

Under siege, for-profit colleges cry foul over new federal rules [The Charlotte Observer]