Education Secretary Betsy DeVos Will Allow For-Profit Schools To Continue Offering Programs That Don’t Meet Standards

Earlier this year, Education Secretary Betsy DeVos revealed plans to “reset” the Gainful Employment rule meant to hold for-profit colleges more accountable for the education they provide students. Today, she continued tearing apart the rule, announcing the intention to allow colleges to continue enrolling students in programs that run afoul of the regulation.

In a notice [PDF] published in the Federal Register today, the Department of Education announced that it would “reduce the burden on institutions” by revamping the appeals process for colleges when their programs fail to meet the gainful employment standards for employment after graduation.

The Rule

Under the Gainful Employment rule [PDF], for-profit educators must demonstrate their former students are making a living wage after they graduate.

For-profit colleges are 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 above 150% of the poverty line and applies to what can be put toward 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.

Additionally, institutions must publicly disclose information about the program costs, debt, and performance of their career education programs so that students can make informed decisions.

The rule allows schools found to be in violation to appeal the findings if they believe the program graduates earn more than the federal data indicates.

Changing The Appeal

The Department’s new proposed changes appear to tip the appeals process in the college’s favor.

Currently, a school has 60 days to appeal findings that their programs are in violation of the Gainful Employment rule. In the case of this year, schools had until March 1 to file; however, that date was pushed back to July 1. Under today’s announcement, schools found to be in violation of the rule now have until Feb. 1, 2018 to appeal.

In appealing these findings, a school must base their arguments on surveys that include at least 50% of program graduates or state data that uses at least 30 graduates of the program. Additionally, appeals based on surveys with few than 80% of a program’s graduates must demonstrate the respondents are representative of all grads.

Now when appealing, the schools would no longer have to meet a minimum percentage or number of represented students in their findings. Instead, DeVos would determine what is reliable on her own.

The Department’s notice claims that the changes are being made on a one-time basis to comply with a court order. However, the agency notes that the order only applies to members of the American Association of Cosmetology Schools.

Consumerist has reached out to the Department of Education for additional information on the changes. We’ll update this post if we hear back.

That’s Not Okay

Several consumer advocacy groups characterized the Department’s most recent changes to the rule as an “illegal gutting,” noting the agency has taken action without going through the legally required process to amend regulations.

“The gainful employment rule was extensively deliberated, based on years of evidence and diverse stakeholder engagement, to ensure that students and taxpayers do not bear the financial burden of subsidizing failing career education programs,” Suzanne Martindale, staff attorney for our colleagues at Consumers Union, tells Consumerist. “Today’s actions by the Department are a major step in the wrong direction.  We cannot allow poor-quality programs to operate with impunity when they do little more than saddle students with debt.”

Pauline Abernathy, executive vice president for The Institute for College Access & Success, notes that today’s “unilateral changes illegally gut” the rules, while “opening  the floodgates for schools to use federal taxpayer funds to enroll students in failing programs and reinstate low-quality programs and predatory practices.”

As a result of the changes, TICAS warns that failing programs will be able to continue to enroll students without warning them, and may avoid sanctions entirely based on data that could significantly overstate the earnings of graduates by excluding those with no or low earnings.

The Center For American Progress echoed TICAS’ sentiments, noting that weakening the appeals process is another “extralegal action by the Department of Education to avoid enforcing a rule its political leadership does not like.”

“The lack of any clear standards could let any appeal pass, regardless of how ridiculous or poorly designed it is,” Ben Miller, senior director for postsecondary equation at CAP, said in a statement. “The department should stop putting schools ahead of students and enforce the gainful employment regulation.”

The organizations claim that the Trump Administration’s own filing in response to a June 2017 lawsuit contradicts the validity of today’s changes.

In the filing, the administration notes that “the prospect of future rulemaking has no bearing on the validity of the current gainful employment regulations, which remain in effect unless and until they might be revised.”

“The Department may intend to dismantle student and taxpayer protections by rewriting the regulations, but until new rules are finalized and in effect, the current rule is the law of the land,” Debbie Cochrane, TICAS Vice President, said in a statement.