CQ TODAY ONLINE NEWS – EDUCATION
June 2, 2011 – 12:11 a.m.
White House Rules Take Aim at For-Profit Colleges
Despite congressional efforts and intense lobbying by for-profit colleges, the Obama administration published controversial new regulations Thursday aimed at curtailing what it calls deceptive marketing and recruiting practices.
The rules, which are slated to go into effect in July 2012, redefine what’s known as “gainful employment.” They would eliminate federal financial aid for programs with a high proportion of students who are not repaying their student loans, or who end up with excessive debt compared with the salaries they can earn.
“These new regulations will help ensure that students at these schools are getting what they pay for: solid preparation for a good job,” Secretary of Education
While the regulations apply to programs at all types of institutions, Duncan said for-profit programs are most likely to leave their students with unaffordable debt and poor employment prospects and therefore will be affected the most.
Duncan underscored numerous changes made in response to industry criticisms of a draft last year, but it was unclear whether Republicans would continue efforts to block their implementation.
“We all want to ensure institutions of higher learning provide a quality education. However, I remain concerned this regulation could undermine an entire sector of colleges in the name of rooting out a few bad actors,” said House Education and the Workforce Chairman
In March, a group of five GOP senators led by
“Nothing changes the fact that Congressional leaders have made it clear that the definition of ‘gainful employment’ is the purview of Congress and not the department,” said Penny Lee, managing director of the Coalition for Educational Success, a for-profit group. “The department’s attempt to arbitrarily expand the definition of ‘gainful employment’ is clearly at odds with the intent of Congress.”
The regulations also drew praise from Rep.
In a briefing on the new regulations, Duncan emphasized that several key changes had been made as a result of feedback to the draft: Poor-performing programs must fail the debt measures three times in a four-year period before becoming ineligible for student aid programs, rather than losing eligibility immediately.
He also said the regulations would get stricter over four years to give schools time to adjust. “We as a country desperately need this sector to succeed,” Duncan said, referring to President Obama’s goal of having the highest number of college graduates in the world by 2020. “This is not about ‘gotcha.’ We really want to give people a chance to reform.”
Harris Miller, president of the Association of Private Sector Colleges and Universities, acknowledged the changes but stopped short of calling them a lobbying victory. Miller said his organization’s outside counsel has advised him that the regulations go beyond the jurisdiction of the Education Department, but he said his group has yet to decide whether to file a lawsuit.
White House Rules Take Aim at For-Profit Colleges
The for-profit industry has spent the last 18 months waging a lobbying campaign against the regulations, pouring hundreds of millions of dollars into advertising and political donations. With largely Republican support, the industry argues that while there are a few bad actors, the regulations would threaten the entire industry. They say they would also keep underserved groups, such as low-income students and single parents, from obtaining post-secondary education.
If lawmakers push ahead with efforts to block implementation, they will face difficult prospects in the Senate, where Harkin has vowed to fight them. And while the for-profit industry has bipartisan backing in the House, the industry has no support from Democrats in the Senate. The industry would need some Democratic backing to bring a bill to the floor.
Currently, the law requires colleges that qualify for federal aid to prepare students for a recognized occupation. Under the new regulations, a program would have to meet at least one of three metrics: at least 35 percent of former students must be repaying their loans; the estimated annual loan payment must not exceed 30 percent of a student’s discretionary income; or the estimated annual loan payment must not exceed 12 percent of a student’s total earnings.
The regulations will also require institutions to disclose their total program costs, loan repayment rates, graduates’ debt-to-earnings ratio and other consumer information to better help students choose a career program.
The Education Department estimates that 18 percent of for-profit programs are expected to fail the thresholds at some point, with 5 percent of them ultimately losing eligibility. Among programs at all institutions, approximately 8 percent may fail the thresholds at some point, with only 2 percent of them ultimately losing federal student aid eligibility.
According to the Education Department, students at for-profit institutions have 26 percent of all student loans but 46 percent of all student loan dollars in default.