Coalition for Educational Success Welcomes House Education & Workforce Committee Scrutiny of Gainful Employment Regulation

WASHINGTON — Penny Lee, Managing Director of the Coalition for Educational Success, released a statement today regarding the U.S. House Education and Workforce Committee hearing that highlighted the impact the Department of Education’s "gainful employment" regulation will have on students who attend for-profit career colleges for job and skill training. She also noted the growing bipartisan Congressional opposition to the Department’s regulation.

"The gainful employment regulation doesn’t just represent bad policy, it’s also the product of a deeply flawed rulemaking process. There is strong evidence that senior officials at the Department welcomed the influence of Wall Street short sellers — those who "bet short."

"The Coalition applauds Chairman Kline (R-MN) for his leadership to examine the Department’s misguided regulation and poorly conducted rulemaking process. Chairman Kline, along with members from both sides of the aisle on the Education and Workforce Committee, took an important step today that will ultimately expose the gainful employment regulation for what it really is: a job killer and prime example of regulatory over-reach.

“‘Gainful employment’ will impact millions of disadvantaged and nontraditional students by cutting off their access to federal student loans, thereby blocking a pathway to a higher education and career. Every year thousands of students turn to career colleges for an education and a pathway to a better life. The rule would block access to higher education for over 1.5 million students over the next decade. This is a cost neither the students nor the country can afford. As Rep. Payne said during the hearing, ‘my concern remains that the Department’s rule, as proposed, will limit access to a wide range of proprietary programs’.

“In fact, one witness who spoke on behalf of employers that hire career college graduates, testified that community colleges do not provide the same level of training as career colleges. His biggest fear is the Gainful Employment regulation will eliminate programs that produce a highly-skilled and critical workforce for his company.

“As Chairman Kline pointed out, the Congress has purposely never defined gainful employment and any definition imposed by the Department would have unintended consequences. The Department of Education lacks the authority to redefine the term ‘gainful employment’. During the most recent reauthorization of the Higher Education Act, there was no debate or discussion on a need to further define the term. The Department is attempting to unilaterally redefine the term ‘gainful employment’ that has been in US statute for over 45 years. Rather than single out a particular sector, the Department should focus on challenges facing all of higher education.

“The gainful employment regulation doesn’t just represent bad policy, it’s also the product of a deeply flawed rulemaking process. There is strong evidence that senior officials at the Department welcomed the influence of Wall Street short sellers – those who “bet short” on career college stocks, brought little to the table, but stood to gain billions of dollars financially from greater regulation of career colleges. To date, the small amount of materials the Coalition has received from the Department confirm the lengthy and regular communication between Department officials and short sellers. And yet the Department continues to withhold tens of thousands of relevant documents.

“Recently, a growing list of influential Members of Congress, which includes Senators Enzi, Coburn, Burr, McCain and Isakson along with Representatives Kline, Rehberg, Thompson, and Jackson, Jr., have raised serious questions about the inappropriate influence that short sellers may have exerted on the rulemaking process. With the growing number of doubters and the rising chorus of bi-partisan opposition, we hope that Secretary Duncan will respect Chairman Kline’s request, repeated again at today’s hearing, to put an end to this job-destroying regulation once and for all.”

About the Coalition for Educational Success
The Coalition for Educational Success includes many of the nation’s leading career colleges, serving more than 350,000 students at 478 campuses in 41 states. Career colleges provide training for students in 17 of the 20 fastest growing fields. The Coalition advocates for policies that support wider access to higher education, particularly for non-traditional students including full-time workers, workforce returners, working parents, minorities and veterans.

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