5 Things To Know About The Gainful Employment Rule

Career College Central summary:

  • Why is the Department of Education proposing a new gainful-employment rule?
  • Most of the original proposed rule was thrown out by a federal district court in July 2012, after the Association of Private Sector Colleges and Universities, the main trade group of the for-profit-college industry, challenged it in a lawsuit. A judge appointed by President Obama agreed that the department had the right to issue the regulation but said the department had been "arbitrary and capricious" in setting the thresholds for one of the three key criteria it would use to determine whether a program would lose eligibility for federal student aid. Since that debt-repayment measure was closely linked with the two other criteria, the judge vacated those other measures as well, leaving a rule that was basically toothless.
  • Will this new version of the rule satisfy the coalition of more than 50 consumer, student, and veterans groups that have urged the Obama administration to enact an even tougher rule than the one the department unveiled in August?
  • Probably not. Among other concerns, the groups identified what they consider a loophole in the department’s proposal that would have allowed colleges to continue to operate programs even if 99 percent of the students dropped out.
  • Will the latest rule satisfy community colleges?
  • They may not be so happy, either. The colleges still face many of the expense and time burdens of complying with the gainful-employment rule, even though many of their programs are not at risk of failing the rule’s tests. That’s because their programs cost less and don’t require students to borrow as much. Nonetheless, the rule requires all affected colleges to "make public disclosures regarding the performance and outcomes of their gainful-employment programs," the Education Department said in a news release. The required disclosures include information on programs’ costs and their graduates’ earnings, debt, default rates, and completion rates. The community colleges had sought some exemptions for low-cost programs where few students borrow. Even if the rule includes such an exemption—the details on that were not available Thursday night—it probably won’t go as far as the community colleges would like.
  • So is there anything in the new version that advocates for a stricter rule will be cheering about?
  • Yes. According to the department, the new rule would require colleges to certify that each of their gainful-employment programs "meet applicable institutional or program-level accreditation requirements and state or federal licensure standards." That was a priority for veterans groups and other student-advocacy groups concerned that students were finding themselves unable to enter certain careers because the program they had enrolled in wasn't properly licensed.
  • Is this regulation likely to be challenged in court?
  • You bet. Although the department did make some of the changes sought by the Association of Private Sector Colleges and Universities as recently as last Thursday, the group was still reiterating broad objections to the department’s process for developing the latest rule and its expected substance. APSCU, as the trade group is known, has maintained that the criteria "should be set at levels supported by research rather than arbitrarily selected"—the same argument it used in its first, successful lawsuit challenging the rule. And in a letter it sent last Thursday to top White House officials, the association said "no particular research has been cited" by the department for some of the thresholds in the new proposed rule. In a prepared statement, APSCU described the latest round of negotiations over the rule "a sham"—all a pretty clear sign that the group will not let this latest proposal go unchallenged in court.

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