Appellate Court Sides With For-Profit Colleges On Tossing Out A Controversial Rule

For-profit colleges are celebrating a federal appeals court decision that tosses out portions of the U.S. Department of Education's controversial "program integrity" rules.

In a unanimous opinion handed down Tuesday, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit upheld a lower court's decision that struck down a portion of the "state authorization rule," agreeing that colleges had not been given enough time to review it. The ruling also requires the department to revise regulations barring "misrepresentation" in college recruiting and to explain portions of a rule limiting the commissions colleges can pay to student recruiters.

The appellate court's decision comes almost a year after a federal judge threw out a requirement that colleges offering online programs in other states seek approval from each of those states but upheld the department's misrepresentation and incentive-compensation rules. The Association of Private Sector College and Universities, which represents for-profit colleges, appealed that decision last July.

The appellate court's opinion rejects the college association's broad challenge to the rules, but accepts its argument that the misrepresentation rule is too broad and fails to provide procedural protections to colleges accused of wrongdoing. It also orders the department to justify its decision to ban bonuses based on student completion and explain the effect the recruiting rule could have on minority student enrollment.

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