For-profit colleges, which have spent millions fighting the Education Department’s proposed "gainful employment" regulations, have won some major concessions in the final rule, due out today.
Under the rule, vocational programs whose students have the highest debt burdens and lowest loan-repayment rates will become ineligible to receive federal student aid.
The changes, which give colleges more time and ways to meet the rule’s benchmarks, are expected to significantly reduce the number of programs that would be penalized by the department.
Secretary of Education Arne Duncan said the extension was designed to give programs "every opportunity to reform themselves."
"This was not about gotcha," he told reporters in a conference call after the stock markets closed Wednesday. "This gives folks at the margins time to get their act together, but at the end of the day, does not let them off the hook."
But for-profit colleges continued to question the department’s authority to issue the rule and accused the administration of imposing cost controls on colleges.
It’s "basically a back-door way of price fixing," said Harris N. Miller, president of the Association of Private Sector Colleges and Universities.
Supporters of the original rule, meanwhile, were disappointed that it was softened.
"We think the department should have stuck to their guns," said David Halperin, director of the advocacy group Campus Progress, "but it’s a step in the right direction."
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