House Should Ban Funding for “Gainful Employment” Regulation

The future of the fastest-growing sector of American higher education could be decided this week when Congress considers whether to ban funding for a Department of Education proposal that would cut off the flow of federal student loan dollars to students enrolled at career colleges and universities.

Private sector colleges and universities play a vital role in today’s economy because they provide the specialized training and skills that employers are increasingly looking for in their workers. Without these schools, the labor force will not have the necessary skills to acquire and retain jobs.

Unfortunately, the Obama administration has been considering a proposal called "gainful employment" that would impose unrealistic repayment standards on federal loans to students who attend these schools. If this proposal becomes official, it would likely result in the elimination of financial aid for hundreds of thousands of students at private sector colleges and universities.

The “gainful employment” rule is particularly burdensome for the full-time workers, single parents, returning veterans, adult learners and minorities who are attracted to the way these schools enable them to balance work and family obligations while they pursue a degree. Since many enter career schools from modest backgrounds and are more likely to take on student loan debt on their path to graduation, they are particularly hurt by this short-sighted and ill-conceived proposal. The onerous requirements placed on the schools will result in less educational opportunities for those most in need, including one million African-Americans and one million Hispanic-Americans by 2020.

Simply put, if these students lose access to federal financial aid, they cannot enroll and schools will likely have to close their doors. In fact, one prominent career college — Pittsburgh’s LeCordon Bleu — cited the “gainful employment” proposal as one of the reasons it would be closing next year.

This one-two punch would be devastating on a number of fronts. Local communities would lose employers and students would lose an invaluable educational vehicle enabling them to seek and reach their dreams.

Students at career colleges have a 38% higher completion rate than their counterparts at community colleges and account for a greater percentage of graduates in health care, computer-data processing and other fields, areas that are expected to add 1.8 million new jobs through 2016. Career colleges have proven to be a good value for taxpayers, providing, on average, twice the return on investment for each dollar spent when compared with community colleges.

Ironically, the main backers of the Department of Education’s proposal are not students but a handful of Wall Street financiers who could potentially see a huge windfall if the rule becomes binding. Numerous media accounts (including this Wall Street Journal article) have told the story of how one Wall Street mogul used his influence with the Department of Education to get it to advance the “gainful employment” rule. In his zeal to make even more money, he will be cutting off a potential education lifeline to those who need it most.

This week, a bipartisan group of U.S. Representatives, led by Chairman of the House of Representatives’ Education and Workforce Committee John Kline (R-MN), are expected to offer an amendment to the Fiscal Year 2011 Continuing Resolution that would prevent the Department of Education from funding the implementation of the gainful employment rule.

By voting to block funding for this proposal, the U.S. House would send an unequivocal message that it is serious about giving Americans from all backgrounds the chance to make a better life for themselves, while also demonstrating an understanding that employers should be encouraged to put up “help wanted” signs instead of “going out of business” signs.

By Mario H. Lopez, President of the Hispanic Leadership Fund, an advocacy organization dedicated to promoting free enterprise, limited government, and individual liberty.


House should ban funding for ‘gainful employment’ regulation

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