White House Clarifies: No Effective Change to For-profit College Rules

The Obama administration this weekend is making clear that its recent decision to postpone a controversial rule for for-profit colleges will have no influence on its effective date.

The Education Department’s so-called "gainful employment" proposal — designed to ensure that career and professional college students will earn enough to pay back their federal loans — was initially scheduled to be finalized Nov. 1, and to take effect in July 2012.

On Friday, however, the agency announced that the most controversial element of that rule — which will hinge federal aid eligibility on a program’s ability to meet specific debt-to-earnings thresholds — won’t be finalized until early 2011.

The effective date, though, hasn’t changed.

"We’re not postponing anything," Arne Duncan, secretary of the Education Department, told Bloomberg Television on Friday. "We’re going to implement in July of 2012, just like we always said we were going to do.

"What we’re going to do is take the next couple months, rather than announcing something November 1st, [and] come back early in the new year" to finalize the rule.

The delay comes as a direct response to the tens of thousands of public comments the agency received in response to the proposal.

Meanwhile, the for-profit education industry, which is spending millions of dollars lobbying to kill the rule, is cheering the delay in finalization.

Harris Miller, president of the Association of Private Sector Colleges and Universities (APSCU), said that, considering the sheer number of comments, the delay "is the right thing to do."

"This action allows time for careful consideration of the issues involved and the opportunity to avoid issuing a rule that would harm students, job growth and communities," Miller said Friday in a statement.

"We think the hearings the Department of Education will hold on this issue are also a good idea, providing the opportunity for thoughtful analysis and review."

The gainful employment rule has split Democrats on Capitol Hill. Some are warning that the strict debt-to-earnings metrics will harm access to an education for low-income and minority students, who enroll disproportionately in for-profit schools.

Others argue that the stringent limits are necessary to rein in abusive recruitment tactics used by an industry that’s seen explosive enrollment growth in recent years.

Sen. Tom Harkin (D-Iowa), chairman of the Senate education panel, falls into the latter group.

Still, Harkin this weekend also applauded the administration’s delay in finalizing the rule — as long as it doesn’t postpose the ultimate implementation of the reforms.

"As our investigation into the practices of these institutions continues," Harkin said Friday in a statement, "my concerns about the student rates of high debt and low success continue to grow."


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