Why the Press Ignored House Hearing on “Job-Destroying” Gainful Employment Rule

Republicans in the House of Representatives held a joint hearing on Friday aimed at highlighting the need to eliminate the Obama administration’s "job-destroying Gainful Employment regulation," which they say unfairly targets for-profit colleges. Leading the charge was Rep. Virginia Foxx (R-NC), the chairwoman of the House education committee’s subpanel on higher education, who said that the rule "could severely limit education and job training opportunities for millions of students and inhibit local economic development in communities around the country."

The hearing, which was jointly held by Foxx’s panel and a House Oversight and Government Reform subcommittee, received little attention from the news media (besides this Inside Higher Ed article). For-profit college officials and their allies in Congress will undoubtedly cite this as yet another of example of how the press is biased against the industry. But the reality is that journalists are simply getting tired of the fight over Gainful Employment, and do not find the Republicans’ arguments against the rule to be compelling — especially now that the administration has taken most of the teeth out of it.

As we have previously reported at Higher Ed Watch, the Department of Education last month issued the final version of the Gainful Employment regulation, which aims to stop for-profit colleges from saddling students with unmanageable levels of debt. The rule takes a “three strikes” approach to disciplining the worst programs (those at which fewer than 35 percent of former students are repaying their loans, and where graduates have a debt-to income ration greater than 12 percent of their total income and 30 percent of their discretionary income). Instead of immediately losing access to federal financial aid, as the proposed rule would have required, these programs would have to fail each of these tests at the same time three out of four years in a row before they could become ineligible. In other words, only those programs that are completely irredeemable would be in jeopardy of being thrown out of the Title IV student aid programs.

So how exactly would removing federal student aid eligibility from the most damaging programs cause such economic havoc? The answer is that it wouldn’t. But don’t take our word for it. Here’s what Anthony Carnevale, the director of the Georgetown University Center on Education and the Workforce, said in his testimony at the hearing:

The gainful employment rule is not a job-killer. Institutions are free to allocate their money from non-performing programs to new and higher-performing programs, as indeed prior experience and economic theory predicts that they will. If anything, this regulation improves the labor market, protecting the value of credentials in the market by steering students to proven programs.

What’s more, Carnevale said, the regulation will force schools to improve their programs, and by doing so will benefit the industry overall. “Allowing a minority of non-performing programs to continue is not in anyone’s interest — not the for-profit industry, not the students, and not the taxpayer,” he stated.

Some for-profit college officials have acknowledged that the changes that the Obama administration has pushed will ultimately strengthen the sector. “This period of regulatory change and uncertainty is an opportunity to enhance our programs, processes and systems,” Mark Spencer, a spokesman for the giant publicly-traded for-profit chain Career Education Corporation, recently told the Chicago Tribune. “In the end, our schools will emerge even better prepared to meet the needs of our diverse student populations.”

Apparently House Republicans weren’t interested in exploring this perspective.

The for-profit college lobby won a major victory by forcing the Obama administration to back down from its earlier more-aggressive approach. But the industry is now pushing its luck. The fact that last week’s hearing received such little notice should serve as warning to Representative Foxx and the industry’s other champions on Capitol Hill that their doomsday warnings are just not credible. After all, even the press wouldn’t run with them.


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