For-profit colleges may get another break from the Trump administration
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The Trump administration plans to roll back another major Obama-era rule that was created to police the for-profit college industry, according to a proposal issued by the Education Department on Friday.
Education Secretary Betsy DeVos said in her proposal that the gainful employment regulation should be cut entirely, arguing that it wasn’t backed up by research and created burdensome reporting regulations for schools.
Created in 2014, the rule sought to punish for-profit college programs that left graduates with heavy debt compared to their incomes. Programs could be cut off from federal funding if the average debt ratio of their graduates stayed above a certain limit for two out of three straight years.
It also required schools to publicize debt and earnings data for their programs, which aimed to help students avoid programs with poor outcomes.
But DeVos said that, instead of punishing programs, her department plans to give more information to students by publishing earnings data for programs at all colleges and universities, not just those in the for-profit industry.
“Students deserve useful and relevant data when making important decisions about their education post-high school,” she said. “That’s why instead of targeting schools simply by their tax status, this administration is working to ensure students have transparent, meaningful information about all colleges and all programs.”
Her proposal represents the Education Department’s second planned rollback of a major Obama-era rule in a matter of weeks. On July 25, DeVos proposed changes to a regulation that would make it tougher for defrauded students to get their federal loans erased.
Both rules were part of the Obama administration’s crackdown on for-profit colleges, which was fueled by widespread complaints of fraud against chains including Corinthian Colleges and ITT Technical Institute. Both chains collapsed under pressure from Obama officials.
A 2017 study by the Education Department found that more than 800 programs, or about 10 percent bound by the gainful employment rules, were failing to meet its debt threshold. But in June of last year, before any programs lost funding, DeVos delayed the rule and moved to rewrite it.
The Education Department estimates that revoking the rule will add $5.3 billion in federal costs over the next decade.
Arguing against the regulation, the new proposal says it was “more burdensome than previously anticipated” and that officials found “troubling inconsistencies” in the way job placement rates were calculated and reported.
DeVos also questioned the debt ratio that schools were required to meet. The rule gave programs a pass as long as a typical graduate’s debt didn’t exceed 8 percent of his or her total earnings, a debt threshold borrowed from the mortgage industry.
But in the same study that the Obama administration cited in support of that figure, the authors warn that it “has no particular merit or justification” as a student debt ceiling. DeVos cited that warning, saying it raises questions about using the figure as a “critical, high-stakes test of purported program performance.”
Opponents were quick to attack the proposed rollback on Friday, saying it loosens accountability and helps shoddy programs keep their doors open.
“With each new action, Secretary DeVos makes clearer that her allegiances are to for-profit college executives first, taxpayers last, and students never,” said Aaron Ament, president of the National Student Legal Defense Network, a coalition of Obama-era Education Department officials.
James Kvaal, president of the nonprofit Institute For College Access and Success, said the Obama administration’s rule protected students from getting swamped with loans and had already spurred programs to improve.
“The administration put its cards on the table today, and it’s clear that it has little interest in protecting students or taxpayers from excessive, unaffordable student debts,” Kvaal said.
But the news was welcomed by some in the for-profit college industry, which fiercely opposed the rule under Obama.
Steve Gunderson, president of Career Education Colleges and Universities, the industry’s biggest lobbying group, said the proposal widens transparency and “could be the most significant consumer protection for all college students in all colleges and all programs.”
“Now is the time to move beyond ideological attacks on any one sector of higher education and establish a uniform commitment to transparency of outcomes that can stand the test of time,” he said.
The Education Department said it will be gathering public input on the proposal for the next 30 days.