Betsy DeVos Proposes to Free For-Profit Colleges from “Gainful Employment” Requirements!

Dear Commons Community,

Following on the heels of her recent proposal to curtail Obama administration loan forgiveness rules for students defrauded by for-profit colleges, Betsy DeVos is developing a proposal (still in draft form) to eliminate regulations that forced for-profit colleges to prove that their programs lead to gainful employment. As reported by the New York Times:

“Education Secretary Betsy DeVos plans to eliminate regulations that forced for-profit colleges to prove that they provide gainful employment to the students they enroll, in what would be the most drastic in a series of moves that she has made to free the for-profit sector from safeguards put in effect during the Obama era.

The so-called gainful employment regulations put into force by the Obama administration cut off federally guaranteed student loans to colleges if their graduates did not earn enough money to pay them off. That sent many for-profit colleges and universities into an economic tailspin because so many of their alumni were failing to find decent jobs.

The Obama regulations — years in the making and the subject of a bitter fight that pulled in heavy hitters from both parties who backed the for-profit schools — also required such schools to advertise whether or not they met federal standards for job placement in promotional materials and to prospective students.

Now, a draft regulation, obtained by The New York Times, indicates that the Education Department plans to scuttle the regulations altogether, not simply modify them, as Ms. DeVos did Wednesday with new regulations that scaled back an Obama-era debt relief plan for student borrowers who felt duped by the unrealistic appeals of for-profit colleges.

The move would punctuate a series of decisions to freeze, modify and now eliminate safeguards put in place after hundreds of for-profit colleges were accused of widespread fraud and subsequently collapsed, leaving their enrolled students with huge debts and no degrees. The failure of two mammoth chains, Corinthian Colleges and ITT Technical Institutes, capped years of complaints that some career-training colleges took advantage of veterans and other nontraditional students, using deceptive marketing and illegal recruitment practices.

The draft “gainful employment” rule obtained by The Times is the most recent iteration of a proposal more than a year in the making from the Education Department, which as recently as last week had considered preserving at least some of the provisions in the Obama-era regulations, according to officials familiar with the department’s plans. A final rule could look different, and the department plans to solicit public comment on the proposal.

In the draft rule, the department proposes to hold institutions accountable by publishing information on a new federal database, or an existing government website called the College Scorecard. The sites would list student debt burdens, federal loan repayment rates, degree completion rates and the average post-college earnings of alumni, which the College Scorecard already does.

The existing database, created under the Obama administration, includes such data for more than 7,000 institutions, but it does not include program-by-program success rates for such certificates as nursing assistance, cosmetology or auto maintenance, nor does it contain the detailed employment statistics that the gainful employment regulations targeted.

The Education Department wrote in the draft rule that it planned to update the scorecard with information about specific programs for all colleges and universities that are eligible for federal financial aid, “thus improving transparency and providing information to students to inform their enrollment decisions through a market-based accountability system.”

But it would eliminate the powerful threat to withhold access to guaranteed student loans from colleges whose graduates cannot find the work to pay them back. Few higher-education institutions could survive without federal student aid.

“The gainful employment regulations were enacted to protect career college students from being trapped in programs where they incur mountains of debt for little or no benefit,” said Aaron Ament, the president of the National Student Legal Defense Network. “Any attempt to eliminate this common-sense rule is an enormous mistake that will cost students and American taxpayers dearly.”

It has taken almost two years but DeVos is now proving that she and her staff are deep in the backpockets of the for-profit college industry.



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