May 14, 2014
Written by: Aamer Madhani
WASHINGTON — As the Obama administration prepares to establish new
rules governing for-profit colleges later this year, student advocates
and the career college industry are waging a fierce battle to shape the
Stakeholders on both sides of the debate are
ramping up their push on the administration just as the public comment
period on a proposed "gainful employment" regulation is set to close May
Under the proposal that the administration unveiled in March,
colleges would have to demonstrate that graduates' debt load on average
does not exceed 30% of their discretionary earnings or 12% of their
In addition, the new rules would put programs
whose graduates have debt-to-income ratios of 8% to 12% or
debt-to-discretionary-income ratios of 20% to 30% in a danger zone,
which would require the schools to warn students that they might become
ineligible for federal aid.
The administration pointed to the fact
that students at for-profit colleges represent about 13% of the total
higher-education population but are responsible for nearly half of all
college loan defaults in justifying their call for the rule.
On one side, student advocates are arguing that the proposal laid out by the administration does not go far enough.
advocates from groups such as Young Invincibles and CREDO Mobile are
calling on the new regulations to include financial relief for students
at institutions that lose eligibility to federal aid, enrollment limits
on poorly performing schools and stricter standards.
the new rules would slow what's going on," said Mike DiGiacomo, 33, of
Randolph, Mass., who racked up more than $85,000 in debt and lent his
story to a CREDO online petition that has garnered more than 100,000
signatures. "But they are really just putting a Band-Aid on the
The for-profits, meanwhile, counter that the proposed
regulations would cut off access to a college education for millions of
students, disproportionately affect programs serving minorities and
veterans and conflict with Obama's call for increasing access to
"The net result ... is that it's going
to eliminate the bridge to education, skills and opportunity," said
Steve Gunderson, president of the Association of Private Sector Colleges
and Universities, the leading group representing for-profits.
also maintains that the Education Department doesn't have the authority
to regulate colleges in this matter and that under the proposed rules,
3.4 million students could be affected by 2020.
At the same time,
the APSCU appears to be bracing for the inevitability of new regulations
and is calling on the administration to modify the metric for what it
considers a failing program.
The group warns that the
debt-to-earning metric doesn't always tell the whole story, noting that
Education Department data show that students in certain professions may
exceed the 12% debt-to-earning metric in their early years out of
school but have relatively low loan default rates.
This isn't the
first time that the Obama administration has attempted to tighten
regulations on the for-profit industry. In 2010, the Education
Department unveiled its first gainful employment rule that offered the
multiple paths for for-profit programs to maintain eligibility.
of tougher rules said that the administration's first attempt was
watered down under intense lobbying by the for-profits, which enlisted
influential Democrats and Republicans including former Obama
communications director Anita Dunn and former Senate majority leader
Trent Lott, R-Miss.
The rule was eventually thrown out by a
federal judge who called the requirements "arbitrary and capricious"
because they weren't based on any economic studies.
Rory O'Sullivan, deputy director of the Young Invincibles, said another court challenge may be inevitable.
do think this rule will stand up to a court challenge," O'Sullivan
said. He added, "The institutions' voices have been heard in this
debate, but I think what we haven't heard enough about is the students
who have gone to these schools, taken astronomical amounts of debt, but
weren't prepared at all for the job market."
Direct Link to article: http://www.usatoday.com/story/news/nation/2014/05/14/obama-for-profit-colleges-gainful-employment-regulations/9089659/