Education Department Delays Gainful Employment Proposal

June 16, 2010

worried graduateThe Education Department has announced that it will postpone a highly-controversial proposal which could have caused thousands of for-profit college programs to close.

The "gainful employment" proposal would have cut federal aid to schools whose graduates spend more than 8 percent of their starting salaries to repay student loans, based on a 10-year repayment plan. Officials said yesterday that the draft measure remains under discussion and that a related proposal would probably be announced later this summer.

"We have many areas of agreement where we can move forward," noted Education Secretary Arne Duncan in a statement quoted by The Washington Post. "But some key issues around gainful employment are complicated and we want to get it right, so we will be coming back with that shortly."

The measure's postponement comes after an aggressive lobbying effort by for-profit college officials, who questioned the data used to draft the proposal. In particular, the Association of Private Sector Colleges and Universities--which last week changed its name from the Career College Association--spent millions of dollars trying to communicate the message that the proposal would be detrimental to students and to the country.

APSCU President Harris Miller told Inside Higher Ed that Duncan "has done what he's said and is making sure the proposals help protect students and don't harm them or harm the country, as the original proposal clearly would have."

But although the Education Department held off on the gainful employment rule, it announced other regulations which would most certainly affect for-profit institutions: One rule ends certain types of compensations to college recruiters based on student enrollment. Another proposal requires schools to release information to prospective students including graduation and job-placement rates and details about debt load incurred by students. The new rules will be published in the Federal Register this Friday.

Sen. Tom Harkin (D-Iowa), who chairs the U.S. Senate Health, Education, Labor and Pensions Committee, praised the proposed rules in a statement released yesterday and quoted in The Chronicle of Higher Education. "The federal government must ensure that the more than $20 billion in student aid that these schools receive is being well spent and students are being well informed and well served," he said. "For-profit colleges must work for students and taxpayers, not just shareholders."

Compiled by Yaffa Klugerman


"Education Dept. Will Release Stricter Rules for For-Profits but Delays One on 'Gainful Employment,'" The Chronicle of Higher Education, June 15, 2010, Kelly Field and Jennifer Gonzalez

"Partial' Program Integrity,'" Inside Higher Ed, June 16, 2010, Jennifer Epstein

"Some For-Profit Schools Face Tougher Recruiting Restrictions Under Obama Plan," The Washington Post, June 16, 2010, Nick Anderson and Daniel de Vise

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