For-Profit College-Aid Rules Draw Critics on Both Sides

While the announcement of a set of new federal regulations for for-profit educational institutions wasn’t a surprise, it didn’t make a lot of folks happy.

Last week, the Department of Education (DOE) handed down its final rules for regulating for-profit career-college programs, which have come under fire from critics who say they don’t live up to their promise of employment and saddle students with a disproportionate load of loan debt.

The so-called gainful-employment rule, which ties a school’s eligibility to participate in federal financial aid programs to students’ success and ability to pay down loans, has drawn mixed reviews. Associations representing for-profit schools argue the changes are too onerous, while the schools’ critics say the Obama administration went too soft on them. More details:

About the rules: Last week DOE announced stronger accountability measures for colleges that offer career training program tracks, as well as tougher standards for what’s considered to lead to gainful employment for graduates. The goal is to improve outcomes for students, who often find themselves mired in debt after graduation. “While some are strong, today too many of these programs fail to provide students with the training they need,” Education Secretary Arne Duncan said in comments last week, according to The New York Times  (opens in a new tab). The rule comes in the wake of scandals in the for-profit education sector—particularly at Corinthian Colleges, which shifted its operations  (opens in a new tab) and lost access to federal student aid in the wake of a lawsuit alleging predatory lending practices  (opens in a new tab). Meanwhile, executives at the publicly traded company that runs Grand Canyon University recently said they are considering a move to nonprofit status to erase the stigma of its for-profit business model  (opens in a new tab).

A threat to low-income Americans? The Association of Private Sector Colleges and Universities, which represents for-profit schools, said the new rule will hurt the students it intends to help. “The gainful employment regulation is nothing more than a bad-faith attempt to cut off access to education for millions of students who have been historically underserved by higher education,” APSCU President and CEO Steve Gunderson said in a statement  (opens in a new tab). “Regulations created and issued based on bias against certain institutions have no place in our country.”

A record-keeping challenge? Meanwhile, the American Association of Community Colleges said it supports the spirit of the rule but not the final result. “The nation’s community college leaders deeply regret the fact that, after years of deliberation and two extensive rulemaking processes, the Education Department has issued a rule that involves extraordinary amounts of ‘make work’ compliance at community colleges across the country, at a time when they can little afford it,” the group wrote in a statement  (opens in a new tab) [PDF] released last week.

A potential loophole? Academic groups said the rule leaves open a significant loophole because it applies only to students who graduate. “The regulation is ripe for ma­nipu­la­tion. The majority of students at for-profits don’t graduate. This regulation takes no recognition of their plight, so why even do it?” said Barmak Nassirian, director of federal relations and policy analysis at the American Association of State Colleges and Universities, according to the The Washington Post  (opens in a new tab). Pauline Abernathy, vice president of the Institute for College Access and Success, shared that view, noting to the Times that the rule provides career-training programs with “an incentive to keep graduation rates low, so you’re only judged on your most successful students.”

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