Feds resume effort to regulate for-profit colleges on their ‘gainful employment’ record

The Obama administration resumed a controversial effort Friday to regulate for-profit colleges and certain others that offer career-training programs to help graduates obtain “gainful employment.”

From 2009 to 2011, the administration engaged in a sharp debate with the for-profit education sector and its allies over proposals to crack down on programs that leave graduates with heavy debts that they are unable to repay.

The Education Department issued a rule in 2011 that defined standards for loan repayment rates and the ratio of a graduate’s debt to income. Programs that failed the standards were in jeopardy of being disqualified from participation in the federal student aid, which would essentially shut them down.

But a federal judge in 2012 blocked major provisions of that rule, forcing the department to rethink its strategy.

Now the gainful employment rule has been redrafted, and the department has set a schedule for negotiations with representatives from for-profit colleges and others with a stake in the effort. The first meetings will be held Sept. 9-11. The department says its draft is “a starting point for discussion.”

A quick look at the draft found that it includes standards for debt-to-earnings rates and other language that could generate significant debate. A chart prepared by the department indicated that 974 programs, or 9 percent of 11,359 nationwide, could be found to be “failing” to meet standards in the draft.

The gainful employment issue encompasses for-profit colleges and non-degree career programs at public and private, nonprofit colleges.

Among the largest for-profit post-secondary institutions are the University of Phoenix, Ashford University and the American Public University System.

The Washington Post Co. owns the Kaplan network of for-profit colleges.

Nick Anderson covers higher education for The Washington Post. He has been a writer and editor at The Post since 2005.

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