Some for-profit schools face tougher recruiting restrictions under Obama plan

By Nick Anderson and Daniel de Vise
Washington Post Staff Writer
Wednesday, June 16, 2010

The Obama administration proposed to tighten oversight of the booming for-profit sector of higher education on Tuesday, with rules that aim to curtail aggressive recruiting practices and that require schools to disclose graduation and job-placement rates to prospective students.

But in its notice of proposed rulemaking, the Education Department omitted a draft measure, under debate for several months, that would cut federal aid to those schools if graduates on average spend more than 8 percent of their starting salaries to repay loans.

Administration officials said that the draft measure -- an attempt to define "gainful employment" for graduates -- remained under discussion and that a related proposal would be published in coming weeks. Some industry officials object to the measure, saying it would jeopardize many degree programs at for-profit schools even as President Obama is seeking to raise the nation's college graduation rate.

"We have many areas of agreement where we can move forward," Education Secretary Arne Duncan said in a statement. "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."

Nationwide, enrollment in for-profit, post-secondary schools rose from about 550,000 in 1998 to 1.8 million in 2008. Critics of the schools say too many students graduate with unacceptably high debt, which the industry disputes.

Most of the rules proposed Tuesday would apply to all colleges, public and private, an administration official said. One proposal would end certain types of incentive payments to college recruiters. Another proposal, which targets the for-profit sector and post-secondary vocational programs, would require schools to disclose information about graduation and job-placement rates to prospective students.

The government plans to publish final rules by Nov. 1, and they would take effect in summer 2011.

Among the schools that would be affected is the for-profit Kaplan University, owned by a subsidiary of The Washington Post Co. A Kaplan spokesman declined to comment Tuesday pending a review of the administration proposal.

Sara Jones, a spokeswoman for Apollo Group, which owns the for-profit University of Phoenix, said the company already discloses graduation rates for degree programs but does not release job-placement rates because many of its students work while taking classes.

"We support the U.S. Department of Education's efforts to advance accountability in higher education," Jones said.

Harris N. Miller, president of the Career College Association, which represents about 1,500 for-profit schools, said the administration took "the wrong tack" on incentive compensation for recruiters. But he applauded other proposals. "The secretary and the department are listening," he said. "That's what we want."

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