The Trump administration on Friday effectively ended restrictions on the debt students amass in career training programs, loosening federal oversight of for-profit colleges.
In a long-expected move, the U.S. Education Department finalized its repeal of an Obama-era regulation that threatens to cut off federal student aid to vocational programs whose graduates consistently have high loan payments relative to their income.
Although Education Secretary Betsy DeVos has delayed other rules and rolled back guidance issued during Obama’s tenure, Friday’s move is the Trump administration’s first repeal of a higher education regulation.
“The Department’s rules should be designed to support all students and treat all schools fairly. The previous administration’s rule did neither,” DeVos said, in a statement Friday. “All schools should be clear and transparent about their outcomes and all students should have a full range of information available. We’re committed to making that happen.”
It took nearly five years to implement the regulation, known as the “gainful employment” rule, as for-profit colleges petitioned the courts to prevent what they regard as an attack on their sector. The industry found an ally in DeVos, who criticized the rule for targeting schools based on their tax status.
DeVos delayed enforcement of key provisions of the regulation, then suspended the rule, then proposed a rewrite, before deciding to rescind it in August. She said the delays were necessary in light of a federal lawsuit brought by an association of for-profit cosmetology schools seeking exemption. But her actions spawned a series of lawsuits, including one filed by a coalition of 18 Democratic state attorneys general.
All the while, the Trump administration held steadfast to the position that no one group of schools should be subject to heightened regulation, despite what critics say was overwhelming evidence to the contrary.
Although the rule covers vocational education at a variety of institutions, for-profit colleges voiced the loudest objections because a number of their programs were at risk. When the Obama administration issued the rule in October 2014, it had identified 1,400 programs serving 840,000 students that would not meet its accountability standards, 99 percent of them were at for-profit colleges.
Proponents of the regulation say it is a safeguard against schools charging tens of thousands of dollars for programs that cost more than graduates will ever make annually. The regulation also requires schools to inform current and prospective students of total costs, completion rates, graduate earnings and whether they are falling short of the rule.
Shortly after the rule took affect, many colleges eliminated their worst-performing programs, froze tuition and instituted other reforms to improve graduate outcomes. Without the threat of sanctions, supporters of the regulation say there will be no accountability.
Accountability, they say, is critical after the implosions of for-profit Corinthian Colleges and ITT Technical Institute. The closure of those chains, felled by charges of lying about job placement and graduation rates, resulted in hundreds of millions of dollars in taxpayer-funded loan forgiveness.
The Education Department has argued that providing robust information about student outcomes is one of the best ways to hold colleges accountable. Earlier this year, the federal agency beefed up an existing government website called the College Scorecard with more data on graduate earnings, debt and repayment rates.
Friday’s final rule proposed continued updates to and expansions of the website to provide comparable information about all types of programs receiving federal student aid.
“Through our most recent college scorecard update, the Department, for the first time ever, is providing information on 2,100 certificate granting programs and preliminary loan debt information by field of study," DeVos said Friday. “But, this is only the beginning. By the end of the year we will be able to show students how much money they can expect to make after graduation, based on their chosen major or program.”
While advocacy groups and lawmakers have praised the improvements to the website, they say it is no substitute for robust regulation.
“DeVos’s repeal of the gainful employment rule means it is open season for predatory schools to take advantage of students and taxpayers," said Robert Shireman, a senior fellow at the liberal Century Foundation think tank and a former undersecretary of education under Obama. "Schools will no longer risk having their federal funding cut off for loading up students with debts they cannot repay.“
The Trump administration’s repeal represents a major victory for a sector battered by years of declining enrollment, closures and scandals. Enrollment and revenue are rebounding at many surviving for-profit colleges, a testament, some say, to a friendlier regulatory environment under Trump.
Steve Gunderson, president and chief executive of the industry group Career Education Colleges and Universities, said the Education Department’s final rule “commits our nation’s entire higher education system to full transparency." His group represent more than 1,000 for-profit schools.
"Instead of picking and choosing winners and losers in higher education, the Department will make available, in a student friendly and transparent manner, key data points at a program level for all programs at all schools,” Gunderson said.
Because the Education Department missed a critical deadline to repeal the regulation last year, it will remain on the books until July 2020. In the meantime, the federal agency has not been enforcing the rule. It has not produced new data in months because the Social Security Administration, which supplied graduate earnings information, allowed an agreement with the department to lapse.