The Trump administration set in motion Friday the repeal of an Obama-era regulation that sought to ensure students attending career programs mainly at for-profit colleges do not pile up debt they can’t repay.
The 2014 “gainful employment” rule caps the debt former students amass in those programs in relation to their income after leaving school. Programs that breach the limits over multiple years could be shut out of federal student aid funding, putting schools in financial peril.
When the rule was established, Obama officials said it was needed to protect students from low-quality career programs that provide costly credentials of little value in the job market. Most programs subject to scrutiny under the rule are at for-profit colleges.
Last month, the Education Department signaled its plan to scrap the rule. In its place, the department said Friday it wants to expand disclosure of data on student debt and graduate earnings for programs at all types of colleges through a government website called College Scorecard or a similar online venture. The department said its actions would “improve transparency and inform student enrollment decisions through a market-based accountability system.”
The repeal will not take effect immediately. Friday’s action was a “notice of proposed rulemaking” from Education Secretary Betsy DeVos to solicit comments. The department then must review and respond to the comments. It was unclear how soon that would occur, or when the online data disclosure initiative would begin.
“Students deserve useful and relevant data when making important decisions about their education post-high school,” DeVos said in a statement. “That’s why instead of targeting schools simply by their tax status, this administration is working to ensure students have transparent, meaningful information about all colleges and all programs.”
Congressional Democrats assailed the move.
“The Trump administration’s decision to eliminate — rather than revise or replace — the Gainful Employment rule is yet another example of its willingness to prop up low-quality for-profit colleges at the expense of students and taxpayers,” Rep. Robert C. “Bobby” Scott (Va.), the top Democrat on the House Education and the Workforce Committee, said in a statement.
But the department said the repeal would end federal enforcement that proved unfair to certain sectors of higher education. It said the gainful employment regulations “reinforce an inaccurate and outdated belief that career and vocational programs are less valuable to students and less valued by society, and that these programs should be held to a higher degree of accountability than traditional two- and four-year degree programs that may have less market value.”
The department said students sometimes choose career training at for-profit schools because less-expensive options at public institutions are too far from home or don’t offer classes at a convenient time. “Accordingly, we believe that while it is important for a student to know that a program could result in higher debt, it is not appropriate to eliminate the option simply because a lower-cost program exists,” the department said.
The department also said it “it is inappropriate to penalize institutions” when students choose to take on debt through federally approved lending programs. And it asserted that nonprofit schools are not immune from problems. Sometimes, those schools misrepresent how selective they are, inflate the job placement rates of law school graduates or award credit for classes that never existed, the department said — evidence that “bad acts occur among institutions regardless of their tax status.”
The for-profit sector of higher education has shrunk recently under increased federal scrutiny and as a result of demographic and economic trends. Two for-profit chains, Corinthian Colleges and ITT Technical Institute, have shuttered in the past three years.
In fall 2010 — as the fallout from the Great Recession was pushing jobless adults to enroll in colleges — 2.4 million students attended for-profit colleges. By fall 2016, the total had dropped to 1.4 million.
For public college and universities, enrollment skidded slightly in that time, from 15.2 million in 2010 to 14.7 million in 2016. It rose in the private, nonprofit sector from 3.9 million to 4.1 million.
Steve Gunderson, president and chief executive of Career Education Colleges and Universities, which represents many for-profit schools, said in a statement that disclosing information about outcomes at all types of colleges will benefit all students.
“The issue of gainful employment has endured for nine years and spanned across two presidencies,” Gunderson said. “Now is the time to move beyond ideological attacks on any one sector of higher education and establish a uniform commitment to transparency of outcomes that can stand the test of time.”
But James Kvaal, a former Obama official who is president of the Institute for College Access & Success, which advocates for making higher education affordable, said in a statement that expanded disclosure is no substitute for an initiative that he said would prevent programs from “bilking students and taxpayers.” He said the gainful employment rule has forced colleges to improve. The Trump administration, he said, “put its cards on the table today, and it’s clear that it has little interest in protecting students or taxpayers from excessive, unaffordable student debts.”