When the new gainful employment rules take effect later this year, for-profit educators would need to demonstrate that their programs are actually training graduates to earn a living. But a pending piece of legislation seeks to give these schools a free pass to billions of dollars in federal student aid.
In response, a coalition of 45 organizations – working on behalf of students, consumers, veterans, faculty and staff, civil rights, and college access – sent a letter [PDF] to legislators today expressing their strong opposition of the Supporting Academic Freedom through Regulatory Relief Act.
The bill, which was referred to the House Education and the Workforce Committee after being introduced in February, would essentially repeal the recently finalized gainful employment regulation that requires all career education programs receiving Title IV funding “prepare students for gainful employment in a recognized occupation.”
Under the new gainful employment rules [PDF], for-profit colleges will be at risk of losing their federal aid should a typical graduate’s annual loan repayments exceed 20% of their discretionary income, or 8% of their total earnings.
Discretionary income is defined as above 150% of the poverty line and applies to what can be put towards non-necessities.
So for example, say the typical recent graduate of a career education program earns $25,000. That student would need to average annual student loan payments less than $2,000, or the school would be at risk for losing federal financial aid.
The Supporting Academic Freedom through Regulatory Relief Act would repeal those standards and prohibit the Secretary of Education from engaging in regulatory outreach with regard to educational institutions eligibility under title iV of the Higher Education Act.
Among other things the bill aims to ban the “Education Department from carrying out, developing, refining, promulgating, publishing, implementing, administering, or enforcing a postsecondary institution ratings system or any other performance system to rate institutions of higher education.
The coalition groups – which include The Institute for College Access & Success, National Consumer League, and our colleagues at Consumers Union – say that if the bill passes, it would harm both students and taxpayers.
“Congress should be increasing student and taxpayer protections, not scaling them back,” the letter states. “Numerous investigations have revealed widespread waste, fraud and abuse in the for-profit college industry in particular, including deceptive and aggressive recruiting of students; false or inflated job placement rates; and dismal completion rates.”
The group says that the gainful employment regulation, which takes effect July 1, has already had a positive impact, such as propelling many career education programs to disclose e basic information regarding their cost, debt levels, and completion or job placement rates.
“The threat of sanctions under the regulation has already prompted many of the biggest for-profit colleges to eliminate some of their worst programs, freeze tuition, and implement other reforms, such as giving students trial periods before banking their tuition checks,” the group’s letter states.
In addition to repealing protections that would that makes sure students receive the education they pay for, the coalition says the proposed bill would undermine the ban on incentive compensation in higher education.
According to the organizations, the Act would open the possibility that schools could use lies, deception, and other deplorable tactics to pressure students to enroll.
“This legislation would create three statutory loopholes similar to three of the regulatory ones that were just closed,” the letter states. “The last thing Congress should be doing is putting students and taxpayers at greater risk of harm from high-pressure tactics and fraud.”
While the bill still has a long way to go until it is enacted, GovTrack puts the likelihood that the bill will pass at 31%, enough to worry consumer groups.
“Congress should not be repealing rules designed to ensure taxpayer dollars are spent wisely or creating new loopholes for aggressive and misleading recruitment tactics.” the group says. “We need to be cutting wasteful spending, not subsidizing programs that routinely leave students and families buried in debts they cannot repay—and leave taxpayers holding the bag.”
The Supporting Academic Freedom through Regulatory Relief Act isn’t the first attempt to undermine the gainful employment rules.
In 2011, Dept. of Education issued a similar rule that required colleges to show they actually prepares students for gainful employment or risk losing money. However, just a year later, a federal judge blocked major provisions of that rule, forcing the department to start over.
Shortly after the rules were proposed again in 2014, a for-profit college group sued to stop the regulations from being implemented. In November 2014, the Association of Private Sector Colleges and Universities filed a 77-page lawsuit asking a federal judge to strike down the gainful employment rule.
Coalition Letter Opposing the “Supporting Academic Freedom through Regulatory Relief Act” [TICAS]
by Ashlee Kieler via Consumerist
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