For-profit colleges face viability threat due to Education Department rule.
The United States Department of Education Implements New Regulation with Potential Catastrophic Effects on For-Profit Career Colleges
The United States Department of Education recently finalized a new regulation that critics argue could have dire consequences for the long-term viability of for-profit career colleges. This regulation, known as the ”gainful employment” rule, was swiftly approved less than five months after its proposal in May. Its main requirement is that for-profit and career colleges must demonstrate that their graduates earn enough money to make student loan payments and surpass the income of individuals without a college degree.
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Under this regulation, graduates of for-profit institutions must ensure that their debt payments do not exceed 20% of their discretionary income. Additionally, at least half of an institution’s graduates in a specific program must earn more money than a “typical high school graduate” who did not attend college. Failure to meet these metrics will result in the prohibition of participation in the federal student aid system.
The Biden administration asserts that these new regulations, building upon a similar rule implemented during the Obama administration, will protect students from overwhelming debt caused by education programs that do not lead to viable job opportunities. James Kvaal, the Under Secretary of Education, emphasized the importance of these rules in preventing students from being burdened with unaffordable debt and ensuring they have access to relevant information for making informed choices.
However, opponents of the rule argue that it could severely impact for-profit colleges that offer career training programs to a significant portion of the population. Some even suggest that the Biden administration is intentionally targeting these institutions. Bob Carey, director of the National Defense Committee, claims that the regulation fails to assist veterans who rely on career colleges and instead aims to support traditional higher education institutions.
Gerard Scimeca, chairman and co-founder of Consumer Action for a Strong Economy, warns that the regulation will inevitably lead to the closure of numerous colleges. He believes that the rule will limit options for students seeking skills training at career colleges and technical schools. Scimeca criticizes the Department of Education for punishing students who choose for-profit colleges or vocational training.
Jed Brinton, senior vice president and general counsel for Career Education Colleges and Universities, expressed surprise at the speed with which the regulation was finalized after its introduction in May. Brinton highlights that the department shortened the public comment period from 60 days to 30 days, contributing to the accelerated timeline. However, he still finds the rapid process unusual.
Brinton raises concerns about how the administration perceives for-profit colleges compared to traditional non-profit schools. He argues that an “across the board approach” should be adopted, affecting both for-profit and non-profit colleges equally, if the primary concern is quality. Brinton, who previously worked at the Department of Education during the Trump administration, fears that the rule may force the closure of effective career programs that do not meet the department’s standards.
A spokesperson for the Department of Education declined to provide further comment beyond what was stated in the agency’s press release.
Click here to read more from the Washington Examiner.
Why does the gainful employment rule unfairly target for-profit institutions and ignore similar issues within other sectors of higher education?
It career colleges, potentially leading to catastrophic effects on their operations. The regulation’s focus on income as a measure of success fails to take into account the unique circumstances and goals of students attending for-profit career colleges. These institutions often serve non-traditional students, including those who are working full-time or have other responsibilities that limit their ability to pursue education on a full-time basis. Success for these students may not solely be defined by income level but by other factors such as skill acquisition, career advancement, or job placement in their desired field.
Critics also argue that the gainful employment rule unfairly targets for-profit institutions while ignoring similar issues within other sectors of higher education. Private nonprofit and public institutions could potentially have similar struggles with graduate employment rates and debt burdens, yet they are not subject to the same level of scrutiny and restrictions. By singling out for-profit career colleges, the regulation creates an uneven playing field and perpetuates a negative perception of these institutions, despite their contributions to the education landscape and their ability to provide training and career opportunities to a diverse student population.
Furthermore, the gainful employment rule fails to recognize the progress and improvements made by for-profit career colleges in recent years. Many of these institutions have taken steps to increase transparency, improve graduation rates, and enhance job placement services for their students. By implementing this regulation, the Department of Education risks stalling the progress that has been made and stifling innovation within the for-profit sector.
The potential catastrophic effects of this regulation on for-profit career colleges cannot be underestimated. If institutions are unable to meet the stringent requirements of the gainful employment rule, they will lose access to federal student aid, a crucial source of funding for many students. This loss of funding could force these colleges to scale back their operations, limit program offerings, or even shut down entirely. The ripple effects would be felt not only by the institutions themselves but by the students who rely on them for educational opportunities and the communities that benefit from the jobs and economic impact these institutions generate.
In conclusion, while the intention of the gainful employment rule may be to protect students from excessive debt, its implementation without considering the unique circumstances and goals of for-profit career college students could have catastrophic effects on these institutions. Rather than imposing one-size-fits-all metrics for success, a more nuanced approach is needed that takes into account the diverse student population and the different ways in which success can be achieved. By working collaboratively with for-profit career colleges, the Department of Education can promote responsible practices while allowing these institutions to continue their valuable contributions to the education landscape.
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