October 27, 2021

U.S. Department of Education held the first gainful employment negotiated rulemaking session

dept of educationYesterday, the U.S. Department of Education held the first gainful employment negotiated rule-making session.  Here are some highlights from the proceedings.

  • The morning portion was filled with procedural discussions and yada yada…  The panel rejected three additional representatives to the committee, including:  Florida Coastal School of Law,  U.S. Chamber of Commerce,  Bridgepoint Education.
  • Barmak Nassirian, representing public four-year institutions on behalf of AASCU raised the idea of gainful employment being an upfront requirement giving the Department the ultimate authority to decide what programs should exist at what institutions based on a review of factors, such as market needs, pay sufficiently above the minimum wage to justify the cost, etc.
  • Brian Jones, the general counsel at Strayer University and negotiator on behalf of publicly-held institutions explained the new program approval process and the role of accreditors in response to Nassirian’s proposal.
  • Ray Testa, from Empire Education Group, questioned whether there is a need to define gainful employment since it has been around for a long period of time.
  • Belle Wheelan, the president of the Southern Association of Colleges and Schools Commission on Colleges, raised a similiar issue when talking about being unable to control the economy or availability of jobs.
  • Testa raised concern on an institution’s inability to limit borrowing by students. In the previous GE regulation, the Department recognized this problem and allowed for amounts to be limited to tuition and fees in the calculation. That cap was deleted in the new proposal put forward by the Department.
  • The community college negotiator also raised concerns with students over borrowing for living expenses and not for education expenses – a common theme.
  • Marc Jerome from Monroe College explained why the debt-to-earnings ratios don’t work, in part, because of the retroactive nature of the calculation. Changes an institution makes today to reduce debt won’t help the student who has already completed; since debt is all that matters, programs may fail the calculation even though institutions have reduced debt for current students.
  • Nassirian suggested that when institutions have programs in the zone (not passing but not failing) institutions should be required to take action such as, post a letter of credit, not pay dividends or freeze executive compensation.
  • Nassirian turned the discussion to marketing and advertising and suggested targeting institutions that spend more on those activities than on education/instruction.

Testa raised several issues directed at the retrenching of the Department in this version of the regulation as compared to the previous one. He challenged the use of the eight percent standard for the annual debt-to-earnings ratio; the exclusion of non-Title IV students and the reduction in cohort size from 30 to 10, among other things.

Media coverage
The Chronicle of Higher Education, Inside Higher Ed and Politico were all in attendance for various portions of the session, we will circulate their coverage tomorrow in the APSCU morning media clips, as well as tomorrow’s update. Bloomberg, PoliticoNPR and Inside Higher Ed all published preview stories this morning.

APSCU content
APSCU continues to push messages and content that supports the press statements we made on September 5 and August 30. In advance of today’s session, we provided a list of questions to the negotiators for our institutions. Many of the issues were raised in this afternoon’s opening discussions.

 

A judge ruling vacated a core element of the “gainful employment” rule!

A federal judge’s weekend ruling vacating a core element of the “gainful employment” rule was welcomed Monday by the for-profit college industry.  Many see this as vindication of their challenge to the controversial rule.

The decision however, affirmed the Department of Education’s authority to issue the rule, and advocates for tougher regulation including calling on the government to respond with new guidelines that would not be rejected for lack of a “reasoned basis.”

In striking down the regulations the court stated the following,
“The debt repayment standard was not based upon any facts at all. No expert study or industry standard suggested that the rate selected by the Department would appropriately measure whether a particular program adequately prepared its students. Instead, the Department simply explained that the chosen rate would identify the worst-performing quarter of programs…That this explanation could be used to justify any rate at all demonstrates its arbitrariness…This is not reasoned decision making. (“[I]n the absence of any reasonable justification,” the court “must conclude that this aspect of the [rule] is arbitrary and capricious.”
APSCU v. Duncan, pg. 31, 11-1314 (RC) (6/30/12)

Weighing Next Steps

A spokesman for the Education Department said Monday that officials there would decide “very shortly” whether to appeal the ruling, develop new regulations, or “do both.”

the courts decision can be found here: https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2011cv1314-25 

chronicle article here: http://chronicle.com/article/Ruling-on-Gainful-Employment/132737/

APSCU letter to Arne Duncan in response to the ruling here: http://apscu.informz.net/apscu/data/images/documents/lettertosecretaryduncan07012012.pdf

 

Debate on Gainful employment from the linkedin group on forprofit education

 The following are some snipets from the linkedin group on forprofit education:

 Here is one company that in my opinion has put their money where their mouth is. Congrats to Corinthian Colleges, Inc. (CCi) for putting on the armor and marching onto the battlefield!

We can only impact this with hard work. Thank you for the letter (I heard it was 80k, 68k of which argued against).

  I admire Corinthian for taking a stand on this discriminatory DOE Gainful Employment ruling. The rhetorical question is why is this not being applied to non-profit colleges and universities also?

The full page ad and quarter page ads that Corinthian placed in last Sunday’s New York Times (September 19, 2010) should have been paid for by a coalition of for-profit schools. But, my hat is off to Corinthian to have the courage to do what others have not done. Recommend the web-site www.mycareercounts.org to everyone, please.

 • I agree — the Corinthian ad appeared in the Seattle Times as well. The fact that seems to get lost in the wash are the tens of thousands of grads who have started successful careers outside the ‘traditional’ public and ‘not for profit’ systems. Many who could not have been or would not have been successful anywhere else.
 • Next will be the campaign from CCA…
 I certainly think that these policies would have more legs if also applied to the traditionals or “not-for-profit”. The reality is that “not-for-profit” still profits in many ways that are overlooked. Take a look at the compensation of College Presidents and coaches. Take a look at the money they get both privately and publicly and how it is spent. In times when public universities are cutting classes at the expense of their students, they still continue to raise tuition and give the Regents and presidents large pension packages.
 • I had also heard that Kaplan University had placed a similar ad. I have not found a good source to view the text of the Corinthian ad or the Kaplan ad. I would appreciate it if one of you would be able to provide a link pointing me to site providing this.
• Good point,  They also do not contribute tax dollars, something America is quite short on…

 • You need to look at trends on a global basis -and over a long term.
After 40 years in industry, I’ve noticed that a lot of people worry about where thengs are heading; but inevitably, they end up going somewhere unpredicted….and as the decades roll past, this all happens faster & faster.
I decided 10 years ago to cut loose from “government accredited education” and make our business of education much simpler…. provide the best learning experience, charge a reasonable price, take on board students and staff who are like minded, and don’t worry about the things that keep complicating the rest of the industry. This formula works. Politicians are never light on their feet….but small businesses are. Politicians are never going to kill “for profit education” ….they can try, but it is not in their nature to have any capacity to do so.


 • If you want to review nearly everything that’s appeared on this topic, go to:

http://www.intered.com/for-profit-regulation 

  •  • – some really smart people said the same thing about the student loan industry as well. Politicians are professional manipulators (starting with the campaign/election process) and socializing sectors like education IS in their nature…and companies like Sallie Mae would certainly disagree with your assessment of their “capacity”. 

    I appreciate your point of the publics and not-for-profits not being tax paying entities. So true that the for-profits “re-invest” into the country’s tax pool.

• I think the politicians are influenced heavily by the kings of the non-profit world. For-profits are starting to eat their lunch and they are afraid. They might have to tap their endowments (profits).

 •  CCA should have expresed outrage over this months ago. I have no confidence in their ability to speak forcefully for the for-profit industry.
 • I am new to this thread but I find the discussion fascinating.  to your point: how is it feasible that the non-profits are not to be held to similar standards? The criteria for inclusion, as far as I can see, is not whether you are a for-profit educational institution, but whether your students are recipients of financial aid from the Federal Government. Obviously, if I am correct in this, then the “non-profits” are clearly to be held accountable to a similar standard. So, if my kid wants to study Latin at the University of Wisconsin, is the DOE going to force the college to explain the potential gainful employment my kid is likely (NOT) to receive as a result of such an education? Are there any public educators out there reviewing this discussion? I would love to see your comments to this along with the group’s active participants.
 •  – Public educators are not overly concerned. This is a one-sided attack…always has been. The attack is designed to help the public educators by eliminating the private sector competition. Public educators know they could never survive were they held to the standards for-profit schools are held to. So they stay out of the battle as they are secure being out of the line of fire. I have YET TO HERE the DOE make a cogent argument as to why these standards only apply to the for-profit sector. Please…ask them. Maybe they will provide you with an answer.

 • I have posted the question to the Linked In White House group as well as sending an email directly to: AskArne@ed.gov. I will keep this group posted when a response is received.

• Hi, this attack is geared specifically to the for-profit sector. As far as not being held to the same standards…For-Profits have a minimum standard for their completion rates, placement rates, and student default rates to maintain our accreditation and ability for Title IV funding. They are also starting to ding us if the student waives placement because they are GAINFULLY EMPLOYED in a field other than what they studied at your institution. How is that fair? The students waives placement and the institution gets dinged on their placement rates. When was the last time you heard publics being held to these standards. BTW, how much placement assistance did your son with his Latin degree receive upon graduation??? And thank you for posting the question to Arne.
 • Have governments got so much money to spare that they have to focus on damaging for profit education; -which in turn will increase their own cost of providing education.

• They think they can redirect the Title IV money to build a community college system.

 • He is right; the administration figures it will take two years to take out the for-profits, so they’ll be “stimulating” the community colleges in the meantime to expand to accomodate the influx of students. Ahhh, more students fot THEM to abuse.

 • I will withhold further comment on the government’s capacity to do what we do…
 • Many politicians operate with the notion that the best defense is an offense – any offense, regardless of how offensive. In my opinion, this attack on for-profit education is not so much an attack on “for-profit” as it is a defense to prevent an informed constituency from asking deeper, more meaningful questions about political leadership and education. Those deeper questions might be:
1. Where is our national education agenda?
2. Why is education still considered a local issue when it is so clearly a national issue?
3. Why are we still burning billions of education dollars on local level administration in the non-profit (public) education system when that model is so clearly broken?

And on and on and on.

 • Diversity is very important.
I always found as an employer, that the best work team is one made up of people who each have a very different education.
It is wrong to assume that there is one, single, best way of educating people.
Different people learn in different ways.
Everyone has differentr priorities in their lives at different times
Diversity in education breeds innovation in graduates.
All too often though, we try to find a “single framework” and exclude everything on the fringes -that is a big mistake if you want your country to continue to develop.

Isn’t it interesting that big, diverse countries, with less “national strategies” like India and China, are growing faster than America and Europe.

 
• I have received a prompt response from the Department of Education (POSTED BELOW). It raises some of the same questions:

1. Are non-profit (besides community colleges) educational institutions held to the same standards as for-profit institutions?

2. It appears that community colleges will be evaluated on the same playing field according to the response below? Correct?

Department of Education
to me

show details Oct 1 (3 days ago)

Recently you requested personal assistance from our on-line support
center. Below is a summary of your request and our response.

If this issue is not resolved to your satisfaction, you may reopen it
within the next 14 days.

Thank you for allowing us to be of service to you.

Subject
—————————————————————
“Department on Track to Implement Gainful Employment Regulations”

Discussion Thread
—————————————————————
Response (Monica Bates) – 10/01/2010 03:44 PM
Dear Mr. XXX,

Thank you for contacting the United States Department of Education through AskArne@ed.gov.

The Department’s proposed regulations will hold programs accountable for preparing students for gainful employment and ensure program integrity in higher education.

As proposed, the graduation rate and job placement disclosure rule would require proprietary institutions of higher education and postsecondary vocational institutions to provide prospective students with each eligible program’s graduation and job placement rates, and that colleges provide the Department with information that will allow determination of student debt levels and incomes after program completion.

As proposed, the approval of additional programs rule would require institutions to provide: 5 year enrollment projections; documentation from employers not affiliated with the institution that the program’s curriculum aligns with recognized occupations at those employers’ businesses; and that there are projected job vacancies or expected demand for those occupations at those businesses before new programs can become eligible to participate in federal student aid.

Additional information on the Department’s planned public sessions will be released in the coming weeks.

Once again, thank you for contacting the United States Department of Education.

Sincerely,

Information Resource Center
Office of Communications and Outreach
United States Department of Education
400 Maryland Ave, SW, LBJ
Washington, DC 20202-0498

Customer – 09/29/2010 11:56 PM
——————————————-
From:]
Sent: Wednesday, September 29, 2010 10:45:48 PM
To: Ask Arne
Auto forwarded by a Rule

“Department on Track to Implement Gainful Employment Regulations” (attached): I posted the following question today on the Linked-In For-Profit Education Industry Group:

I am new to this thread but I find the discussion fascinating. Sally, to your point: how is it feasible that the non-profits are not to be held to similar standards? The criteria for inclusion, as far as I can see, is not whether you are a for-profit educational institution, but whether your students are recipients of financial aid from the Federal Government. Obviously, if I am correct in this, then the “non-profits” are clearly to be held accountable to a similar standard. So, if my kid wants to study Latin at the University of Wisconsin, is the DOE going to force the college to explain the potential gainful employment my kid is likely (NOT) to receive as a result of such an education? Are there any public educators out there reviewing this discussion? I would love to see your comments
to this along with the group’s active participants.

I was challenged by a member of the group to directly ask our government how such an inequity is possible. I look forward to a response which I will forward to the group. Thank you.

 • Well, I finally took the time to find an article on the latest default rates. If you want to know the source, you can find it at

http://money.cnn.com/2010/09/13/pf/college/student_loan_default_rate/index.htm

“Student loan default rate creeps higher”

The most important revelation in this article for me is found in this paragraph:

Graduates of public colleges defaulted at a rate of 6%, up from 5.9% a year earlier. Students coming from private schools had a 4% default rate, up from 3.7%. The default rate for borrowers at for-profit schools, however, rose to 11.6% from 11% a year earlier.

OK, people, what gives? Why is the rate of default so much higher for for-profit schools? A demographic group with fewer moms and dads able to help out in tough times?

 • – at the risk of sounding condescending, if you aren’t familiar with the different demographics served, you should do some homework. Working adults, unemployed adults, under-employed adults and a high percentage from economically-challenged families vs. 18-22 year old students predominately from middle to upper-middle class homes, and you ask what gives?
  •  –
When you preface a comment in such a way, then you can assume the reader understands your intent. I would recommend leaving your emotions and condescensions for the government and just try be a real and honest guy here. Just a thought.

Nonetheless, that is exactly what I assumed the rebuttal to be. As I sent you in an email, is there any rate of default that would shock anyone from this group (people in the for-profit space)? In other words, if the default rate were 50%, would that concern you? At what rate (or rate discrepancy) would we expect/want the DOE to step in?

When do we have another mortgage crisis developing versus when do we have an over-zealous government agency?

 • It has been required for many years that for-profit schools manage their default rates to maintain their eligibility to offer Title IV programs and understand that. I think the bigger issue is that often the demographic we serve is high risk. We provide accessibility to education which may not otherwise be available. We teach in a way that allows for our students to learn a practical skill in a short period of time to get an entry-level position in their chosen fields. Hopefully, this will in-turn decrease the dependency on some other public assistance programs while creating a stepping stone to continuing to further their education.

90/10 and gap, I won’t go any further on this topic but it is worthy of a mention in driving tuition rates. Again, not a standard that the traditionals are held to.

We have so many people who take advantage of social services offered by this country because it is easier and makes more sense for them to stay home and on these services then take the step to get off of them. We have generations of welfare families out there. For-profits are the ones that serve them. We get them in school, hold their hands, and strive very hard to get them not only to graduation but getting them employed.

Another trend that is not sitting well with me is that if a student is employed out of the field and waives placement, we are getting dinged for it; it doesn’t make any sense. Again, ask many who graduated from a traditional college with a liberal arts degree what they ended up doing with it…

•  – apologies for the comment if you feel I WAS being condescending, but I will not leave my “emotions” for the government. For people like myself (and various other) who have given upwards of 20 years of my life to this sector of higher education, this is an emotionally charged issue. MY government is unfairly and unduly attacking me and my friends, and threatening rules that would be devastating to this country, especially those financially less fortunate than most. Sorry, but you’d have to be a droid to not feel emotion on this one.
 • Having attended the APSCU Student Rally and immediately going to Senators Boxer’s and Feinstein’s office to discuss this rule, I can tell you it is extremely one-sided. Our initial talking point with staffers, most of which had already decided their recommendations, was to talk about equal treatment. Their response was that it indeed is equal since non-profits and publics have to have the same income-to-debt ratio for their certificate and diploma programs. When I countered with, equal would be for publics and non-profits to be held to the same standard for Associate, Bachelor, Masters and higher; the same as the for-profits are, I was met with silence. The party line was that Congress is held responsible to safeguard the taxpayer’s investment. I countered with the $220 billion in 2008 that was subsidizing publics and non-profits at both the state and federal levels that not a dime is returned or paid back to the government. Since non-profits make up 10% of higher education, let’s take 10% of the subsidies and split the $22 billion according to enrollment to bring down the tuition at the for-profits and I’m sure the debt-to-income ratios would be far greater than our counterparts. I also asked one staffer, why couldn’t subsidies be based on student need instead of flat across the board. They didn’t have the answers.
 • You are right
 • That’s the problem. Lack of knowledge results in reliance on “party line”. This is why I actually laughed out loud when Senators Harkin and Franken suggested that this was not a political issue.

Like so many issues in DC, this is partisan politics at its worst. Hardcore democrats are out to destroy for-profit schools and hardcore republicans are supportive of the for-profit schools. Our need is to influence the others, those who care enough to look at the facts…those that will consider what is at risk and who is at risk.

  • Having worked in career colleges, both FP and NP, and as a graduate of a public university, I continue to find these discussions interesting. I have opined in the past that the NP and FP operated basically the same – tuition driven, no direct assistance from government, student centric, outcomes of paramount importance to survival. One’s tax status doesn’t really matter.

The FPs will be able to meet these requirements and still survive, if only barely. They will eventually be forced to enroll fewer low socio-economic students, primarily minorities and single mothers. Yes, the repayment rates will rise, the default rates will drop, and we will create a permenant underclass that has very little chance to gain any semblence of the so called Amercian Dream. The DOE, media, President Obama, and Arne Duncan need to heed the old adage, “be careful for what you ask, you just might get it.”

 • Thank you,  – WELL SAID!!!!!

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