Obama's victory means continued scrutiny for the For-Profit Education sector

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November 7, 2012

The re-election of President Obama isn’t likely to result in a slew of new regulations aimed at for-profit colleges. But with student debt and the cost of college expected to remain high-profile issues in his second administration, industry observers foresee little let-up in the focus on the for-profit sector. That focus will begin, many say, with a push to resuscitate the gainful-employment regulation, a Department of Education proposal strongly opposed by for-profit colleges. And according to one community-college leader, in its new incarnation, the regulation might come back to life “in a broader form,” with portions of it applying more widely at nonprofit colleges as well. The original regulation was largely vacated by a federal judge last summer after it was challenged in court by the Association of Private Sector Colleges and Universities, the main trade group of for-profit colleges. And while the election brought no changes in control to either the U.S. Senate or the U.S. House of Representatives, observers also predict that for-profit colleges will continue to face heat from Democrats in Congress as deficit-cutting measures and the reauthorization of the Higher Education Act take center stage over the next few years. “Student debt is a huge political and economic issue,” and for-profit colleges are a key part of that story, says Teddy Downey, a senior policy analyst with TJ Strategies, a firm in Washington, D.C., that provides research on education issues to investors and policy makers. “They’re still going to be a big part of the conversation.” Some executives of for-profit colleges say privately that they hope a second-term Obama administration will shift the focus “away from just our sector to the whole sector,” and put the spotlight on curbing rising tuition at all colleges. But several analysts say that might be more wishful thinking than reality… Tougher Version of Gainful Employment? President Obama’s win over Mitt Romney also means the sector is likely to see continued attention from the Consumer Financial Protection Bureau, a new agency that has already opened investigations into student-lending practices at two major for-profit-college companies, ITT Educational Services and Corinthian Colleges Inc. A win by Mr. Romney would have meant “a neutered CFPB,” says Jarrel Price of Height Analytics, a firm that follows the for-profit-college industry for financial companies. During his campaign Mr. Romney singled out for-profit colleges as innovators and said he opposed “punitive regulations” on the sector, prompting many to assume he would let the gainful-employment regulation die if he were elected, either by not pursuing further court appeals or not attempting to rewrite the regulation to meet objections raised by the federal judge. Click Here to read full article on the Chronicle]]>