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DeVos Repeals Obama-Era Rule Cracking Down on For-Profit Colleges (18 hits)



Education Secretary Betsy DeVos on Friday officially repealed an Obama-era regulation that sought to crack down on for-profit colleges and universities that produced graduates with no meaningful job prospects and mountains of student debt they could not hope to repay.

The so-called gainful employment rule was issued by the Obama administration in 2014, right before huge for-profit chains collapsed, leaving students stranded with debt and worthless degrees. Under the new standards, career and certificate programs, many of which operate in the for-profit sector, would have to prove their graduates could find gainful employment to maintain access to federal financial aid. It also would have required schools to disclose in advertisements a comparison of the student debt load of their graduates and their career earnings.

In her first two years in office, Ms. DeVos has delayed critical parts of the rule, and last year, she sought to repeal it entirely, siding with for-profit industry leaders and congressional conservatives who have contended that the Obama administration unfairly targeted for-profit schools.

In her first two years in office, Ms. DeVos has delayed critical parts of the rule, and last year, she sought to repeal it entirely, siding with for-profit industry leaders and congressional conservatives who have contended that the Obama administration unfairly targeted for-profit schools.

Education Department officials have argued that transparency, not regulation, is the best way to hold all schools — public nonprofits, community colleges and for-profits — accountable for their results. Instead of any accountability measures, it promised to expand an existing database, called the College Scorecard, to provide information on student debt and earnings prospects. The database, which provides information, including loan debt information, for 2,100 certificate granting programs, was unveiled last month.

On Friday, Ms. DeVos said that the scorecard was “only the beginning.”

“These important reforms are a more complete and effective way to hold all types of higher education institutions accountable and make sure that students have a full suite of data when making a decision about their education,” she said in a statement. “This administration will continue to put students first and make sure they not only have a multitude of pathways to success post-high school but also the information they need to make the best choices for themselves.”

But in rescinding the rule, the department is eradicating the most fearsome accountability measure — the loss of federal aid — for schools that promise to furnish students with specific career skills but fail to prepare them for the job market, leaving taxpayers on the hook to pay back their loans.

Congressional Democrats and student advocates said rescinding the rule would leave the scandal-scarred for-profit college industry unchecked. The repeal will take effect July 2020.

The department estimated that repealing the rule would cost $6.2 billion over 10 years, which includes funding grants and loans to students attending schools that would have been cut off from federal funding under the Obama rule.

“Repealing — rather than revising or replacing — the gainful employment rule will prop up low-quality for-profit colleges at the expense of students and taxpayers,” said Representative Robert C. Scott of Virginia, the chairman of the House education panel. “Today’s announcement underscores the need for Congress to pass a comprehensive reauthorization of the Higher Education Act that protects students and taxpayers from low quality for-profit schools.”
Bob Shireman, a senior fellow at the Century Foundation and an architect of the rule when he was in the Obama administration, called the repeal “disturbing and shortsighted.”

“They are opening the door to operators whose singular focus on gobbling up federal grants and loans for their investors will steer the business toward manipulative recruiting and poor quality training,” he said.

The Obama administration began drafting the regulations when the for-profit college sector was booming, with large chains enrolling 500,000 students at a time. But it was seen as a crucial safeguard against predatory colleges after the collapse of ITT Tech and Corinthian Colleges beginning in 2015.

The Obama administration also tried to channel loan relief to graduates who were defrauded by their colleges. Ms. DeVos has moved to overhaul that “borrower-defense” rule as well, hoping to give some students only partial relief. That process has been tied up in court proceedings, leaving more than 150,000 student claims in limbo.

One part of the gainful employment rule that had already been put into place has identified hundreds of failing programs, many of which went on to close after they were measured against the new standards. In the Education Department’s first assessment of debt-to-earnings ratios for college graduates, about 98 percent of programs that failed to meet standards for earning power were for-profits. An analysis included in the department’s final rule also shows that for-profits continued to have a significantly higher failure rate.

But the department argued in its final rule that the debt-to-earnings formula created by the Obama administration was “fundamentally flawed” and did not account for factors other than the quality of an education that could affect students’ earning potential. The department also said that the rule did not properly account for other kinds of programs that have poor career outcomes and high debt, such as some liberal arts degrees.

For-profit leaders have said that although the Obama rule was never fully enforced, its intent already shut down the worst-performing schools in their sector. Since 2010, when the Obama administration began deliberating the rules, more than 2,000 for-profit and career programs — nearly half — have closed, and the industry’s student population has dropped by more than 1.6 million.

“The U.S. Department of Education’s final decision commits our nation’s entire higher education system to full transparency,” said Steve Gunderson, the president of Career Education Colleges and Universities, the for-profit trade group. “Instead of picking and choosing winners and losers in higher education, the department will make available, in a student-friendly and transparent manner, key data points at a program level for all programs at all schools.”
A version of this article appears in print on June 29, 2019, on Page A15 of the New York edition with the headline: Rules on For-Profit Schools Are Repealed.

https://www.nytimes.com/2019/06/28/us/politics/betsy-devos-for-profit-colleges.html?rref=collection%2Fsectioncollection%2Feducation&action=click&contentCollection=education®ion=rank&module=package&version=highlights&contentPlacement=1&pgtype=sectionfront
Posted By: Elly Moss
Wednesday, July 10th 2019 at 9:04AM
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