Back To The Starting Line On Regulating For-Profit Colleges

Jul 12, 2017
Originally published on July 12, 2017 12:38 pm

Betsy DeVos has put the brakes on two Obama-era regulations aimed at protecting student borrowers. Beginning with two public hearings this week, one in Washington, D.C., on Monday and a second Wednesday in Dallas, the Education Department is asking stakeholders to go back to the starting line.

On Monday, speaker after speaker in favor of the rules expressed weariness at the reopening of a "negotiated rulemaking" process that took several years and much legal wrangling.

"I can't believe we're here again," Alexis Goldstein of Americans for Financial Reform, a consumer rights advocacy group, said at the first public comment hearing this week. A second hearing will take place Wednesday from 9 a.m. to 4 p.m. ET in Dallas.

Monday's all-day hearing marked the beginning of a "regulatory reset" announced by Education Secretary Betsy DeVos last month on two rules designed to protect borrowers from predatory for-profit colleges:

  • The "gainful employment" rule sanctions individual programs at colleges and universities based on how many students are able to pay back their loans.
  • The "borrower defense to repayment" rule smooths the way for students to get their loans forgiven if their college is found to engage in fraudulent behavior, a situation that has befallen tens of thousands of students at Corinthian Colleges and ITT Technical Institute, among others, in the last few years.

Among those who testified Monday was Kevin Thompson, a 20-year veteran of the Navy who found himself homeless, along with his family, while enrolled in ITT Tech. He testified that, after the college was shut down, he was left with no degree, exhausted GI benefits, loans that need to be repaid and credits that could not be accepted elsewhere.

"Gainful employment is meant to prevent future predatory behavior; borrower defense is meant to help those hurt," Barmak Nassirian of the American Association of State Colleges and Universities said at the hearing. Nassirian was one of the original negotiators involved in drafting the gainful employment rule.

"Repealing the gainful employment regulation will cost us, the American people, $1.3 billion over 10 years," he said.

"Why does the Department of Education want to do away with a rule that protects students' and taxpayers' investments in higher education?" asked Randi Weingarten, president of the American Federation of Teachers.

Speaking against the rules were representatives of for-profit, private and community colleges.

The American Association of Cosmetology Schools has sued the Education Department over gainful employment, arguing that their graduates are paid in tips and, therefore, official income data doesn't reflect the true value of the program.

Meanwhile, David Baime, with the American Association of Community Colleges, argued that the cost of compliance with gainful employment has been burdensome for many public two-year institutions.

"For our campuses, the burden of implementing GE has been huge — causing tremendous confusion and complexity and cost," he said. His group advocates that similar information be collected on all colleges, not just "career"-type programs.

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