DeVos Ends Obama-Era Safeguards Aimed at Abuses by For-Profit Colleges

DeVos Ends Obama-Era Safeguards Aimed at Abuses by For-Profit Colleges


WASHINGTON — Education Secretary Betsy DeVos formally moved Friday to scrap a regulation that would have forced for-profit colleges to prove that the students they enroll are able to attain decent-paying jobs, the most dramatic in a series of moves that will free the scandal-scarred, for-profit sector from safeguards put in effect during the Obama era.

In a written announcement posted on its website, the Education Department laid out its plans to eliminate the so-called gainful employment rule, which sought to hold for-profit and career college programs accountable for graduating students with poor job prospects and overwhelming debt by revoking federal funding and access to financial aid. After a 30-day comment period, the rule is expected to be eliminated July 1, 2019.

Instead Ms. DeVos would provide students with more data about all of the nation’s higher education institutions — not just career and for-profit college programs — including debt, expected earnings after graduation, completion rates, program cost, accreditation and other measures.

“Students deserve useful and relevant data when making important decisions about their education post-high school,” Ms. DeVos said in a statement. “That’s why instead of targeting schools simply by their tax status, this administration is working to ensure students have transparent, meaningful information about all colleges and all programs. Our new approach will aid students across all sectors of higher education and improve accountability.”

But in rescinding the rule, the department is eradicating the most fearsome accountability measures — the loss of federal aid — for schools that promise to prepare students for specific careers but fail to prepare them for the job market, leaving taxpayers on the hook to pay back their taxpayer-backed loans.

“By withdrawing the gainful employment regulations, the Trump administration is once again choosing the interests of executives and shareholders of predatory for-profit higher education institutions over protecting students and taxpayers,” said John King, the Obama-era education secretary charged with implementing the rule, who called the move “outrageous and irresponsible.”

The Obama administration bolstered the accountability measures in its 2014 rule to require for-profit institutions to measure how much debt their students incurred against their post-graduation earnings and required them to disclose their failing marks in advertisements. Ms. DeVos had already delayed those parts of the regulations.

But a part of the rule that had already taken effect has identified hundreds of failing programs, many of which went on to shut their doors after they were measured against the new standards. That regulation will also be eliminated.

“Rescinding the rule is a derogation of the department’s duty to protect students from exploitation and taxpayers from the waste of federal funds,” said New York Attorney General Barbara D. Underwood, whose office joined 17 other state attorneys general that sued the department for delaying its implementation.

The Obama administration said its goal was to weed out the poorest performing for-profit colleges and career programs, but the for-profit sector said the rules unfairly targeted its programs and were designed to put them out of business.

Steve Gunderson, the president of Career Education Colleges and Universities, praised Friday’s decision as “the most significant action by any U.S. Department of Education to provide complete transparency on the outcomes of today’s higher education programs.”

“Only the most partisan advocates can argue that this proposal does not represent a better outcome for all students across all of higher education,” Mr. Gunderson said in a statement. “This could be the most significant consumer protection for all college students in all colleges and all programs.”

The New York Times reported on July 26 that Ms. DeVos planned to rescind the rule — one day after she announced a separate regulation that would restrict access to loan forgiveness programs for students who say they were defrauded by their colleges. The notification Friday confirmed those plans.

In its notification, the department said Ms. DeVos was rescinding the rule entirely based on research that undermined the “validity of using the debt and earnings comparisons.” That research, the department contended, was not properly considered by the Obama administration when it was writing the rules in 2014. Officials wrote they also found “a troubling degree of inconsistency and potential error exists in job placement rates” that “could mislead students in making an enrollment decisions.”

The department also said that requirement that schools disclose their data had proven to be “more burdensome than originally anticipated.”

The move further divided congressional leaders on the direction of higher education under Ms. DeVos, as efforts stalled earlier this year to rewrite the federal law governing higher education. A House bill drafted by Representative Virginia Foxx, Republican of North Carolina, would eliminate the gainful employment rule by statute.

Senator Lamar Alexander, chairman of the Senate Education Committee, praised Ms. DeVos’s plan, as giving Congress an opportunity to hold all schools accountable.

“Secretary DeVos’s regulation proposes to end a clumsy rule that consumed 945 pages to define two words in the higher education law and targeted just one segment of our 6,000 colleges and universities,” Mr. Alexander said.

Senator Patty Murray, the ranking member of the Senate committee, said in a statement that Ms. Devos was undermining a “common-sense and effective consumer protection.”

“Her extreme proposal to rescind this rule is further proof that there is no line Secretary DeVos won’t cross to pad the pockets of for-profit colleges — even leaving students and taxpayers to foot the bill,” she said.

The DeVos approach would undo nearly a decade of efforts to create a tough accountability system for the largely unregulated for-profit sector of higher education. In recent years, large for-profit chains have collapsed under mountains of complaints and lawsuits for employing misleading and deceptive practices. The most high-profile chains, ITT Tech and Corinthian Colleges, generated tens of thousands of complaints from student borrowers who said they were left with worthless degrees. The Obama administration forgave at least $450 million in taxpayer-funded student debt.

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.

That prompted intensive campaigns by the for-profit sector to kill the rule, dozens of hearings, more than 90,000 public comments and lawsuits.

Ms. DeVos has filled her top ranks with advisers from the sector, including Diane Auer Jones, a senior adviser on postsecondary education, whose ethics filings show that she lobbied against funding the rule while working for an operator of for-profit schools, Career Education Corporation.



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