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Many Comments, Few Surprises

05/28/2014

Inside Higher Ed. May 28, 2014.

As the public comment period for the U.S. Department of Education’s proposed “gainful employment” regulations ended last night, the department had received thousands of comments, most of which argued either that the rules go too far or that they don't go far enough.

The White House is pushing hard for the new rules after a previous effort was largely blocked in a federal court. The draft rules would tie federal aid eligibility for vocational programs to the earnings and debt of their former students. The policy would cover all vocational programs at for-profit colleges and vocational, certificate programs at public and private nonprofit colleges.

Official tallies of the number of comments weren’t immediately available, because the website was still being updated as comments poured in, but an early review of the comments submitted yielded few surprises of where different organizations stand.

Most of higher education’s membership associations weighed in on the proposed rules, as did consumer groups and hundreds of private citizens. However, many of the individual public comments that were available on the government’s website Tuesday night were form letters that for-profit colleges drafted and circulated among their students, graduates and employees.

Hundreds of employees of Corinthian Colleges, for instance, submitted identical letters criticizing the proposal as arbitrary and misguided, saying it will be harmful for “those students who are most in need of higher education opportunities.”

Likewise, hundreds of students attending colleges run by the Education Management Corporation (EDMC) submitted identical or nearly identical comments as part of the company’s campaign against the proposed regulations.

Jennie Harrison of Charleston, S.C., is one such student who signed on to a letter circulated by Argosy University, which EDMC operates.  

Harrison, 47, said in an interview that she first learned about the “gainful employment” proposal when she logged into her online student portal several months ago. She decided to sign a letter, she said, after both the university and her instructor contacted her about it.

“If the school thinks it’s this important, then I thought that I would at least fight for the cause,” she said. “I do want to be protected (by the government) but I don’t want to be so protected that I’m cradled. I want the right to choose and the right to finish what I started.”

Harrison estimated than she had “roughly” more than $100,000 in outstanding student loan debt. At least half of that amount, she said, comes from her current online studies at Argosy University, where she’s pursing a doctor of education degree in pastoral community counseling. Her goal, she said, is to teach biblical studies to working adults at the college level.

Proponents of tough regulations on for-profit colleges also had their own online campaign aimed at persuading the public to submit comments in support of the administration’s efforts. The Education Trust, the Institute for College Access and Success, and the Young Invincibles all have form letters dedicated to urging the Education Department to do more to tightly regulate the for-profit industry.

Organizations Weigh In

Beyond the competing comments submitted, ostensibly, by individuals, many of the large higher education membership organizations weighed in on the proposal.

About 20 of the associations that represent traditional higher education’s interests in Washington signed on to a letter submitted by the sector’s umbrella lobbying group, the American Council on Education (ACE).

The comment was a relatively brief five pages. It said the groups are “strongly supportive” of a gainful employment regime that protects students from low-performing academic programs. However, the proposed rules fall short of that goal, the letter said, and should be both modified and strengthened.

Institutions that are home to programs with high student borrowing rates and loan volumes will be able to manipulate the metrics, according to the council.

“The regulation allows for the shifting of debt to noncompleters, periodic tuition discounts to generate better outcomes for just one year and the application of institutional ‘default management’ techniques to program cohorts,” the letter said.

Not surprisingly, the Association of Private Sector Colleges and Universities (APSCU), which is the for-profit industry’s primary trade group, had a different take. APSCU called the regulations “flawed, arbitrary and biased” in a written statement.

The group’s 219-page comment (which included many pages of attachments) built upon a study it commissioned and released Tuesday. That report said the department underestimated the number of students at for-profits who would lose access to federal financial aid. Up to 44 percent of students at for-profit colleges, many of them lower-income students, would be displaced if the rules are enacted, the study found.

A federal judge in 2012 threw out the administration’s previous attempt to set gainful employment standards, ruling that one of the proposed metrics had been set arbitrarily.

APSCU has said publicly it hasn’t made any decisions yet about whether it will again challenge the rules in court this time, but many industry observers expect such a lawsuit. And the trade group’s comments offer plenty of hints about where a legal challenge might focus.

“In many ways the proposed regulations are more biased and irrational than the 2011 regulations,” the group said “Among other things, the proposed regulations lack any statutory authorization and propose debt metrics that are arbitrary and capricious.”

After for-profits, community colleges have the most at stake under gainful employment. The two-year sector has been largely supportive of the thrust of the regulations, but only with substantial revisions.

Community colleges’ primary beef with the proposed rules are that they would impose costly new reporting requirements on the sector -- which doesn’t have much money to burn -- while focusing on a relatively small sliver of the students who actually attend vocational certificate programs at those institutions.

Those arguments were on display in a 10-page comment the American Association of Community Colleges and the Association of Community College Trustees submitted on Tuesday.

For example, the metrics focus on students who are eligible to receive federal financial aid. But only 36 percent of certificate-seeking students at public, two-year colleges receive federal aid, the groups said. And just 9 percent of certificate-seeking students at community colleges take out federal loans.

“The proposed metrics would necessarily capture information about a fraction of students,” the two groups said, “and they will often be materially and statistically unrepresentative of all the students in a program.”

The jointly issued public comment included several proposed changes to the rules. Perhaps most notably, the groups suggested that programs in which less than half of graduates take on debt should be exempt from the metrics. The ACE letter also included that suggested change.

Comments from APSCU, community college groups and the coalition ACE pulled together all agreed on one point -- that the proposed regulations are unnecessarily burdensome.

The two-year sector’s comment included a specific estimate from the Virginia Community College System. That statewide system, after conducting its own analysis, said it would spend roughly $2.4 million a year to comply with gainful employment. (The department has predicted a nationwide compliance cost of $60 million in the first year and an ongoing, annual cost of $10 million.)

Likewise, the ACE letter said the rules include excessive layers of reporting. Gainful employment would require a “mind-numbing” 16 categories of disclosures with 36 separate data elements, according to the groups.

“The value of this extraordinary range of disclosures to prospective students is highly dubious,” they wrote.

Many of the groups that have supported the concept behind the Obama administration’s development of the “gainful employment” rules said that the current proposal should go further in a range of areas.

More than 50 consumer groups, labor unions and other organizations and associations submitted comments that called the regulations “urgently needed” to protect students and taxpayers.

Still, the coalition letter said, “the proposed regulation is too easy to game, and its standards are too low.” It calls for the administration to raise the standards, impose tougher sanctions on poorly performing programs and more tightly regulate online programs that lack the accreditation needed for licensure in the states in which they enroll students.

Ben Miller, a policy analyst at the New America Foundation, submitted comments calling on the Education Department to fix, among other things, what he called the “low-income problem” in its current iteration of the rules.

“If left unfixed, it could counterintuitively make it easier for programs with extremely low earnings returns to pass than programs with equivalent percentage results but better incomes,” wrote Miller, who is also a former Education Department staffer.

The problem, he said, is that programs that produce graduates earning low wages are able to pass the debt-to-annual-income ratio calculation (even if they miserably fail the other debt metric that measures only the income that graduates might be reasonably expected to actually put toward loan payments -- i.e., income in excess of 150 percent of the poverty level).

Those programs producing low-income workers also slip through the second metric -- which measures default rates -- because the graduates are able to stay out of default with federal income-based repayment programs, Miller argued.