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California Association of Private Postsecondary Schools

Obama’s Crackdown On For-Profit Colleges Will Reduce Educational Opportunities

07/24/2014

The Daily Caller. July 22, 2014.

One of the best ways to predict the effect of a proposal for more bureaucracy in Washington is to consider the name its proponents give it. Usually, the actual results of their program will be the exact opposite of whatever its title implies. The “Affordable Care Act,” for instance, increased premiums by an average of 49 percent. The “American Recovery and Reinvestment Act” wasted half a trillion dollars and certainly didn’t produce a recovery.

Now we have a new Orwellian euphemism to add to the list: the 841 page “gainful employment” regulation, which will kill jobs and destroy opportunities for working adults to advance in their careers.

With the gainful employment regulation, the Department of Education would disqualify any program offered by a for-profit college from accepting student loans if its graduates, on average, have monthly student loan payments in excess of 8 percent of their monthly income. The regulation also sets a threshold on the percentage of students who can default on their loans.

While the regulation would also apply to certificate programs offered by non-profit institutions, it would apply to all programs – from certificate through doctoral – offered by for-profit schools.

This move is clearly designed to put for-profit colleges out of business. The truth is that few institutions in the country — whether public, for-profit, or “non-profit” — could meet the gainful employment regulation’s arbitrary standards. The average 4-year public school would fail, with students graduating with a 12 percent debt-to-earnings ratio. So would the average for-profit, with a 13 percent ratio. And private non-profits would fail worst of all, with a 16 percent ratio (twice the proposed standard). In fact, about half of all student borrowers nationwide do not meet the requirement.

This unfair and unequal treatment from the Obama administration is unsurprising considering the long-standing hostility to for-profit schools from the traditional education establishment.

If it was actually a good idea for the federal government to hold colleges and universities accountable for the earnings of their alumni, the administration would want to apply the regulation to every school. The fact that it applies almost exclusively to career-focused, private sector colleges shows the regulation is less about protecting students than it is about satisfying an ideological grudge.

It is even worse when you consider whom the rule will most harm. Nearly 3.4 million students would be denied access to the career enhancement programs of their choice through the end of the decade. This includes over 630,000 African Americans, 623,000 Hispanics and 209,000 veterans. It also includes more than 1.8 million low income Americans – precisely those who need to borrow more money to finance their education, and thus have more debt when they graduate.

The “gainful employment” regulation, then, penalizes institutions the more they meet the needs of low-income students. And it denies those students the support they require to attend programs they believe will help them secure gainful employment!

In short, when you kill job training, you kill job opportunities.

Fortunately for America’s working adult and low income students, the Department of Education’s Gainful Employment regulation is not yet officially implemented. So there is still time to prevent Washington from blocking the opportunity for millions of Americans to improve their lives and get a better job.

It is time we demand our congressmen and senators – and those running for office – to promise to take measures to block the Department of Education from implementing this destructive regulation.