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In what may mark an early sign of more favorable treatment of for-profit colleges under the Trump Administration, the U.S. Department of Education has announced delays for colleges to submit appeals or public disclosures relating to gainful employment rules, Inside Higher Ed reported.

Gainful employment rules -- created during the Obama Administration -- establish performance standards for for-profit colleges that tie their eligibility for federal student loan funds to their graduates' rate of success in loan repayments after entering the workforce. Republicans and Trump Administration officials have indicated that they will seek to curb or eliminate gainful employment rules.

In the recent announcement, the Department of Education granted roughly three-month delays to for-profit colleges to make filings relating to their gainful employment performance. According to Inside Higher Ed, the Trump Administration's Education Department said in a written statement that it decided to make the new delays to "allow the department to further review the gainful employment regulations and their implementation."
 
 
A cosmetology association is suing the U.S. Department of Education over gainful employment rules that tie schools' eligibility to receive federal student loan funds  to their graduates' job performance.
 
Inside Higher Ed reports that the American Association of Cosmetology Schools, which represents about 750 institution, is seeking in a lawsuit filed last week to obtain relief from  U.S. Department of Education gainful employment regulations.

According to Inside Higher Ed, "The organization argues that gainful employment undercounts cosmetology graduates' income because many self-employed workers rely on gratuities and are paid in cash. Many cosmetologists simply underreport their incomes, according to the organization."
 
 
A newly released study of federal data finds that for-profit college students experience a decline in earnings and increase in debt with six years of attendance, when compared to their financial standing before enrollment.

Inside Higher Ed reports today on the research study by George Washington University and part of the U.S. Department of Treasury.  "The negative earnings effects we find are troubling given the debt that students incur to attend for-profit institutions," the student find.

A for-profit college industry spokesman criticized the study, stating in part, "The study's methodology is an extension of the flawed logic behind the gainful employment regulation -- it looks only at short-term earnings and not at the lifetime benefit of higher education to a non traditional student and their family."
 
 
In another development in the years-long battle between the Obama Administration and the for-profit school industry, a key industry group is seeking to preclude new  federal "gainful employment" requirements from being implemented.

The Association of Private Sector Colleges and Universities -- representing more than 1,400 for-profit schools -- filed a motion in federal district court seeking to preclude the implementation of new regulations that would apply a debt-to-earnings test with regard to graduates when determining schools' future eligibility to receive federal financial aid.

In response, a coalition of 28 public interest groups is urging the same court to reject the for-profit industry's arguments and to not delay implementation of the regulations. 

The regulations are scheduled to become effective July 1, 2015.

Meanwhile, a leading Republican lawmaker, Rep. Virginia Foxx (R-N.C.), had introduced a bill that would abolish the gainful employment rule and prevent the Obama Administration from implementing a college-ratings system.

 
 
Herzing University, a Wisconsin-based school that has operated for decades as a for-profit institution, has changed its status to non-profit at a time of increased regulation aimed at colleges and universities that operate as for-profit companies.
As reported in the Milwaukee Journal-Sentinel, the move to non-profit status "comes in the wake of new federal regulations on for-profit schools that drew widespread opposition from the industry."  The switch also takes Herzing out of oversight by a Wisconsin state agency.  
Herzing has a student enrollment of approximately 6,000 students in campuses across eight states.
New federal regulations implemented by the U.S. Department of Education will require for-profit schools to satisfy measures for "gainful employment" aimed at establishing that career-oriented programs actually are resulting in graduates obtaining well-paying  jobs in those fields.  The regulations will require schools to demonstrate that their students' annual loan payments back to the school are not more than 20% of their discretionary income or 8% of their total earnings. Failing to meet these "gainful employment" standards can result in schools' losing eligibility for federally funded student loan programs.

 
 
An interesting item by David Halperin in the Huffington Post reveals the for-profit college industry's plan to defeat or undo the Obama Administration's years-long effort to bring more accountability to the programs offered to students.   According to the HuffPost report, one of the leaders  in the for-profit school industry recently gave a PowerPoint presentation to a trade association gathering that outlined a multi-pronged plan to block the increased federal oversight.  The planned steps included seeking to "defund" the regulators, to "stop implementation," and to litigate if necessary.  The HuffPost article questions the effort to block regulation, stating in part that, "The purpose of the gainful employment rule is not to end career training programs generally for all of these types of students.  Rather, the purpose is to stop giving federal money to those career training programs that, through a toxic combination of sky-high prices and low quality, have been proven to leave such students financially worse off than when they started.  If successfully implemented, the rule would free up more federal money to send those students to programs that actually help them build careers."
 
 
The Obama Administration's years-long effort to improve regulation of the nation's for-profit colleges and trade schools with new "gainful employment" rules is nearing completion.
The public comment period for the Administration's final rule-making process ends May 25, and the Administration is expected to enact a final rule later this year. 
As set forth in its proposed final rule unveiled on March 14, the Administration is enacting new requirements that will apply to nearly all for-profit colleges and trade schools and many certificate and non-degree programs at public and non-profit institutions of higher education.  In order to remain eligible for federal student aid (the lifeblood of many for-profit colleges), the new rules will require schools to demonstrate that their programs are actually preparing students for gainful employment in a recognized occupation.   In a press release, the Department of Education explained that under the proposed final rules,  "Career programs would need to meet key requirements to establish that they sufficiently prepare students for gainful employment."  Among the requirements:
  • Institutions must certify that all gainful employment programs meet applicable accreditation requirements and state or federal licensure standards.
  • All gainful employment programs must pass metrics to continue eligibility in the student financial aid program, including: the estimated annual loan payment of typical graduates does not exceed 20 percent of their discretionary earnings or 8 percent of their total earnings and the default rate for former students does not exceed 30 percent.
  • Additionally, institutions must publicly disclose information about the program costs, debt, and performance of their gainful employment programs so that students can make informed decisions. 
Education Department Secretary Arne Duncan has said about the new proposed rules, "Higher education should open up doors of opportunity, but students in these low-performing programs often end up worse off than before they enrolled: saddled by debt and with few—if any—options for a career. The proposed regulations address growing concerns about unaffordable levels of loan debt for students enrolled in these programs by targeting the lowest-performing programs, while shining a light on best practices and giving all programs an opportunity to improve."
 
 
A recent Washington Post editorial railed against the Obama Administration's proposed federal rules that would tighten standards for colleges' eligibility for federal student aid, arguing that the "likeliest effect" of the rule change would be making "it more difficult for poor Americans to earn a secondary degree."  But, as recently noted in the Huffington Post, the major newspaper failed to mention in its editorial that its own publisher is heavily involved in the for-profit college industry that is actively opposing the rule changes.  Katherine Weymouth, the newspaper's publisher, serves on the board of directors of Graham Holdings, which owns Kaplan, Inc., the company that runs Kaplan University, one of the nation's largest for-profit colleges.  Graham Holdings also has a stake in another large for-profit education company, Corinthian Colleges, according to the Huffington Post.
 
 
The Los Angeles Times has joined the call among major newspapers for regulatory reform that would require colleges and trade schools -- particularly those for-profit schools selling career programs -- to demonstrate that the expensive programs that they market actually result in gainful employment.  Praising the Obama Administration's recent proposal for new federal rules on the subject, the newspaper wrote in part, "For-profit colleges that wildly exaggerate their graduates' success and talk prospective attendees into taking on extraordinary debt are not only harming their students but costing taxpayers billions of dollars on wasted Pell grants and defaulted federal student loans. After an earlier court defeat, the Obama administration is trying again to set rules to stop schools from overpromising to attract students. This time, the rules should stick. The administration has spent years looking for ways to crack down on the bad actors within the for-profit college industry, which accounts for just 13% of college enrollment but almost half of all federal student loan defaults. The misrepresentations made to prospective students have been widely documented; culinary schools, for instance, have been known to count janitors at fast-food restaurants as graduates who have secured work in their chosen field. But so far, aggressive lobbying and legal complaints by the schools have stymied reform. The new rules, announced this month, don't only target for-profit colleges but apply to any non-degree program that promotes itself as a gateway to "gainful employment." Applicants to such schools would not qualify for federal grants and loans if the default rate for the program they plan to attend is more than 30% and if loan payments regularly exceed a certain percentage of graduates' incomes. It is expected that the rules will overwhelmingly affect for-profit colleges."