For-Profit Colleges Fight ED Regs on Gainful Employment Rules

NEW YORK (MainStreet) — For-profit colleges have been a target of consumer groups and federal legislators alike, who point to the high tuition and loan balances that students have to bear while experiencing low employment rates after graduation.

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The schools themselves are experiencing declining revenues and falling enrollments. What's more, the Obama administration looks determined to regulate them as it examines public comments on the "gainful employment" rules it has proposed for for-profit colleges.

Gainful employment rules gauge the debt load and repayment rates of for-profit college graduates and are focused on post-college outcomes. The Department of Education (ED) proposed that for-profits demonstrate that 35% of their graduates were repaying their loans — a threshold that was criticized as too low by for-profit opponents. In a complex 2012 decision, a Washington, D.C. federal district judge threw out ED's proposal in what appeared to be a victory for the for-profits. But the court said the Department could still seek gainful employment standards.

ED was back last year with another proposal that addresses gainful employment and a loan default standard that includes students who fail to finish school. For-profit colleges are generally notorious for having high dropout rates.

The comment period on ED's proposal ends on May 26. If gainful employment rules go into effect, regulators will have a hammer that could disqualify these schools from federal aid, a potential death knell for an entire industry which depends on federal student loans.

Critics of gainful employment rules say they unfairly target for-profits. Rep. Matt Salmon, an Arizona Republican, told Congress last month that they should also apply to law schools and culinary arts programs.

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Lobbying federal legislators has been standard fare for years. But due to their reduced state, for-profit colleges might have little choice but to resort to the kinds of grass roots organizing their opponents have used in the past.

An analysis of lobbying disclosures by Inside Higher Education found that for-profit education firms spent at least $1.9 million on lobbying in the first quarter of this year. Among the big spenders were Apollo Education Group, the Association for Private Sector Colleges and Universities, Bridgepoint Education and Corinthian Colleges.

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But that's a fraction of what the industry's leaders coughed up in 2011 when burneding through over $10 million in what was largely an attempt to nip the Obama administration's earlier gainful employment rule proposal in the bud.

This time around, for-profits may be taking to the Web rather than the halls of Congress, the more expensive alternative.

Education Management Corporation (EDMC) is exhorting stakeholders — instructors, students and their parents — to write to Congress and urge members to vote against gainful employment rules. At the portal of the Art Institute, an EDMC chain which has over 50 locations, students who log in to check academic progress and their emails will find two banner displays and an appeal to "Save Student Choice," according to Inside Higher Education.

The main trade association for for-profit colleges in Washington, D.C. -- The Association of Private Sector Colleges and Universities (APSCU), the best-known trade association for for-profit colleges -- has joined the fray.

"We're working hard to make sure that constituents are part of these meetings," said APSCU president Steve Gunderson said, who seems to be urging the students of these colleges to contact their elected officials. "It's when people from back home talk to their member of Congress that they listen. If it's a personal relationship, that's important, too."

--Written by John Sandman for MainStreet

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