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Consumer Reports urges Education Department to protect students from career education program abuses

Education Department proposal to rescind Gainful Employment rule leaves students and taxpayers vulnerable to more fraud, waste, and abuse

September 13, 2018

WASHINGTON, D.C. – Consumer Reports, the advocacy division of Consumer Reports, called on the Department of Education today to implement a rule that withholds federal student loan funds from career education programs that do not effectively prepare students for the job market.  The existing rule, known as the “Gainful Employment rule,” was suspended last year by Education Secretary Betsy DeVos.  In August, the Department of Education proposed repealing the rule altogether.

“The Department has failed to provide any reasonable rationale for rescinding the rule, which will result in more fraud, waste and abuse at the expense of students and taxpayers,” said Suzanne Martindale, senior staff attorney for Consumer Reports.  “We urge the Department to protect students and hold schools accountable for providing quality job training by implementing the existing gainful employment rule.”

The gainful employment rule set minimum standards to ensure that career education programs prepare students to get suitable jobs in their expected field upon graduation.  It measured how graduates of these programs are doing after they leave school by collecting data on how much they earn relative to their debts, and warned schools to improve outcomes or risk losing access to federal financial aid.  It also set forth disclosure requirements so that students can make informed choices about where to enroll.

Consumer Reports letter to the Department points out that the rule was based on years of extensive research and sound analysis that found that some career education programs were accepting federal financial aid dollars and enrolling students while consistently failing to train and prepare those students for employment.

The gainful employment rule has been through nearly a decade of negotiation, litigation and public input, in response to the for-profit college industry’s rapid expansion as well as recent scandals, including the collapse of large nationwide chains such as Corinthian Colleges and ITT.  A slew of state and federal investigations in recent years have uncovered many for-profit colleges engaging in aggressive marketing to prospective students, using inflated graduation and job-placement rates to induce them into paying top dollar for their education.

Michael McCauley, mmccauley@consumer.org, 415-902-9537 (cell) or 415-431-6747 (office)