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Education Department proposes repeal of gainful employment rules for career colleges

Scuttling the gainful employment rules represents a betrayal of student borrowers harmed by predatory for-profit schools

Friday, August 10, 2018

WASHINGTON, D.C. – The Department of Education proposed today to abandon a rule that withholds federal student loan funds from career education programs that fail to demonstrate that they are effectively preparing students for the job market upon graduation.

Consumers Union, the advocacy division of Consumer Reports, said today that scuttling the “gainful employment” rules would represent a betrayal of students harmed by poor performing career education programs that fail to prepare them for the job market.  This latest news comes on top of the Department’s Proposal in July to drastically limit the ability of students who have been defrauded by higher education programs to cancel their loan debts.

“The Department of Education has turned its back on student borrowers harmed by predatory for-profit schools and on any efforts to hold them accountable for providing a quality education and spending taxpayer funds responsibly,” said Suzanne Martindale, senior attorney for Consumers Union.  “The Department has a duty to evaluate career programs for quality, and help students make better choices when seeking to improve their futures through higher education.  Instead of abandoning these rules, the Department should be working to ensure that students and taxpayers are not subsidizing schools that do little more than put students in debt.”

The gainful employment rules, which Secretary Betsy DeVos suspended last year for renegotiation, 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 disclosures so that students can make informed choices about where to enroll.

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, ext 7606 (office)