Education Department lets for-profit colleges reduce transparency, hurting students

The department scaled back the Obama-era gainful employment rule on Friday.

Education Secretary Betsy DeVos attends an event to celebrate Congress passing the Tax Cuts and Jobs Act.  CREDIT: Chip Somodevilla/Getty Images)
Education Secretary Betsy DeVos attends an event to celebrate Congress passing the Tax Cuts and Jobs Act. CREDIT: Chip Somodevilla/Getty Images)

For-profit colleges, some of which have defrauded students, will no longer have to post median earnings of graduates to their websites, the Department of Education announced on Friday. This requirement was part of the gainful employment rule that went into effect in 2015 under the Obama administration, which the Trump administration has continued to scale back.

The rule is designed to hold vocational programs at for-profit colleges accountable by asking them to meet a threshold for graduates’ debt-to-earnings rates. If colleges don’t meet these thresholds, their federal financial aid is at risk. Some students who attended for-profit colleges have as much as $30,000 in student debt for programs that failed to train them properly. When students considered leaving the school, counselors often manipulated them into staying.

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The disclosure of median earnings was supposed to arm students with information so that they could avoid attending a college where they were unlikely to pay off debt after graduation. Of course, the information will still exist, Clare McCann, deputy director for federal higher education policy at New America explained, but it’s unlikely students will see it.

“They would have to go through the Department of Education website or student aid office and find an Excel sheet and download it. No one will ever see it,” McCann said.

But in June of last year, the department announced it would give for-profit colleges until July 1, 2018 to comply with disclosure requirements that were originally due on July 1, 2017 and would start negotiations  to develop new regulations “that would better serve students and enable institutions to provide high-quality programs.”

The department announced the changes were part of the 2018 gainful employment disclosure template. Schools have until April 6 to update disclosures for gainful employment programs.

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In addition to colleges no longer having to disclose this information on median earnings, they also are no longer required to disclose room and board charges and can provide multiple job placement rates for programs.

The problem with providing multiple job placement rates from different accreditors is that it could confuse students.

“There might be two agencies that look at massage therapy and they might have different definitions for what job placement looks like,” she said. “It would be confusing if people saw an accreditor job placement rate with [Higher Learning Commission] is 70 percent and this one is 90 percent. They will ask, ‘Well what does that mean?'”

McCann said she is concerned that eventually, the department will want to use Bureau of Labor Statistics data for the disclosures of graduates’ median earnings, which would be an inaccurate picture of what graduates can expect. The issue came up in a negotiated rule making sessions in December. Last year, Career Education Colleges and Universities (CECU), a for-profit college lobbying group, proposed using BLS data instead. Jordan Matsudaira, an education and labor economist at Cornell University, questioned the wisdom of using this data for disclosures.

“They might want to move from measuring earnings of actual program graduates, like matching the actual graduates’ information with federal tax records to calculate what happened to those students, and instead have been talking about whether they should use statistical averages,” McCann said. “This is not helpful because BLS data are not tied in any way to the actual program of study. You’re taking out a measure of program quality and replacing it with an average that is in almost every case dramatically overstated relative to the actual program’s earning potential.”

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The rulemaking process will drag on for some time, but a final rule will have to come out by November to go into effect next year.

This is the only the latest move to chip away at Obama administration oversight of for-profit schools. In December, the department announced changes to how it decides how much students receive for debt relief when they have been defrauded by for-profit colleges. Higher education experts said that these changes would mean that any student who found a minimum wage job would lose out on full debt relief, regardless of whether the job they have is related to the education they received.

In October, a coalition of 18 attorneys general filed a lawsuit against Education Secretary Betsy DeVos for the department’s suspension of the gainful employment rule. The lawsuit argued that the department violated federal law and did not provide a strong enough justification for freezing it. They are looking for injunctive relief so that the department would be forced to implement the rule immediately.