The debate about the divisive Gainful Employment Rule continues to make national headlines, particularly as evidence mounts against the fairness and soundness of this flawed Department of Education regulation. Following are some of the key questions we are frequently asked about this controversial regulation:

  • What is the purpose of the Gainful Employment Rule and when does it take effect?

The U.S. Department of Education’s stated intent with the GE Rule was to ensure that students attending certain higher education programs receive a quality education that adequately prepares them for gainful employment. Programs that failed the Rule’s performance metrics would quickly lose access to federal student aid programs. Barring a legal intervention, it is scheduled to take effect July 1, 2015.

  • Why is APC advocating against the adoption of the GE Rule?

APC agrees with strong, fair and unbiased efforts to ensure that colleges offer quality, cost-effective educational programs that avoid excessive student debt and can lead to gainful employment, but the proposed GE Rule simply won’t deliver such outcomes.

There is a significant disconnect between what the Department said it wanted to accomplish with the GE Rule and what the proposed rule can realistically measure or achieve due to its flawed performance metrics.

  • Is APC against regulatory oversight of proprietary colleges?

Not at all. APC has long-endorsed the Department of Education’s efforts to protect students from bad or weak programs that leave them with big student loan debt and little education of value, but this GE Rule is not the impartial, equitable regulatory framework required. There is an underlying political bias to this regulation that essentially vilifies all proprietary colleges, approaching them all as “bad actors” that need to be weeded out of the system, regardless of their actual successful outcomes for students and graduates.

Proprietary colleges and the tens of thousands of students who attend them deserve far better from regulators.

  • Had APC shared its concerns about the proposed regulation with the DOE?

Yes. Comments submitted by APC and individual member colleges can be accessed here.

  • When and why did APC file a lawsuit against the Department of Education regarding about the GE Rule?

In early November 2014, APC filed suit in the Southern District of New York, challenging the validity of the GE Rules. As APC has pointed out in numerous posts on our Where We Stand blog and as formally outlined in that complaint, the Rules are unconstitutional, violate the plain language of the Higher Education Act, and are arbitrary and capricious. In addition to being legally flawed, the GE Rule clearly does not accomplish what it was designed to do — identify poorly performing programs.

As noted in the filing:

“The GE Rules apply to tens of thousands of educational programs, affect the lives of millions of students, and will dictate the distribution of billions of dollars in federal student financial aid. Given the importance of these new regulations, one would think that the Department would rest the regulations of firm constitutional and statutory bases; commission careful studies; employ reliable methodologies; and rigorously determine the likely effect of the regulations. The Department did none of these things. Rather, the Department’s fundamentally flawed GE regime is unconstitutional, statutorily unauthorized, arbitrary and capricious, and deliberately structured to undermine proprietary educational institutions…(T)he GE Rules must be vacated on multiple independent grounds…”

  • Where can I see a copy of APC’s complaint?

A copy of the initial complaint is available on our website here.

  • What are some of the specific complaints that APC has with the GE Rule’s design?

Among the core complaints:

  • The term “gainful employment” entered the higher education vernacular via the Higher Education Act five decades ago, in the definition of an eligible program as “a program of training to prepare students for gainful employment in a recognized profession.” Nothing in the law or that short unambiguous phrase authorizes the Department to reverse decades of accepted interpretation in favor of new, complicated, debt-driven post-graduation metrics that do not accurately identify whether a program is successful.
  • Of particular interest to APC and its member colleges: The regulation conflicts with the recognized authority of The New York State Board of Regents, which is the primary governing body responsible for the general supervision of all educational activities within New York state. APC member colleges are bound to the academic standards and governance requirements of the Regents, and elements of the GE Rule directly conflict with the Regents’ approach to proprietary colleges and its oversight of their educational programs.
  • According to the latest data prepared and published by the New York State Education Department, in 2012, students attending proprietary colleges graduated at a much higher rate than those attending public colleges and, in many instances at a higher rate than at non-profit independent colleges in New York. The GE Rule would threaten to close high quality educational programs that meet NY’s stringent requirements and have successful outcomes.
  • The Rule’s metrics are arbitrary and capricious. The Department adopted untested one-off metrics, failed to conform the GE Rules to any accepted methodology, and conducted no appropriate studies to test its hypothesis as to how the metrics would actually function, while the research that it did perform was careless if not deliberately misleading.

A third-party study conducted by The Parthenon Group, a global strategy consultancy, concluded that the GE Rule was based on flawed analysis, and that the Department ignored student demographic data that its own previous studies had clearly established were important factors in measuring students’ success.

A separate study conducted by Mark Schneider, the former Commissioner at the National Center for Education Statistics and a leading authority on education policy, also found that the metrics do not adequately assess program value. That study looked at more than 500 programs in the Texas public university system, and found that more than one-quarter of bachelor’s programs and as many as 54 percent of the degree programs in this highly respected, publicly funded state system would fail the GE Rule if they had to comply (but, conveniently for them, as public institutions, their degree programs are not subject to the GE rule).

  • The GE Rule’s process to evaluate a program’s success by measuring graduates’ income from as little as 18 months after graduation — when the graduates’ income is at its lowest — is counterintuitive. As logic suggests, and expert studies submitted to the Department establish, that period does not accurately reflect the increase in income that students enjoy as a result of post-secondary education.

That said, there is no logical connection between the Department’s stated objective to measure a program’s success in preparing students for good jobs and the use of debt-to-earnings rates to do so. The regulation ignores traditional measures such as program completion and job placement rates to focus on financial matters, specifically student loan debt relative to earnings solely during the first few years of their professional careers. That seems indefensible, particularly given that, under the current draft of the regulation:

  • A program that enrolls thousands of students with a mere handful of graduates could still pass the proposed Rule since the Rule would only apply if the program had more than 30 graduates in the covered years.
  • A program can pass if it has a median debt of zero (based on extensive taxpayer subsidies), even if very few students graduate or obtain employment.
  • The Rule violates institutions’ Fifth Amendment Due Process rights by, among other things, improperly failing to provide institutions with the constitutional right to even see the evidence used against them. Instead, the Department relies on Social Security Administration information regarding former students’ income to calculate the debt-to-earnings rates, which the Department does not provide affected institutions — leaving them unable to challenge the accuracy of the Department’s data.
  • There is no graduation rate requirement, which does not make sense. Under the GE Rule, more than 60% of community college certificate programs are permanently exempt because an insufficient number of students will ever actually graduate from their programs. In New York, excellent programs at APC colleges with high graduation rates and low default rates will fail this rule, while programs at public colleges where the on-time graduation rates have been below ONE percent for the last 10 years will pass.
  • Has the Department previously attempted to establish a gainful employment measure?

Yes. The Department’s first attempt in 2010 to create a GE Rule was successfully challenged in court by APSCU, the Association of Private Sector Colleges and Universities. A Federal district court found that key provisions of the proposed regulation were not based on relevant evidence or factual findings, and subsequently voided it.

  • Why does APC believe that the GE Rule is unfairly targeting proprietary colleges?

The Department has targeted this Rule at proprietary colleges by devising formulas that basically exempt community colleges from complying with the regulation, essentially treating them as sacred cows even though many are producing the poor program results that the Department claims the GE Rule seeks to weed out. These broad exemptions also include many career programs that are offered at public and non-profit institutions.

There are public and non-profit institutions participating in federal student loan programs that offer career programs that have very low graduation and placement rates, or very high cohort default rates, but they would have amnesty from the GE Rule by virtue of certain exceptions and waivers built into the Rule. If the goal is to protect students and taxpayers, then all institutions should be held to the same standards, regardless of their tax status. To do otherwise is arbitrary and irregular oversight, and is misleading to students.

  • Why does APC contend that the GE Rule will most adversely impact minority students?

As the result of the Rule’s questionable metrics that target minorities and economically disadvantaged students, but have no statistical relevance measuring gainful employment outcomes, institutions who primarily serve these student populations are disproportionally and most harshly and unfairly penalized. A study by the Parthenon Group found that “the proposed rule is tantamount to educational red-lining:  under the GE Rule, low-income students, minority students, and females will be denied access to the federal grants and loans that they need to pursue their education.”

  • It’s understandable that proprietary colleges, which seem to be the ones heavily targeted by this regulation, would oppose it. Is there significant support outside the sector to have the GE Rule overturned?

Yes. In mid-February 2015, Representative Virginia Foxx (R-NC), chair of the Higher Education Subcommittee in the House of Representatives, introduced a bill called the Supporting Academic Freedom through Regulatory Relief Act (H.R. 2637) that would “prevent future federal overreach in postsecondary academic affairs” and eliminate three onerous regulations affecting colleges and universities, including Gainful Employment.

Rep. Foxx’s bill has received considerable attention, including in a Forbes‘ blog by Richard Vedder, an avid critic of the Gainful Employment rule and director of the Center for College Affordability and Productivity, entitled: “Senator Alexander: Smart Like a Foxx.” Mr. Vedder makes a compelling point that APC has made time and again, and which is an important component in understanding our disagreement over the Gainful Employment rule – namely that, while we wholeheartedly support the intention of ensuring colleges provide students with a quality education that leads to gainful employment, the current GE rule as it stands is a misguided attempt that is a “blatant ideological attack against for-profit institutions.” As he wrote:  “While a comprehensive gainful employment rule applying to all schools might be justifiable, that is not what we have, and we need to start from scratch, as Virginia Foxx has proposed.”

  • What is the current status of the proposed GE Rule?

The Department issued its final rule on October 31, 2014; it had a July 1 enactment date for certain aspects of the Rule. However, shortly following its publication, separate lawsuits were filed by APC and the Association of Private Sector Colleges and Universities (APSCU) challenging its validity and seeking to block its enforcement.  The APC complaint is here; the one filed by APSCU can be found here. Those lawsuits are currently in process within the judicial system.

  • The Department did not release the data supporting its recommendations. Why is that problematic?

Despite requests to do so during the negotiated rule-making discussions and subsequent Freedom of Information Act requests, the Department failed to release supporting documentation and information relating to its proposal. This omission not only impedes independent inspection of the rationality of the Department’s methodology, but also thwarts interested parties from assessing the impact of the proposed Rule on students, employees, businesses that hire the graduates, and others.

Look at a specific example: One metric would ultimately close any program with more than an 8% debt-to-earnings rate, but there is no data to establish the correlations between student debt loads, early-career earning levels, and the long-time value of their education. Nor is there any education-related data to justify setting the threshold at 8%, which is very harsh given that other reports, even reports prepared by the Department’s own statistical office, indicate that the average graduates of other degree programs use approximately 13% of their income to pay their student debts. If this 8% threshold were actually applied to degree programs at public and non-profit institutions, multiple other studies indicate that most of those programs would fail.

  • What will the implications be for students enrolled in a failing program?

As reported in Inside Higher Ed, “Up to 44 percent of students at for-profit colleges could lose access to federal financial aid under proposed ‘gainful employment’ regulations, according to a new report from (APSCU: Association of Private Sector Colleges and Universities). And many of those students lack other educational options in their academic field or geographical area.”

Unfortunately, the general public will tend to assume a program that fails these metrics is, by definition, a bad program and should be avoided, which will lead to poorly informed enrollment decisions. APC expects that many students will opt for local community and public colleges that do not have to abide by the same measures, and so never need to publicize that their graduation, job placement or cohort default rate outcomes trail those of the proprietary college that the students dismissed from consideration due to the misleading data under the GE Rule.