March 9, 2015

28 Groups Urge Court to Protect Students and Taxpayers, Uphold Department of Education ‘Gainful Employment’ Rule

Department of Education Regulation Curbs Abuses by For-Profit Colleges

WASHINGTON, D.C. – A new Department of Education rule designed to protect students from exploitation by unethical for-profit colleges that receive billions in federal aid should be preserved, 28 groups have told a federal district court.

In a friend-of-the-court brief filed late Friday with the U.S. District Court for the District of Columbia, the organizations urged the court to reject a legal challenge by the Association of Private Sector Colleges and Universities (APSCU) to the “gainful employment” rule. The groups advocate for students and college access, civil rights, veterans and consumers.

Nearly all of the groups also filed a brief on March 2 in the U.S. District Court for the Southern District of New York, where another industry group – the Association of Proprietary Colleges – launched a similar challenge to the rule.

“The rule is absolutely essential to curb some of the most egregious abuses of unethical for-profit schools,” said Julie Murray, an attorney with Public Citizen who drafted the brief. “The groups that filed this brief are extremely concerned that some career colleges that target students of color, low-income students, veterans and others are exploiting those in the federal student aid program. The programs’ predatory actions must be stopped.”

The 2014 gainful employment rule is designed to address overwhelming evidence that some career training programs, particularly at for-profit institutions, fail to prepare students for jobs that would enable them to repay their federal student loans and leave some students worse off than before they considered going to college.

The rule requires programs whose students receive certain federal student aid, such as Stafford loans or Pell grants, to certify that they meet certain accreditation requirements and demonstrate that their debt-to-earnings rates – which measure graduates’ debt burden relative to their earnings – meet certain thresholds. In addition, schools must make meaningful disclosures to students and their families, including the total cost of tuition, fees, books, supplies and equipment.

In the case addressed by Friday’s brief, Association of Private Sector Colleges and Universities v. Duncan, the association challenging the rule claims that the rule fails to account for harm to students and violates schools’ First Amendment rights.

Both claims are erroneous, the groups on the brief maintain. In fact, a large record of evidence – from congressional hearing testimony to state attorney general investigations – shows that many for-profit schools have harmed students, preying on underserved populations and saddling many students with a lifetime of debt.

School recruiters have testified that they targeted students who were not academically ready for college, and Congress has uncovered evidence that some schools seem to train their employees not to provide students with a total cost of the program during the recruitment process. Many students leave for-profit institutions without graduating, and many graduates have high debt, low earning potential and few job prospects, leading to high rates of student loan default.

Evidence shows that some for-profit career training programs offer students an inferior education, with substandard instructors and few support services.

Regarding the First Amendment claim, requiring schools to disclose the cost of their programs does not violate the First Amendment because it doesn’t bear on APSCU members’ political, religious or other forms of opinion, the brief said.

“For-profit colleges looking to boost their bottom lines shouldn’t do it at the expense of students and U.S. taxpayers,” Murray said. “The abusive practices have been going on far too long. The gainful employment rule, although weaker than many advocates had hoped, is a step toward reining them in.”

Read the District of Columbia brief and the brief filed in the Southern District of New York.

Learn more about the case.

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