New Rulemaking and Public Hearings Announced; Broad Coalition Urges Action
In a notice in the April 15, 2013 Federal Register, the Department of Education announced it will hold three public hearings in May and begin negotiated rulemaking in September on a range of issues. In its news release, the Department wrote it “will begin conversations with the higher education community on rules that would be designed to ensure colleges and universities are giving students a high-quality education that prepares them for the workforce and lifelong success – including discussion of topics like state authorization for online programs, issues surrounding institutions’ management of federal student aid funds, and how to define ‘gainful employment.’” On the heels of this announcement, a coalition letter was sent to President Obama urging the Administration to promptly begin rulemaking to effectively enforce the statutory “gainful employment” requirement for all career education programs. The coalition letter is signed by more than 40 organizations that work on behalf of students and college access, consumers, veterans, and civil rights.
Update: The Department of Education has announced the addition of a fourth public hearing at which interested parties may comment on the topics for upcoming negotiated rulemaking,suggested by the Department and may suggest additional topics for consideration for action. The deadline for submission of written comments has been extended to June 4, 2013.
Gainful Employment Litigation
In June 2012, a federal judge upheld the Department of Education’s authority to issue regulations to enforce the statutory requirement that career education programs receiving federal funding, whether at for-profit, public or nonprofit colleges, “prepare students for gainful employment in a recognized occupation,” but it also invalidated parts of the gainful employment regulations because the judge concluded that the Department had not offered a sufficient rationale for the rule’s loan repayment rate threshold. The Department petitioned the judge to uphold the rule’s reporting requirements, which support the rule’s disclosure requirements. The judge issued his ruling in March 2013, denying the Department’s motion to uphold the Gainful Employment reporting requirements, which means only the rule’s disclosure requirements remain in effect. You can read articles about the ruling here and here.
Senate HELP Committee Report on the For-Profit Education Industry
On July 30, 2012, Senator Harkin unveiled a HELP Committee report on the for-profit education industry and the 30 companies that have been the focus of a two-year Committee investigation. The report provides a comprehensive analysis of how the $32 billion annual investment in the sector is serving taxpayers and the students enrolling in the schools. The report draws on data and documents not previously released including new student outcome data for each of the companies reviewed. Joining Senator Harkin at the press conference were Senator Blumenthal, Congressman Cummings, Amy Wilkins from The Education Trust, Tom Tarantino from Iraq and Afghanistan Veterans of America, and Laura Brozek, a former Director of Recruitment for ITT Technical Institute.
The entire report, For Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success, can be found here.
Gainful Employment Informational Data
On June 26, 2012, the Department of Education released data for career education programs at public, for-profit and non-profit schools subject to the Gainful Employment regulation. The data show that five percent of the programs—all located at for-profit colleges—do not meet any of the three debt measures in the Department’s Gainful Employment regulation. Only 35 percent of programs meet the minimum standard for all three metrics. The data are informational only and do not have any consequences associated with them. And now, with the federal judge’s June 30 decision on the Gainful Employment Regulation, the problems revealed in this informational data are left with no regulation to address them.
On a visit to Fort Stewart in Georgia on April 27, the President signed an Executive Order designed to protect veterans and servicemembers and their families from colleges that seek to mislead them. In his speech, the president said:
“I’m not talking about all schools. Many of them — for-profit and non-profit — provide quality education to our servicemembers and our veterans and their families. But there are some bad actors out there. They’ll say you don’t have to pay a dime for your degree but once you register, they’ll suddenly make you sign up for a high interest student loan. They’ll say that if you transfer schools, you can transfer credits. But when you try to actually do that, you suddenly find out that you can’t. They’ll say they’ve got a job placement program when, in fact, they don’t. It’s not right. They’re trying to swindle and hoodwink you. And today, here at Fort Stewart, we’re going to put an end to it.”
The goal of the Executive Order is to:
• Create a centralized complaint system for students receiving Federal military and veterans educational benefits to register complaints that can be tracked and responded to by the Departments of Defense, Veterans Affairs, Justice, and Education, the CFPB, and other relevant agencies.
• Provide students with educational and financial information to make informed decisions.
• End fraudulent and aggressive recruiting techniques on and off military installations.
• Ensure support services for service-members and veterans.
• Develop and collect service member- and veteran-specific student outcome data.
• Begin the process to trademark the term “GI Bill.”
The full text of the Executive Order is here; the White House news release is here; background on the visit and event is here; a video of the President’s speech is here; the text of the President’s Fort Stewart speech is here, and President’s weekly radio address, which was also on this topic, is here. Veterans organizations that have been working on this issue came out in strong support of the Executive Order. Statements were issued by many groups, including the American Legion, Military
GAO Reports on For-Profit Colleges
The GAO recently issued two reports dealing with for-profit colleges. For the first, For-Profit Schools: Experiences of Undercover Students Enrolled in Online Classes at Selected Colleges (October 2011), the GAO was asked to conduct undercover testing by enrolling in online classes under degree-granting programs. It reported that, “during the course of undercover testing, GAO documented its observations related to enrollment, cost, financial aid, course structure, substandard student performance, withdrawal, and exit counseling. Overall, GAO observed that 8 of the 15 colleges appeared to follow existing policies related to academic dishonesty, exit counseling, and course grading standards. At the 7 remaining colleges, GAO found mixed results. For example, one or more staff at these colleges appeared to act in conflict with school policies regarding academic dishonesty or course grading standards, or federal regulations pertaining to exit counseling for student loans, while other staff acted consistent with such policies.”
The second GAO report, Student Outcomes Vary at For-Profit, Nonprofit, and Public Schools (December 2011), reviewed available studies to look at student outcomes according to student characteristics at higher education institutions. As reported in The Chronicle of Higher Education,” For-profit institutions perform worse than public and private colleges on most measures of quality, even when student demographics are taken into account.”
On July 21, 2011, the U.S. Senate Health, Education, Labor & Pensions Committee chaired by Senator Tom Harkin held a full committee hearing entitled: Improving For-Profit Higher Education: A Roundtable Discussion of Policy Solutions. The discussion was focused on finding policy solutions to the problems in the for-profit highed education industry. In a news release announcing the hearing, Senator Harkin said, “Over the past year, my Committee has documented serious problems at some for-profit schools including deceptive and misleading recruiting tactics, disturbingly high drop-out rates, and large numbers of students left with debt but little else to show for their attendance” said Harkin. “Given the annual $30 billion taxpayer investment in these schools, it is incumbent on both the industry itself and Congress to ensure this investment is being used wisely. I am looking forward to a thoughtful discussion with school leaders, student and consumer advocates, and my colleagues to discuss how best to address the problems we’ve uncovered and ensure our taxpayer dollars are being used to provide Americans with education and opportunity.”
Frontline: Educating Sergeant Pantzke
Tuesday, June 28: American public television’s public affairs series, FRONTLINE, began airing Educating Sergeant Pantzke.
FRONTLINE writes: As troops return from Iraq and Afghanistan, U.S. government spending on veterans’ education will more than double to $9.5 billion this year, and a growing percentage of this money has been ending up in the pockets of for-profit colleges. In a follow-up to FRONTLINE’s College, Inc., correspondent Martin Smith investigates how the for-profit schools are aggressively recruiting huge numbers of new veterans with educational promises that many now question whether they can keep.
You can find additional media coverage here.