Oppose Efforts to Nullify the Gainful Employment Regulation

Protect Students and Taxpayers, Not Wasteful Programs:
Oppose Efforts to Nullify the Gainful Employment Regulation

October 5, 2011

At a time when we need to do more, not less, to eliminate waste, fraud and abuse of taxpayer dollars, the House Committee on Appropriations fiscal year 2012 Labor, HHS & Education appropriations bill goes in the opposite direction by repealing modest regulations designed to protect students and taxpayers from the worst career education programs.  We need to be strengthening, not weakening, measures to ensure taxpayer money is not wasted and that Americans are gaining the skills they need to obtain employment.

Numerous investigations have revealed widespread waste, fraud and abuse at for-profit career colleges, including deceptive and aggressive recruiting of students and veterans; false or inflated job placement rates; and dismal completion rates.  Some schools have gone so far as to enroll people who are homeless, enroll students without their consent, and use tactics that invoke “pain” and “fear” to pressure students into enrolling.  The U.S. Department of Justice is taking legal action against the second largest for-profit college corporation, and 22 state attorneys general are jointly investigating potential abuses in the for-profit college industry.  Many of these schools receive nearly all of their revenues from federal taxpayer-funded programs.  In other words, taxpayer dollars are subsidizing career education programs that prey on low-income and minority students and veterans, saddle them with debt they cannot repay, and leave the taxpayer holding the tab.

The modest “gainful employment” regulation finalized earlier this year advances a common-sense principle:  taxpayer-funded federal financial aid should not go to wasteful career education programs that consistently leave students buried in debt they cannot repay.  Federal law requires career education programs that receive federal student aid to “prepare students for gainful employment in a recognized occupation.”  The regulation defines what this means so the law can be enforced.  Editorial boards from across the country have called for stronger regulations, and a broad coalition of civil rights, student, consumer, veterans and college access organizations oppose any effort to nullify the regulation.

The House FY12 Appropriations bill would nullify the gainful employment regulation, turning a blind eye to how billions of taxpayer dollars are being spent.  The House bill would

  • Block accountability. It would prevent the Administration from enforcing the final regulation that holds all career education programs accountable, not just those offered by for-profit colleges. Schools need to be held accountable for the billions of dollars of taxpayer-funded federal student loans and grants that go to students enrolled in career education programs.
  • Eliminate consumer information and transparency.  The bill would bar the Department of Education from enforcing required consumer disclosures that ensure access to basic information needed to make an informed choice about a career education program, such as its cost and student completion rates.
  • Condone wasteful spending and business as usual. Blocking the gainful employment regulation effectively turns a blind eye and condones the current abuses in the career college industry. These colleges enroll about 12% of all students but account for nearly half of federal student loan defaults.  We need to be cutting wasteful spending, not subsidizing Wall Street corporations that hire high-paid lobbyists and routinely leave students and families buried in debts they cannot repay—and leave taxpayers holding the bag.

Congress needs to protect the interests of students, veterans, and taxpayers.

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