Thursday, 24. June 2010

Protect Students and Taxpayers, Not Wasteful Programs:
Oppose Efforts to Block the Gainful Employment Regulation
March 7, 2011

With Members of Congress taking a hard look at our finances and federal deficits, we urge the Senate to oppose any effort to block the Administration from issuing a gainful employment regulation. Blocking a gainful employment regulation would require Washington to turn a blind eye to how billions of dollars in taxpayer-funded student aid are being spent. After a massive special-interest lobbying campaign by the for-profit college industry, the House has already voted to block any gainful employment rule and  force the government to ignore widespread waste, fraud and abuse in career education programs. A similar Senate proposal (S. 460) has been introduced as well.

Numerous investigations have revealed widespread waste, fraud and abuse at for-profit career colleges, including deceptive and aggressive recruiting of students; 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. 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 students, minority students and veterans, saddle them with debt they can’t repay, and leave the taxpayer holding the tab.

Federal law requires career education programs that receive federal student aid to “prepare students for gainful employment in a recognized occupation.” Although this law has been on the books for years, the term “gainful employment” has never been defined. The Obama Administration is preparing to enforce the law by issuing a final gainful employment rule that 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. That’s why a broad coalition of civil rights, student, consumer, veterans and college access organizations supports a strong gainful employment rule.

Any attempt to block the Administration from enforcing the law and implementing a gainful employment regulation is wrongheaded and would turn a blind eye to how billions of taxpayer dollars are being spent. Doing so would:

Block accountability. The Administration should not be prevented for issuing a final regulation that will hold all career education programs accountable, not just those offered by for-profit colleges. Schools need to be held accountable for the more than $20 billion in taxpayer-backed federal student loans that go to students in career education programs.

Cost taxpayer dollars. CBO says a gainful employment regulation will save taxpayer money. With scarce resources and a tight budget, there is no rationale for blocking rules that ensure we are spending each taxpayer dollar wisely. We need to be cutting wasteful spending, not subsidizing Wall Street corporations that routinely leave students and families buried in debts they cannot repay—and leave taxpayers holding the bag.

Condone wasteful spending and business as usual. Blocking a rule effectively turns a blind eye and condones the current abuses in the career college industry. These colleges enroll about 10% of all students but account for nearly half of federal student loan defaults (48%).

The abuses in the career college industry have been likened to the subprime mortgage crisis.  Now is not the time to turn a blind eye to these problems.

A broad coalition of more than 45 organizations that advocate for civil rights, consumers, veterans, students and college access sent a letter to President Obama on January 26, 2011, urging his administration to issue a strong and enforceable “gainful employment” rule.  To read this letter, click here.


The U.S. Department of Education recently proposed new rules to protect students and taxpayers from career education programs that over-charge and under-deliver. Leading student, civil rights, consumer and college access groups, along with Members of Congress and thousands of concerned Americans, weighed in to support the regulation or to strengthen it.

Proposed rules covering thirteen program integrity issues, including those around incentive compensation designed to protect students from high-pressure and deceptive sales tactics, were issued on October 28, 2010.  The final regulations can be found here and here. These new rules provide many needed protections for students and taxpayers.  To view a statement from the Institute for College Access & Success, please click here.  To read media coverage of these new rules, please click here.

Proposed rules around “gainful employment” were issued in July with public comments accepted through September 9, 2010.  On September 24, the U.S. Department of Education announced that it would issue final regulations on gainful employment in early 2011, rather than by November 1, 2010. The Department made clear that this timing change will not delay the planned implementation of the regulations in 2012. This new timeline for issuing final regulations gives the Department more time to consider the comments it received on the draft regulations and to host meetings and public hearings on November 4 and 5.

Thank you to everyone who sent in comments on the draft regulations.  It is critical that your voices are heard in this rulemaking process.

To see comments from key organizations that were submitted in support of strong rules, click here.

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