The United States Department of Education finalized a new regulation last week that critics say could have a catastrophic effect on the long-term viability of for-profit career colleges.
The so-called "gainful employment" rule was finalized last week, less than five months after it was proposed in May. The new rule requires for-profit and career colleges to prove that graduates of a given program make enough money to make payments on their student loans and earn more money than someone without a college degree.
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The regulation requires graduates of for-profit institutions to make enough that their debt payments do not exceed 20% of their discretionary income. The regulation also requires that at least half of an institution's graduates in a given program are earning more money than "a typical high school graduate" who did not attend college.
If colleges fail to meet the metrics, the regulation stipulates they will be forbidden from participating in the federal student aid system.
The Biden administration says that the new regulations, which build on a similar rule implemented by the Obama administration, will help students avoid crippling debt from education programs that do not lead to job opportunities that will allow them to successfully pay off their debt.
"Students overwhelmingly say that they’re going to college to find a good job and build financial security, but too often their programs leave them no better off financially than those with no postsecondary education at all," Under Secretary of Education James Kvaal said in a press release. "These rules will stop taxpayer dollars from going to schools that continually saddle students with unaffordable debt. Separately, we’re ensuring all students have increased information to make good choices.”
But opponents of the rule say the regulation could have a crippling effect on for-profit colleges that provide career training programs to a significant portion of the population. Some have even suggested that the Biden administration is deliberately targeting for-profit colleges.
Bob Carey, director of the National Defense Committee, a conservative veterans advocacy group, said that the new regulation did nothing to help veterans who rely on career colleges, and instead was meant to prop up traditional higher education institutions.
"This regulation is not about protecting students’ and veterans’ educational benefits, but about protecting traditional colleges’ historical market position, by infantilizing veterans as incapable of making any education decision for themselves and forcing them back to these traditional colleges," Carey said.
The sentiment was echoed by Gerard Scimeca, the chairman and co-founder of Consumer Action for a Strong Economy, a consumer advocacy organization, who said that the regulation will inevitably lead to the closure of numerous colleges.
"Unfortunately, the final gainful employment rule published ... by the Biden administration will likely reduce the amount of options available to students that want to learn skills at career colleges and technical schools," Scimeca said. "Even the administration notes that upwards of 1,800 programs may be forced to close under this rule. The federal government shouldn’t punish students who choose for-profit colleges or vocational training, but that is exactly what the DOE is doing with its GE rule."
Jed Brinton, senior vice president and general counsel for Career Education Colleges and Universities, told the Washington Examiner in an interview that the speed with which the regulation was finalized after being introduced in May was surprising.
Brinton said that the department abbreviated a public comment period for the rule from the traditional 60 days to 30 days, which may have helped shorten the time frame, but the brevity of the process was still unusual.
"I was surprised with how quickly it happened," he said.
For Brinton, the regulation raised significant questions about how the administration views for-profit colleges in comparison to traditional non-profit schools. He noted that his organization had advocated for the department to adopt an "across the board approach" that would affect for-profit and non-profit colleges equally.
"If you really are primarily concerned about quality," he said, "then you would want to measure all the schools regardless of tax status, and get rid of all the bad ones."
Brinton, who worked at the Department of Education during the Trump administration, said that the rule could have the effect of closing down career programs that are serving students effectively but don't meet the department's standards.
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"[The rule] just gets the conclusion wrong," Brinton added. "In many cases where I think you can have really excellent programs that are just going to not show up as excellent on these measures."
A spokesperson for the Department of Education declined to provide further comment beyond what was in the agency's press release.