U.S. Department of Education sued by 18 states for ignoring for-profit college rule

Inside Subprime: October 20, 2017

By Caroline Thompson

Attorney Generals from 18 U.S. states have filed lawsuits against the Department of Education and Secretary of Education Betsey DeVos, for failing to implement Obama-era rules designed to protect students against for-profit college scams. The rule, called the “Gainful Employment Rule,” should require for-profit and community colleges to establish vocational programs that help students find employment upon graduation, but since DeVos took power earlier this year, she has been working hard to dismantle many of these student protections.

When it was rolled out in 2015, U.S. News & World Report said it would “weed out ​programs that saddle students with unmanageable education loan debt and lead to few quality job prospects. Under the rule, nearly all programs at for-profit institutions and a few other institutions had to meet a minimum repayment and student debt-to-income ratio, and more information had to be disclosed to current and prospective students.​” If schools failed to meet these criteria, their access to federal student loans would be denied, effectively shutting off from its main source of income, and preventing students from being saddled with student loans for a program that wouldn’t actually help them get a job.

According to DeVos, and other critics of the rule who have been fighting it since its inception, its implementation would limit students for higher education.

“Since their creation under the previous administration, gainful employment regulations have been repeatedly challenged by educational institutions and overturned by the courts, underscoring the need for a regulatory reset,” DeVos said in the June 30 statement. “We need to get this right for our students, and we need to get this right for our institutions of higher education. Once fully implemented, the current rules would unfairly and arbitrarily limit students’ ability to pursue certain types of higher education and career training programs. We need to expand, not limit, paths to higher education for students, while also continuing to hold accountable those institutions that do not serve students well.”

California Attorney General Xavier Becerra, one of the 18 AGs listed in the lawsuit, says this pushback has more to do with President Trump’s former businesses than any real pledge to protect students:

“Less than a year ago, Donald Trump had to pay $25 million to settle lawsuits against his now-defunct, for-profit Trump University. Now, as President, his Department of Education seems dead-set on continuing a tarnished legacy of putting predatory for-profit colleges ahead of students,” Becerra said in a statement. “Regardless of his fond nostalgia for those business practices, enough is enough.”

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