Why is the Department of Education proposing a new gainful employment rule?
Most of the original proposed rule was thrown out by a federal district court in June 2012, after the Association of Private Sector Colleges and Universities, the main trade group of the for-profit-college industry, challenged it in a lawsuit.
A judge appointed by President Obama agreed that the department had the right to issue the regulation but said the department had been "arbitrary and capricious" in setting the thresholds for one of the three key criteria it would use to determine whether a program would lose eligibility for federal student aid.
Since that debt-repayment measure was closely linked with the two other criteria, the judge vacated those other measures as well, leaving a rule that was basically toothless.
In March 2013, the judge, Rudolph Contreras of the U.S. District Court for the District of Columbia, rejected the department’s motion to restore some of the criteria.
In May 2013, the department said it would drop any further efforts to revive the old rule and would instead develop a new one. It released a draft of the new proposed rule in August 2013.
Will this new version of the rule satisfy the coalition of more than 50 consumer, student, and veterans groups that have urged the Obama administration to enact an even tougher rule than the one the department unveiled in August?
Probably not. Among other concerns, the groups identified what they consider a loophole in the department’s proposal that would allow colleges to continue to operate programs even if 99 percent of the students dropped out.
To deal with that, they proposed that the department also include criteria based on how many students—whether they dropped out or not—were repaying their loans. The proposed rule being unveiled on Friday does not include any measures based on repayment rates.
Read more at The Chronicle of Higher Education: http://chronicle.com/article/5-Things-to-Know-About-the/145327