A group representing these schools — the Association of Private Sector Colleges and Universities (APSCU) — filed a lawsuit last week in the United States District Court for the District of Columbia in a bid to declare the regulation unlawful and to have it set aside.
The APSCU represents 1,400 member institutions, including American National University, DeVry University, Full Sail University, Kaplan College, Lincoln Technical Institute, San Joaquin Valley College and Stratford University, among many others. The schools are often part of much larger educational companies owned by various holding companies and such.
“This regulation, and the impact it will have on student access and opportunity, is so unacceptable and in violation of federal law, that we were left with no choice but to file suit. If successful, our suit will protect student access and opportunity to higher education at a time when the U.S. Department of Education seems interested in limiting choices for students by closing private sector programs,” said Steve Gunderson, president and CEO of APSCU.
Gainful Employment Rule
The APSCU has objected to several parts of the administration’s mandate, including the main rule that risks federal funding if annual loan payments for graduates exceeds 20 percent of their discretionary income or 8 percent of their total earnings. The gainful employment rule will take effect in July 2015.
In its court complaint the APSCU called the ruling “unlawful, arbitrary” and also said that it would “…needlessly harm millions of students who attend private sector colleges and universities.” Further, the association claims that the ruling is “unconstitutional” and a violation of the Administrative Procedure Act. The association also said that the administration’s previous ruling “needlessly imposed costs on taxpayers” and left an air of uncertainty among schools and students. They claim that the earlier rules, put in place in 2011, have only been exacerbated.
In a statement issued by the association, the APSCU claims that the debt-to-earnings metric is so high that students at private and public universities would have their degrees disqualified if the ruling was applied to their institutions. The association argues that other factors can impact students and their ability to secure employment to include: local job-market conditions, their own employment decisions as well as their financial situations.
Federal and State Scrutiny
The Obama administration’s initial attempts to rein in for-profits institutions was struck down in 2012 by a federal judge in Washington according to the New York Times. That initial ruling set benchmarks for student loan repayments, also based on earnings and discretionary income.
For-profit colleges and universities have also been facing scrutiny on the state level. In Massachusetts, the state has issued new regulations requiring greater disclosure in their literature about tuition and fees, employment statistics, graduation rates and program completion time. Massachusetts has also cracked down on some of the “high pressure sales tactics” these schools allegedly practice noted MassLive.
In October, Wisconsin’s Attorney General sued Corinthian Colleges for allegedly using deceptive marketing to enroll students in its Milwaukee campus, since closed. The AG’s complaint says that the school inflated its graduation and job placement rates. Corinthian closed the school in Aug. 2013 and provided some refunds to students that did not graduate according to Channel 3000.
The Value of a College Degree
Should the APSCU succeed in having the ruling set aside, the scrutiny will continue. That isn’t a bad thing as parents and students evaluate the effectiveness of any college program that should provide a pathway to employment.