House Quashes Rules On Student Debt at For-Profit Colleges

A bipartisan House group voted on Friday to block the Obama administration from cracking down on career college programs that leave students with debt they can't repay.

The House budget amendment, proposed by Rep. John Kline, R-Minn., and approved 289-136, would prevent the Department of Education from publishing long-discussed consumer protection rules that would regulate for-profit colleges and some community college programs.

Known as the "gainful employment" rule, the hotly debated regulation would gauge whether students at such programs are able to repay their student loans and can attain salaries that don't bury them under unmanageable debts. Programs that fail to meet certain student debt targets could lose access to federal higher education grant and loan dollars -- revenue that is crucial to the survival of the for-profit college industry.

The measure is still far from becoming reality, as the House budget bill will face a major uphill battle in the Senate, and the threat of a veto from President Obama. But the vote is indicative of the growing political influence of the for-profit education industry on both sides of the aisle in Congress.

More than 50 Democrats in the House joined Republicans in opposing one of the Obama administration's key higher education reform proposals.

Industry representatives applauded the vote, saying the regulation would "cost in excess of 100,000 jobs and deny a pathway to employment for more than 1.5 million students, disproportionately affecting minorities and women," according to a statement from the Coalition for Educational Success, an industry group representing some of the largest publicly traded for-profit education companies.

Individual programs -- not entire schools -- could be subject to sanctions. The Department of Education estimates that if the rules go through, about 16 percent of for-profit programs could lose access to federal higher education dollars.

For-profit colleges are facing increased public scrutiny amid a bevy of data that shows students at such schools take on much more debt and default on federal student loans at much higher rates than other college students.

Average tuition at for-profit schools is nearly twice that of the in-state tuition at four-year public colleges, and more than five times the average tuition at community colleges, according to a Senate report released last year. And recently released data from the Department of Education show that a quarter of all students enrolled at for-profit schools defaulted on federal student loans within three years -- more than double the rate of students at non-profit institutions.

Debate on the gainful employment rule has often centered on access to higher education. Opponents of regulation say the rules would prevent mostly minority, low-income students from attending college. Supporters argue the regulations would simply target the worst actors in the industry, who seek profits from federal aid dollars with little regard for student outcomes once they enter the workforce.

The Department of Education has not yet released a final version of the rules, but a draft version would allow programs at for-profit colleges to remain fully eligible even if less than half of students are repaying the principal on federal student loans.

A spokesman for the Department of Education defended the regulations, and said the agency would "continue working with Congress and education stakeholders as we thoughtfully move forward on this important issue."

"Far too many students are being saddled with unmanageable debts in exchange for degrees and certificates that do nothing to improve their employment prospects," said the Department spokesman, Justin Hamilton.

Rep. George Miller, D-Calif., the ranking Democrat on the House Education and the Workforce Committee, who opposed the amendment, said the vote would "shut down work on protecting students from financial exploitation."

"When these institutions can make up to 90 percent of their revenue from federal student aid, we have an obligation to protect the taxpayer investment," Miller said.

Comments

[DrMandible]

10:44 AM on 03/24/2011

Yes to Gainful Employment regulations!

[emh]

11:22 PM on 03/13/2011

this is a travesty. i work at one of these institutions right now (thanks, wall street, for destroying the economy!!) because i don't have a choice, but i will ONLY be there until i can find a better job. i'd say 75% of my students don't belong in college. i'm not judging intelligence or capabilities, but they are woefully underprepared and lack even basic skills - like how to construct a sentence. most of them graduate without having improved much on their entry-level knowledge. i give them 150% because i love to teach, and i believe that everyone who is there deserves my best. but this is a racket, make no mistake about it. the stories i've heard from the students themselves about recruiting tactics, efforts to keep them in school when they want to dropout, etc. are alarming at best. i went to a big 10 school, have a graduate degree, have years and years of top notch experience, and i can't find a job. i can't imagine what it will be like for my students with all but worthless pieces of paper and sometimes up to $100k in debt. they will not be able to pay it off. that's the bottom line.

there doesn't seem to be much light at the end of the tunnel for me in this economy, but at least i'm getting paid (less than minimum wage per hour) to be there. my students are racking up debt in amounts they probably don't even comprehend

[ThinkAboutWhy]

03:52 PM on 03/12/2011

A rule is proposed that ties performance to pay... for a business and it gets quashed.

These bad institutions take advantage of the fact that to get a real job (living wage, benefits etc) takes a piece of paper. The institutes just slap the chains of debt on these students promising that the education they are buying will take off the chains.

It should be criminal, but the poor are not paying their lobbyists enough to get results.
What do they expect?

These unscrupulous institutions also can not get enough of that GI bill money. They even hose our vets without blinking.

[littleblackcat]

04:49 PM on 03/11/2011

Someone needs to get their head un-wedged. These "For-profit" online universities are NOT "Opening doors and creating jobs and/or a workforce", they are rooking tens of thousands of dollars from tax-payers and would-be students. They have as many tricks up their sleeves as the average republican politician. I'm ashamed of any Democrat who supports this obscenity, it's what anyone would expect from the 'thugs because it will continue to drive down the earning capacity of the average American, meaning they won't be able to afford a home of their own and will be forced to rent from a fat cat, at whatever the renter can possibly scrape together to keep a roof over their head.

[Mary Sue Mc Cormick]

09:56 AM on 03/11/2011

In other words, they quashed the bill because it would what?... help the poor?.... why, exactly, would passing the bill be such a bad thing in hepling to keep a mind-boggling debt load off the students backs? The politicans are not even trying to hide their stupidity any more. Amazing!

[miamia25]

08:57 AM on 03/11/2011

Visit any third world country and this is what the government is like. There are no protections in place for the citizens and the government only works for the wealthy.

[JohnSawyer]

12:27 AM on 03/11/2011

Something I don't understand about this, is why would lower-income people disproportionately choose for-profit educational institutions, which cost more, and often educate more poorly, than public institutions, including community colleges? When I was 20, in 1976, got my two-year AS degree in electronics from College of Marin in California, where I received an education that was so good, it was felt to be nearly equal to a four-year degree, and I was employed by the first company I applied to, after passing a stringent test, impressing my employers. Since then, over the years, I've taken a few more community college classes in other subjects, and in each case I've been stunned at how good the teachers were, and how thoroughly they covered their topics. And the price of community colleges is an incredible bargain, and in many cases you can get financial aid too, often grants you don't have to pay back. Why would some of the people who can least afford it, saddle themselves with huge debts by going with expensive, questionable institutions?

[Godfearing]

12:59 PM on 03/02/2011

It looks like private colleges have bought off the birthers! More student loans that will never be paid.

[danceswithdata]

06:08 PM on 02/21/2011

I work in the student loan industry and therefore I am saturated every day with info on this debate. It does have two sides -- One, how is it that the for-profit schools (privately owned and many that are now publicly traded) can not be locked into a blatant conflict of interest position when they charge significantly higher tuition rates than most non-profit colleges and universities in order to satisfy the demands of the shareholders? Two, they go out of their way to recruit students from economically depressed backgrounds and enroll them with the promise of a degree that will bring them a high paying job. It's no wonder that these students are carrying a huge amount of debt, mostly debt that they will never be able to repay so the burden falls on the taxpayers. Nothing new about that. But most people are unaware that enormous numbers of these for-profits get almost 90% of their revenue from government student loans, or Title IV funds. The other side is that those who are fiercely arguing against this "gainful employment" rule are accusing the Dept of Education of turning a blind eye to the state that the non-profit colleges are in, and not holding their feet to the fire to give better educations at lower costs to all of their students. It's a very sticky problem and one that is not going to be easily resolved. Nothing new about that, either.

[dc8s]

01:09 PM on 02/21/2011

This is why educating people is key. All that has to happen is that people stop attending these colleges and being roped in by their used car salesman (no offense) tactics. When their money source starts to dry up, we'll see changes and the worst offenders will close. But until the market that they try to dupe decides to do things a different, and sometimes more difficult way, they'll keep on doing what they do. I can't understand why anyone would go to some of these places ... are the lies that believable? A little research could tell a halfway intelligent person the truth!

[fortressfountain]

11:43 AM on 02/21/2011

What happened to both parties who say education is important and to sacrifice for the youth?
May be because a lot of well educated people are presently unemployed.
If the politicans were serious about education, they would make college free to all.

[Mary Sue Mc Cormick]

09:58 AM on 03/11/2011

They NEVER make anything free... we all end up getting the shaft in the end... no pun intended!:)

[Sigger]

10:59 AM on 02/21/2011

Another "buy-off" of the gop with corporate donations. Our democracy, and decency for the average American is being destroyed by the very people who didn't play fair with the consumer in the first place. Now that they have been caught, it's round two of buying votes in the gop.

[SPQR1775]

10:46 AM on 02/21/2011

The GOP is so hypocritical and the DINOs who voted with them. WHY IS THE GOVERMENT subsidiseing FPCU and that matter why is the Goverment subsidiseing FP Hopitals and Healthcare centers? It seem as if OBAMA has the entire House of Representatives against him, so DO THE PEOPLE KNOW WHO REALLY HAVE THEIR INTEREST AT HEART? IT IS NOT THE GOP or the Oligarchy funded DINOs!!!

[SPQR1775]

10:36 AM on 02/21/2011

For profit institutions are set up by GOP fronts like the KOCH brothers to do their dirty fake research etc. The GOP communication strategy is built by creating their own fake arms and they all use American, Patriotic, National Security, Liberty, Conservative, Christian etc as code words, but truly in't any of what they preached. I am still waiting for the 0300 AM call from Americans to the President, something bigger than Egypt would be awesome, but demanding that the President use National Security to trump the GOP, which he can! Education, Healthcare, Social Security, and so much more social programs are NATIONAL SECURITY ISSUES!

[SPQR1775]

10:32 AM on 02/21/2011

According to the GOP, Education, Healthcare, WARs, EPA, everything in America is for PROFIT even your Social Security must be PRIVATIZED. President O and his administration should allow the GOP to pass all the laws they want, STACK THEM HIGH and TAKE THEM AROUND THE NATION to be read by the people and CALL IT OUT. Obviously the GOP has a loosing strategy, but it will only backfire when the Administration rally the troops. FDR, Lincoln, JFK, LBJ all did just that. It is time to call out the GOP. Obviously we have a group of Congressional Reps, Local State Reps and Governors who are funded by the Oligarchy and doing whatever they want to win favors and ruin the American Dream. People should do a few things and sink the banks....STOP allowing these deregulated conglomerate to ruin our way of life and living. The Banks, Phonce Co's, Hospitals for Profit and so much more. What has the US becomes?