The New Yorker posted an analysis online calling on the Biden Administration to reinstate the Gainful Employment Rule, an Obama-era set of regulations on for-profit colleges that mandated public disclosures of key performance data, tracking of student-debt levels and incomes by school, and cutting off federal aid to schools that “consistently overpromised and under-delivered.”
Betsy DeVos—Secretary of Education under Donald Trump and “privatization zealot,” per the New Yorker—got the Gainful Employment Rule repealed in 2019, and for-profit colleges have since benefited from lax oversight, particularly during the pandemic: “enrollment at four-year, for-profit schools rose by more than five percent last year; among students without previous college experience, the increase was nine and a half percent,” the New Yorker reported.
These schools derive the majority of their revenue from federal resources, and have a history of predatory behavior. They charge, on average, four times the tuition and fees of community colleges, according to the New Yorker, and fill the gaps left by federal aid with expensive private loans that often leave students in financial ruin. Though they only account for about ten percent of all college students, the New Yorker reported, for-profit colleges account for half of loan defaults.
Congress has taken some action to reign in for-profit colleges. Earlier this year, Congress closed a loophole in the so-called “90/10 rule”—which stipulates that for-profit colleges must derive at least 10 percent of their revenue from non-federal resources—by prohibiting GI Bill funding from counting toward that 10 percent. Previously, schools were able to characterize GI Bill funding as non-federal revenue. The rule won’t go into effect until 2023, however, according to the New York Times, which also advocated restoring the Gainful Employment Rule in March.
Yet calls for Biden and his Education Secretary, Miguel Cardona, to restore the Gainful Employment Rule have been met with inaction. The Department of Education could, according to the New Yorker, reverse DeVos’s repeal of the rule by settling a 2020 lawsuit filed by the National Student Legal Defense Network. However, government lawyers said they had no intention to settle, and Undersecretary of Education James Kvaal wrote in an October brief that an effort to restore the rule would cause “considerable disruption and diversion of resources from the Department’s priorities, which include restoring the student protections in this rule,” the New Yorker reported. Kvaal also cited the difficulty of accessing data required by the rule, data which the New Yorker found “might not be as elusive as the Department of Education has made out” and which, in any case, “could be a big help to those trying to evaluate programs.”
- Andrew Thomas, NCSPE Research Associate