NAICU Washington Update

Proposed Rules on Gainful Employment Continue to Roil the Waters

September 02, 2010

The trade and national press continue to turn out stories and commentaries in the wake of the Department of Education's Notice of Proposed Rule-making on "gainful employment" (see earlier Washington Update story) and Sen. Tom Harkin's (D-Iowa) August 4 hearing, scalding the for-profit sector. 

News articles have revealed a variety of points of view. There have stories citing additional instances of misrepresentation by for-profit schools, and a counter campaign by the for-profit sector expressing concern that more stringent rules and measurements will prevent attainment of President Obama's 2020 goal to make the U.S. the world leader in college graduation.  Even Steven Colbert got into the action with a recent skit in his popular, but controversial, political comedy show.

Lost in all the media frenzy are the implications of the proposed regulations on non-profit and public colleges. The department has estimated that 2,139 public institutions - many of them community colleges - and nearly 250 private, non-profit colleges would have credential programs falling under the rules. Given all the new matrixes proposed by the regulations, it is impossible to predict which colleges might be negatively impacted by the proposals, since program-level data on which the formulas will be based do not yet exist.

The Department of Education, for its part, has used forums such as conference calls to explain the complex NPRM and answer questions about them.  Such events have been flooded by stock analysts, anxious to figure out what the implications are for publically traded companies.  The department also released information on August 24, re-affirming the methodology the department used in calculating the institution-level repayment rates it published for all colleges. The letter caused another drop in the stock prices at for-profit schools.

NAICU is working with the rest of the traditional higher education community to formulate a collective and balanced response to the regulations.  In the meantime, it is unlikely that the focus on the for-profit sector will dissipate any time soon.  Sen. Harkin has requested massive amount of data from 30 for-profit schools.  The first response was due August 26.  The second is due shortly thereafter.  Harkin also plans at least two more hearings this fall.

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