NAICU Washington Update

Court Okays Gainful Employment Regulations

June 30, 2015

Despite pending provisions in the House and Senate’s Labor, HHS, and Education appropriations bills to eliminate the gainful employment regulations, the regulations went into effect on July 1, 2015. The U.S. District Court for the District of Columbia, in a recent decision, upheld the Department of Education’s gainful employment rule, denying the Association of Private Sector Colleges and Universities’ (APSCU) suit. (An earlier decision in a New York court also upheld the Department’s regulations.) APSCU, which is appealing the ruling, sought to label any employment after college as gainful.

The court’s decision supports the Department’s approach in assessing the meaning of gainful employment, and thus enables the implementation of the regulations. The case was only argued on the basis of the laws involved, since both sides agreed to the facts.

The decision provides extensive rational for the court’s opinion citing the validity of the Department’s action under the Administrative Procedure Act (APA) and the court’s obligation under a legal principle called the Chevron deference, which requires courts to defer to interpretations of statutes made by those government agencies charged with enforcing them, unless such interpretations are unreasonable.

The court reasoned that the Department’s use of debt-to-earnings test in the revised regulations was not outside the purview of the Higher Education Act (HEA), nor was it arbitrary or capricious under the APA, as APSCU had argued. (APSCU sued the Department over an earlier version of the gainful employment regulations and won.) In addition, the court explained that it must defer to the interpretation of the agency in charge of enforcing the statute, (i.e., the Department of Education), when the statute itself is ambiguous.

All programs at for-profit schools and certificate programs at non-profit and public institutions are considered gainful employment programs, and are only eligible for Title IV funding if the institutions’ programs “prepare students for gainful employment in a recognized occupation.” At the heart of the controversy is the fact that Congress did not explain what it meant by “prepare,” “gainful employment,” or “recognized occupation.”

The court this time determined that the Department reviewed, considered in depth, and remedied problems cited in its losing decision in the earlier case on gainful employment.