DeVos revokes Obama-era rule policing for-profit colleges

The Trump administration on Friday revoked an Obama-era rule that aimed to terminate federal funding to for-profit college programs that consistently left graduates with high student debt.

Department officials announced that the 2014 gainful employment rule will be rescinded effective July 1, 2020. The agency’s announcement said the rule focused too narrowly on graduate earnings and unfairly targeted for-profit colleges.

“The department’s rules should be designed to support all students and treat all schools fairly. The previous administration’s rule did neither,” Education Secretary Betsy DeVos said in a statement. “All schools should be clear and transparent about their outcomes and all students should have a full range of information available. We’re committed to making that happen.”

Instead of punishing schools that leave students strapped with debt, DeVos has promised to publish earnings data for all college programs as part of an update of the department’s College Scorecard website. DeVos has said it’s a fairer alternative that lets students decide for themselves whether a school meets their standards.

Under the rule, certain vocational programs could be cut off from funding if the average debt ratio of their graduates stayed above a certain limit for two out of three straight years. It was created under President Barack Obama amid widespread complaints of fraud against for-profit chains including Corinthian Colleges and ITT Technical Institute. Both chains collapsed under pressure from Obama officials.

But before any schools lost funding, DeVos moved to delay the rule in 2017 and a year later began the process to revoke it. A federal judge ruled last September that the delay was illegal, but the department never took steps to enforce the rule, citing a dispute with the Social Security Administration that has left the department unable to access earnings data.

Friday’s announcement drew quick condemnation from Democrats and borrower advocates, which had lobbied the department to revise the rule rather than remove it entirely.

Sen. Patty Murray, D-Wash., the top Democrat on the Senate’s Health, Education, Labor, and Pensions Committee, said the repeal is “a gift to predatory programs and for-profit colleges that want to take unsuspecting students for a ride.”

“If Secretary DeVos had students’ best interests at heart, she would withdraw this repeal immediately and reinstate the common-sense and effective consumer protections put in place by the Obama Administration,” Murray said in a statement.

The chief of the National Student Legal Defense Network said the decision proves that DeVos “only cares about protecting for-profit colleges, no matter how many students they swindle.”

“Scrapping these common sense regulations will lead to students racking up debt for worthless degrees, while DeVos props up failing and predatory schools with billions of dollars from taxpayers,” President Aaron Ament said. “There is simply no sound rationale for eliminating these important protections.”

But the move was welcomed by the Career Education Colleges and Universities, a lobbying group that represents dozens of for-profit colleges across the U.S.

“This standard is universally fair and applies to all students, in all programs, at all schools, regardless of sector — something that previous administrations did not do,” said Steve Gunderson, president of the group.

The rollback is only the latest in the Trump administration’s campaign to remove Obama-era regulations, including several targeting for-profit colleges. The department says it’s also rewriting a 2016 rule that allows students to get their federal student loans erased if they were scammed by for-profit colleges. In the meantime the department has stopped processing applications for that loan forgiveness, prompting more than 150,000 students to sue the department earlier this week over the delay.

The gainful employment rule applied to certain vocational programs at all types of colleges but it primarily targeted for-profit institutions. In early 2017, the Education Department found that more than 800 programs bound by the rules, or about 10 percent, were failing to meet its debt threshold. Of those that failed, 98% were for-profit colleges.

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