For-profit College Rules Get Reset by U.S. Department of Education, and It Starts in University Park

Last month, the U.S. Department of Education secretary Betsy DeVos put the brakes on two Obama-era regulations designed to protect student borrowers at for-profit colleges, saying it was “time for a regulatory reset.”That reset started this week - in University Park.On Wednesday, the Department of Education held a full-day forum in the basement of Southern Methodist University's Law Library to gather public comments on unwinding those regulations. It was the second of two hearings this week, the first held Monday in Washington, D.C.Fewer than 50 speakers presented their cases to a panel of bureaucrats that included Jim Manning, the education department’s acting under-secretary who also helmed President Trump’s transition effort.The agency plans to reopen a lengthy rulemaking process to rework two important provisions: the “gainful-employment rule” and the “borrower defense to repayment,” both aimed at protecting student borrowers from predatory practices of for-profit colleges. A 2012 Congressional report found that federal taxpayers helped foot $32 billion in student aid annually at for-profit schools.The gainful-employment rule looks at the level of student loan-debt for graduates and the income of jobs they are getting out of school, using federal aid as a cudgel to ensure for-profit colleges aren’t excessively burdening their students.The borrower defense to repayment rule, a revision of which was postponed from going into effect July 1, would have provided relief for students if their school was found to have engaged in fraudulent behavior. It also banned for-profit colleges from using mandatory arbitration clauses in student contracts.The regulations were crafted at the time two for-profit giants had gone under: Corinthian Colleges in 2015, and ITT Technical Institute in 2016. Both companies had multiple campuses in the Dallas-Fort Worth area.Those who spoke came from distinctly separate camps: students and public-interest groups asking for the rules to be maintained; and representatives and lobbyists of for-profit colleges, asking for a reprieve.Frederick Haynes III, the senior pastor at Dallas’ Friendship-West Baptist Church and an adjunct professor at Paul Quinn College, said that he’d heard countless stories from members unable to repay their loans, or find the types of jobs they had been assured would be available with a for-profit degree.Many for-profit colleges aim their efforts to those interested in vocational training, tend to be more expensive than comparable schools, have higher default rates, lower graduation rates, and poorer job placements. Those schools, Haynes said, disproportionately affect black students.“In order to protect students, specifically students of color, the department should enact and implement strong regulations -- like the gainful employment rule -- that are clear, consistent, and provide necessary relief for students defrauded by the harmful institutions and practices,” Haynes said.Ryan Clark, an Army veteran from Colorado who re-enrolled at DeVry while deployed in Iraq, expressed his frustrations dealing with the for-profit college. He said he’s been forced to withdraw from college twice, once at DeVry and again at a public university in Denver, because of DeVry’s mishandling of his tuition assistance.“I was an active-duty deployed soldier and still felt exploited,” Clark said.While one of the industry’s loudest voices - Steve Gunderson, president and CEO of Career Education College and Universities, a trade group of for-profit schools - presented to the panel, so did a number of operators of small schools, including those that trained acupuncturists and cosmetologists.John Turnage, the owner of Paul Mitchell Schools Dallas, argued against using a student’s debt-to-earnings ratio, which he said could be wildly inaccurate. Cosmetologists work in a cash and tip-based industry where former students don’t always accurately report their income to the Internal Revenue Service, he said.Turnage also had issues with the protections afforded to institutions when students make a claim that they were fraudulently mislead.“You cannot buy a car and two years later, decide that you do not want it and then complain that it didn’t drive the way you want it, so you want your money back,” Turnage said.It’s unclear how long it will take to revisit the rules, but it could be years.Last week, attorneys general in 18 states and the District of Columbia filed suit against DeVos and the Department of Education for delaying the implementation of the borrower defense to repayment rule.  Continue reading...