Gainful-Employment Disclosures Delayed Again

Education Department announces a second yearlong delay of some gainful-employment disclosures as DeVos works on a do-over of the vocational education rule.

June 18, 2018
 
Education Secretary Betsy DeVos
Education Secretary Betsy DeVos

The federal government will not require colleges to publicly disclose data about their vocational programs' graduate employment rates or debt levels -- requirements under the Obama-era “gainful-employment” rule -- until after U.S. Department of Education can rewrite the regulation.

The department announced in a filing Friday that it will postpone certain gainful-employment disclosure requirements, which had been scheduled to go into effect next month, until July 2019. It’s the second yearlong postponement for those requirements under Betsy DeVos, the education secretary, who also in January weakened the disclosures by dropping one on graduate earnings.

The Trump administration and congressional Republicans have sought to dismantle the rule, which is based on two debt-to-earnings metrics, saying it unfairly targets for-profit colleges.

"Once fully implemented, the current rules would unfairly and arbitrarily limit students’ ability to pursue certain types of higher education and career training programs,” DeVos said in a written statement last year.

Gainful employment applies to degrees and certificate programs offered by for-profit institutions and to vocational certificate programs at community colleges and other nonprofit institutions -- but not to degree programs on the nonprofit side.

Roughly one in 10 of covered programs would have failed under the rule, the department said in January 2017, just before the Trump administration took over. Fully 98 percent of failing programs were at for-profits.

Colleges must publish gainful employment information about covered programs on their websites, using a template the department tweaked in January to drop median earnings data or information about room and board. But the new delay means institutions will not need to distribute gainful employment data directly to prospective students or publish it in promotional materials until next year. (Note: This paragraph has been added to an earlier version of the article.)

The Obama administrations worked for years to enact the rule, arguing it would help prospective students make informed decisions about which career education programs are worth the investment and which ones “might leave them worse off than when they started,” as John B. King Jr., then Obama administration's Education Secretary, said in 2017.

A federal court threw out portions of the rule's first draft. But the final version withstood legal challenges, and the courts held that the federal government was within its rights to seek to hold career educational programs accountable with the rule.

DeVos announced the planned do-over for gainful employment one year ago, while also rolling back borrower-defense regulations, which for-profit college advocates and some representatives from historically black and other private colleges had criticized.

The department then appointed negotiators to hash out a revised gainful-employment rule. But the session ended in March without a consensus. So the Trump administration will release its own version to replace the rule by November.

The Education Department said Friday that it was giving colleges the additional year while it works through the "utility" of requirements under gainful employment.

“As part of this rulemaking process, the department continues to evaluate the efficacy of these disclosures to students, including the manner in which the gainful employment regulations would require institutions make these disclosures, and the burden associated with the implementation of these requirements,” the department said.

Steve Gunderson, the president and CEO of Career Education Colleges and Universities, said his group, which represents for-profit colleges, supports the department's delay while it works on a new rule he anticipates will include "more meaningful and less onerous" disclosure requirements.

"Under the current rule, institutions are still required to provide students and consumers with important program-level data using the department’s approved disclosure template," Gunderson said in a written statement. "This delay simply acknowledges that the various methods for disseminating this information to students under the current rule are not useful for students and burdensome for institutions."

The department's justifications for the delays don't hold water, said Debbie Cochrane, vice president of the Institute for College Access and Success.

When it announced the last postponement, the department said it needed more time to evaluate the use of requirements. "Isn't a year long enough?" Cochrane said. And she noted that the department's inspector general found last year that the burden of the disclosure provisions would be negligible.

"This is simply another step in the department’s efforts to dismantle student protections," Cochrane said in a written statement. "What good are disclosures if you don’t have to show them to anyone? How are students supposed to decide between career education programs if they aren’t given basic information like how much a program costs and how many graduates get jobs?"

Not everyone involved with for-profit higher education will be happy with the latest disclosure delay, said Trace Urdan, an expert on for-profits and managing director at Tyton Partners, a consulting firm.

Urdan said investors want this information and that responsible colleges already are measuring it and managing against it.

"We are involved in a couple of school sales, and gainful-employment data is a core element of due diligence," he said via email. "It's true that the information is backward-looking and that there are some schools that have made responsible changes to programs where the disclosure could cause a repaired program to then fail in the marketplace, but anyone that expects the marketplace to be an effective screen for quality needs to advocate for more and better consumer information."

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