Appeals Court Upholds Obama For-Profit College Rules

March 9, 2016

In a victory for the Obama administration, a federal appeals court on Tuesday rejected a challenge by for-profit colleges of the U.S. Department of Education’s gainful employment rule.

The court upheld the administration’s rewritten regulations that are aimed at holding for-profit colleges more accountable for the earnings and loan debt of their graduates.

A three-judge appeals panel sided with a lower court’s ruling that rejected claims by the Association of Private Sector Colleges and Universities that the rule’s debt-to-earnings metrics were arbitrary and lacked congressional authority.

The appeals court again affirmed that the Education Department had the authority to craft the regulations defining gainful employment with a measure of students’ postgraduate earnings and debt. The court wrote that “it would be strange for Congress to loan out money to train students for jobs that were insufficiently remunerative to permit the students to repay their loans.”

A previous lawsuit by the for-profit college association in 2012 led a federal court to strike down key parts of the Obama administration’s original regulations. That sent the administration back to the drawing board to craft new regulations, which went into effect last July.

“When the first gainful employment regulation was struck down by the courts, we expressed hope that the era of overregulation and litigation would give way to a public-private partnership focused on giving Americans the occupational skills they need to succeed in the workforce," Steve Gunderson, APSCU's president and CEO said in a written statement. "We again call on the department to engage with us in finding ways to enhance both quality and opportunity for all students -- especially those seeking employment skills."

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