June 5, 2013

By Rigel Massaro

Last Thursday, Public Advocates testified before the U.S. Department of Education at a San Francisco regional hearing on the need for regulations supporting transparency and minimum standards in career education programs nationwide. We brought the civil rights perspective to the hearing, insisting that access to postsecondary programs means nothing, and can in fact lead to students’ financial ruin and a waste of precious taxpayer dollars, unless students can access quality programs.

The problem

The Department of Education seeks to ensure career education programs, public and private, “prepare people for jobs at a price they can afford,” according to Education Secretary Arne Duncan. The worst offenders are those private for-profit institutions that heavily market to and enroll the most vulnerable low-income and minority students. These programs charge a premium – and they count on billions in federal and state financial aid to boost their profits even more — but  often place only a fraction of their students in secure jobs upon program completion. In fact, according to a two-year investigation spearheaded by Senator Tom Harkin (D-Iowa), for-profit colleges garner a staggering $32 billion per year in taxpayer subsidies. Yet more than half of the studentswho enrolled in those colleges in 2008-09 left with neither a degree nor a certificate, and half of that group dropped out within four months.

As a result, many students in these programs are unable to find work in their field of study and end up defaulting on their federal loans at staggering rates. One telling statistic, also from the Harkin report: For-profit colleges enroll just 13 percent of the students across the country – but those students are responsible for 47 percent of the country’s student loan defaults.

Attempts to regulate

The Department of Education issued its first “Gainful Employment” regulations in 2011. It aimed to ensure that all vocational programs, including many for-profit institutions, actually train students for—and place them in—meaningful work situations. These regulations seem to have made a difference: some poor performing programs were terminated, and some schools adopted new practices to improve recruiting or allow students to drop out without a penalty.

Although a federal district court judge partially struck down these regulations in 2012, the court upheld the department’s clear authority to address the “serious policy problem” presented by substandard career education programs. The court also affirmed that the statutory framework allows the department to root out “unscrupulous institutions” that prey on both young people seeking a professional path and taxpayers.

What’s happening now

The department is on the verge of re-launching the process to regulate again on this important matter. At Thursday’s hearing—and at the Atlanta, Minneapolis and Washington D.C. counterparts—groups representing indebted students, veterans, advocacy groups, former attorneys general and former policy makers in the Obama Administration all testified. Together we urged the department to promulgate strong “gainful employment” regulations to ensure career education programs truly do prepare their students for gainful employment in their field of study and do not leave them buried in debt they cannot repay.

Our role

We shared our experience promoting effective regulation of postsecondary institutions operating in California, and suggested California’s now strong disclosure requirements and definitions might be a model for the department’s own regulations. Specifically, we testified against sending federal financial aid to wasteful career education programs and for efforts to ensure that potential students know programs’ job placement rates and student loan default rates before they commit to indebtedness.

We’re proud to contribute to this important conversation. New gainful employment regulations could improve outcomes and reduce costs to hundreds of thousands of students nationwide. We’ll continue to push California and the nation to ensure all institutions prepare students for stable, family-supporting jobs. Access without quality is no access at all.

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