Education Secretary Betsy DeVos has repealed the gainful employment rule, which requires career colleges to ensure that their graduates can afford to repay their loans. Any program that leaves most students with unaffordable debts, relative to their earnings, must either improve its value proposition or lose eligibility for federal student aid.
Although the Trump administration finalized the repeal on June 28, it was published in the Federal Register on July 1.
DeVos believes students should be free to make their own choices. She also argues that the rule discriminates against the for-profit colleges that offer many career programs because it does not apply to all colleges.
That’s a mistake. Minimum standards have driven career colleges to improve. They protect hundreds of thousands of students from unaffordable debts and save taxpayers billions.
When the Obama administration proposed the so-called gainful employment rule a decade ago, some for-profit colleges were earning huge profits without serving students well. Half of students at for-profit colleges would later default, with the disproportionate share of them black and Latino. Among those who defaulted were many veterans.
Journalists and congressional investigators went undercover to record widespread high-pressure, misleading and sometimes fraudulent recruiting practices.
Back then, it was hard to know how widespread the problems were. Many insisted that most career colleges were a good investment. But now that the rule is in place, Department of Education data on students’ debts and earnings validate that while some programs are good bets, many are not.
More than 350,000 students graduated from the worst-performing programs with debts they are unlikely to repay. About 170,000 attended programs where most graduates earn less than the full-time minimum wage.
The fight against colleges profiting from unaffordable debts sparked one of the most intense lobbying battles of the past decade. But even as the debate raged in Congress, colleges across the country sought to improve the value they offered students. Schools cut tuitions, increased scholarships and introduced free trial periods.
According to one investment analyst in 2012, “successful for-profit schools will focus on improving value propositions by increasing transparency, retention, completion, and employment prospects for students.” Another noted “substantial changes,” including “new program offerings, changing tuition, reducing the duration of programs, and even more dramatic steps including the closure of poorly performing campuses.”
For more than two years, though, the Trump administration has refused to carry out the rule, even though it carries the force of law. Now, at last, they are repealing it, effective immediately.
But the story is not over. Agencies must have a rational basis for their actions, and this one misrepresents or ignores a substantial body of experience and research. Soon it may be another in DeVos’s growing string of losses in court.
Congress will also have a say. Many Democrats are stalwart supporters of employment standards. Republicans are not, but some — like Sen. Lamar Alexander of Tennessee — believe in principle that colleges should be held accountable for leaving students worse off than they were before.
Student loans can open up new opportunities for college and a better life, but — at the wrong college — they can become an albatross. The gainful employment rule has proven if we set higher standards for career colleges, they can offer students a better deal.
James Kvaal was an education adviser for President Barack Obama. Arne Duncan was secretary of education. They wrote this piece for The Washington Post.
Editor’s note: An earlier version of this perspective piece contained a reference to Ashford University. The university disputes its accuracy, and neither the authors nor The Washington Post has conducted independent reporting on the matter. Therefore, the reference has been removed.