Betsy DeVos' rollback of Obama's for-profit college rules is almost complete

Department of Education Secretary Betsy DeVos is rolling back another Obama-era regulation that was meant to...

Posted: Aug 11, 2018 8:40 AM
Updated: Aug 11, 2018 8:40 AM

Department of Education Secretary Betsy DeVos is rolling back another Obama-era regulation that was meant to protect students from abusive practices by for-profit schools and colleges.

On Friday, DeVos said she plans to fully repeal a rule that targeted schools that failed to prepare students for "gainful employment."

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The regulation required for-profit colleges and certificate programs at non-profit colleges to publish information on how much student debt graduates took on and how much they were earning after leaving school. If the average debt-to-income ratio did not meet government standards, the school's federal funding would be revoked.

The announcement comes two weeks after DeVos said she would replace the "borrower defense" rule that aimed to help defrauded students seek debt relief.

Together, the two rules were an important part of the Obama administration's crackdown on for-profit colleges like Corinthian and ITT Tech, which were accused of defrauding students and eventually shut down. Corinthian was fined $30 million by the Department of Education for overstating job placement rates and was accused of preying on low-income people with high-interest loans. When ITT Tech abruptly shut down in 2016, it left 35,000 students without a degree and many of those who had completed their program found their degree was worthless because the program didn't have the correct accreditation.

DeVos froze the two rules more than a year ago so that they could be reviewed and to make sure they would actually help harmed students, she said at the time.

In 2017, before DeVos was sworn into office, the Department of Education said that 800 programs serving hundreds of thousands of students failed the accountability standards because grads' loan payments were more than 30% of their discretionary income and more than 12% of their total earnings.

About 98% of these programs were offered by for-profit colleges, the department said. One program offered by a non-profit school was a theater arts curriculum at Harvard that later suspended enrollment.

On Friday, DeVos proposed a new rule that would require all schools — both for- and non-profit — to provide data on student outcomes.

"Our new approach will aid students across all sectors of higher education and improve accountability," DeVos said in a statement.

But a big difference in the proposed rule is that it won't institute a new standard that schools have to meet in order to keep receiving federal funding. The public has time to comment on the proposal before a rule is finalized.

Consumer groups and Democrats attacked DeVos' plan for putting the interests of for-profit colleges ahead of students.

"Her extreme proposal to rescind this rule is further proof that there is no line Secretary DeVos won't cross to pad the pockets of for-profit colleges — even leaving students and taxpayers to foot the bill," said Senator Patty Murray, a Democrat and ranking member of the education committee.

Democrats have criticized DeVos before for hiring department officials with connections to the for-profit college industry. Last year she named Julian Schmoke, Jr, a former dean at for-profit DeVry University, to lead enforcement activities at Federal Student Aid. In 2016, DeVry settled a lawsuit with the government over a claim that it misled students with a false job placement rate.

Career Education Colleges and Universities, a trade organization that represents for-profit colleges, applauded DeVos's proposed rule for aiming to "provide complete transparency on the outcomes of today's higher education programs."

Senator Lamar Alexander, a Republican and chair of the education committee, called the Obama-era rule "clumsy."

"This reset gives Congress an opportunity to create a more effective measure of accountability for student debt and quality of institutions," he said.

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