Gainful Employment Rule Coming Out Today

The Department of Education is set to release the Gainful Employment rule today according to several news sources:

Chronicle of Higher Education – Education Department Takes Aim at For-Profits With Student-Debt Rule

Inside Higher Ed – Splitting the Difference on Gainful Employment

Associated Press – Proposed federal rules target for-profit colleges

Wall Street Journal – U.S. to Scrutinize For-Profit Career Colleges

Washington Post – Administration proposal aims to tighten oversight of for-profit colleges

Reuters – U.S. rule would force education cos to show work

New York Times – U.S. Releases Rules on For-Profit Colleges

USA Today –  Plan would crack down on for-profit college industry

Rumor has it…

Rumors abound that the Department of Education aims to loosen the restrictions on its proposed gainful employment rule. And recent shifts in stock prices reflect optimism that these whisperings will prove to be true.  But what does this mean?

Department of Education spokesperson Justin Hamilton e-mailed the following statement:

“What our proposal will do is balance the need to protect students and taxpayers while strengthening the critical role for-profit schools will play in helping us meet the president’s 2020 goal: for America to once again lead the world in the number of college graduates.”


For months, I have been writing that the proposed gainful employment rule has the potential to leave low-income and minority students out in the cold. The Department’s recent statement indicates the intent to move ahead with a rule that restricts access to higher education by focusing apparent dislike for private sector institutions ahead of the desire to help students seeking higher education.

My admiration for Secretary Duncan leads me to hope that Mr. Hamilton’s emailed statement means that the amended rule will recognize the critical role of for-profit schools.  The rule is scheduled to be released shortly by the Department of Education.

College Complexities

In previous blogs, I have observed how complex the challenges of higher education really are.  The news from three recent, separate sources, when considered together, confirm its complexity and also once again raise concerns about the capacity of U. S. higher education to respond to our growing needs for sophisticated human capital as a foundation of our economic competitiveness.

On Sunday West Virginia Governor Joe Manchin called on state governors to focus this year on higher education productivity – e.g., enrollment, persistence, and graduation.  Governor Manchin is the new Chair of the National Governor’s Association.

And just five days earlier, the Wall Street Journal reported that low and moderate income students are less likely today to enroll in college, underlining the Governor’s call for a focus on productivity.  The Wall Street Journal summarized a report to Congress from the Advisory Committee on Financial Assistance; compared with 1992, the percentage of low income students who enroll in college has fallen 14 percentage points with only 40% enrolling by 2004.  For moderate income students, the burden of college expense had gone from 22% of family income to 26% of family income in the same period.

Monday’s Chronicle of Higher Education added a third, but inter-related piece of news with its report by Goldie Blumenstyk.  Median family income of students in for-profit colleges is just $24,300, 60% of family income of public college and university students.

If we are to raise U. S. competitiveness and increase higher education productivity as called for by Governor Manchin, we must turn around the decline in enrollment among the lowest income group, and we must assure support for students from low income backgrounds who are increasingly choosing for-profit schools for their education.

Venus Williams

“Most of you know me as a tennis player,” Ms. Venus Williams opened with at the National Press Club on July 12th in Washington, DC.  She was in town to promote her book, “Come to Win”. What you may not know about Venus outside of her amazing tennis career, is that she is a graduate of a for profit college- The Art Institute of Ft. Lauderdale.  Venus graduated from Ai with a degree in Fashion Design. She launched her clothing line with a major national retailer and also founded V Star Interiors, an interior design firm. Forbes Magazine named her one of the top 100 most powerful celebrities.

While I have often focused on how private sector colleges provide opportunities to students at risk such as low-income individuals, minorities, single parents and many more, Venus Williams is an outstanding example of how individuals chose for profit higher colleges because they play a vital role in higher education.

Obviously, Venus has an income that would allow her to attend any higher education institution of her choosing.  The fact that she selected the Art Institute of Ft. Lauderdale, speaks volumes for the quality of education that institution provides.  It’s time critics of these schools take a better look at the industry and education, including not only the bad examples, but the good.

Lowering Default Rates

Despite the overtly negative tone of The Chronicle of Higher Education’s story, “Business Is Up in Keeping Default Rates Down,” two things are clear:

  • For-profits are committed to lowering default rates: “Default management has become a flourishing practice and business in its own right, and colleges are seeking help on that front with increasing urgency.”
  • For-profit colleges serve a large majority of at-risk students: “Most for-profit colleges enroll more low-income and working-adult students than higher education does as a whole, and college leaders in that sector say that is a major reason for their high default rates.”

While the story seems to advocate a “misalignment in interests” between the students and the school in managing loan defaults, the article misses the point by targeting assumed motivation rather than positive outcome. Truly, default management is in the same interest as the students, the school, and the government.

“Mr. Hawn, of ECMC, says the practical realities of default-management protect against abuse, as does the ethos of the industry …Colleges aren’t looking to cut corners either, Mr. Hawn ads.  “So far I’ve not run into any school that’s saying, ‘Dave, just focus on the easiest thing,’ he says.”


One Size Does Not Fit All

Chronicle of Higher Education reporter Jennifer Gonzalez makes a very interesting point in her article “Nonprofit Colleges Have Their Own Concerns About New Federal Rules” stressing that it’s not just the proprietary schools that are having concerns with the proposed Dep of Ed regulations.

Mollie Benz Flounlacker, associate vice president for federal relations at the Association of American Universities says “There is concern that some of these regulations targeting the for-profit sector will have a spillover effect. This one-size-fits-all approach doesn’t work in higher education, which has such a diverse set of institutions.”

Students and their learning needs vary enormously.  One-size does not fit all, and traditional colleges and universities are well aware of the resulting challenge.  Schools shouldn not be regulated in a one-size-fits-all approach.

In the same article from the Chronicle, it was also interesting to note C. Todd Jones’ comment. He is the president and general counsel of the Association of Independent Colleges and Universities of Ohio. He makes the point that “the department has created a new regulatory regime to fix a problem that they have not fully articulated with a solution whose impact they don’t fully understand.”

As with any federal rule-making, , there are going to be concerns on both sides of the issue. It is important for the Department to consider the various and unintended consequences of its regulations. At the end of the day, the U. S. needs to consider what is best for the student and what is best for raising U. S. economic competitiveness through education.  And a one-size-fits-all approach probably is not a solution.

Reporting on Private Sector Success

Typically only the most egregious circumstances make the headlines.  Today thankfully is different.

The Cinncinati Enquirer posted a success story.  It was a story of a graduate from a private sector college in Ohio.  Quincey Montgomery, a single father and full time worker, who chose to go back to school to earn his Associate Degree in Business Management at Brown Mackie College.  He chose this school because of the flexibility and the ability to focus on one class at a time.

“Montgomery, however, feels as if he owes his job to Brown Mackie. He already was enrolled when he earned a co-op assignment at Procter & Gamble Co.’s downtown headquarters. Now he’s working there full-time as an administrative assistant in the product supply unit.


‘I feel like it was 70 percent me and 30 percent Brown Mackie,’ he said. ‘But I think that 30 percent goes a long way.’


He said he took ‘all the classes I would take anywhere else,’ such as accounting and business law, and never had more than 20 people in any of his classes.


He paid for the program, about $25,000 total, with student loans. He pays about $200 a month and regards it as money well spent.”

While negative stories about private sector colleges have driven the vast majority of the headlines recently, it is refreshing to see a story that represents  amore objective view of this aspect of our higher education industry.  I have maintained that the private sector plays a critical role in our national educational goals.  Sure, there are bad actors out there and stories that go along with them, but there are also success stories.  There has to be a reason so many have chosen a private sector education.  True negative headlines sell more papers, but the expansive growth of for profit colleges exemplifies what is happening to higher education.  Individuals are “voting” with their feet and choosing to enroll at these educational institutions because they present the best opportunity for them – often with more flexibility and accessibility than traditional colleges and universities.  I expect there will be more of these stories in the future.