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2014 November 10 - 09:43 am

Gainful Employment Rules a Mixed Bag for Community Colleges

AACC Decries Added Reporting and Recordkeeping Burdens in New Regulations

When the U.S. Department of Education released its final “gainful employment” rules for career education programs, there was good news and bad news for community colleges.

First, the good: missing from the final version of the rules was the program-level cohort default rate as an accountability metric for the covered programs. ED officials accepted the argument of community college leaders that it would have unfairly judged programs based on the behavior of borrowers at community colleges — a fraction of community college students. Just 9 percent of community college students enrolled in gainful employment programs borrow money under the federal student loan program “The final regulations contain a critical modification sought by community colleges, and the result is a stronger and simpler framework,” said J. Noah Brown, president and CEO of the Association of Community College Trustees, in a statement.

Now, the bad news: According to a statement by the American Association of Community Colleges, the new rules “impose massive reporting, recordkeeping and related costs on community colleges that largely will provide no benefit to students, taxpayers or the public.”

“Community colleges proudly offer access at an affordable cost to gainful employment programs to millions of students each year,” said AACC President and CEO Walter G. Bumphus. “Our institutions and programs judiciously allocate limited resources for the benefit of our students who are working to improve their lives through these programs.”

Though the regulations will allow nearly all community college non-degree, certificate programs to continue their Title IV eligibility, “the millions of dollars in compliance costs that these the final regulations will entail will largely be wasted — a frittering away of precious and limited institutional resources,” Bumphus said.

According to the AACC, colleges will be required to report data on hundreds of thousands of students for which no information will ever be disclosed to the public.

Colleges will have to report the enrollment and withdrawal of every Title IV student enrolled in a gainful employment program every year. This information won’t be available to the public because the numbers are too small to meet privacy protection thresholds.

Among the data that will have to be disclosed: graduation rates for full-time and part-time students enrolled in career education programs; program withdrawal rates; the loan repayment rate for both program completers and non-completers, median earnings of both completers and non-completers; and median loan debt for completers and non-completers, the AACC said.

“The nation’s community college leaders deeply regret the fact that, after years of deliberation and two extensive rulemaking processes, the Education Department has issued a rule that involves extraordinary amounts of ‘make work’ compliance at community colleges across the country, at a time when they can little afford it,” the AACC statement said.

AACC said it supports the disclosure of relevant information to prospective students, such as the placement rates; program completion rates for full-time and lessthan-full-time students at appropriate benchmarking junctures; median earnings for all program completers; and median debt for program completers and those who withdraw.

But the association opposed many of the disclosures contained in the final rule, believing they will be extremely difficult for prospective students to understand.

The final rules, to take effect next summer, are primarily aimed at clamping down on for-profit colleges that collect millions of dollars in federal money but have programs that don’t lead to wellpaying jobs, resulting in students with large debts they often can’t repay.

“Career colleges must be a stepping stone to the middle class,” said U.S. Secretary of Education Arne Duncan. “But too many hard-working students find themselves buried in debt with little to show for it. That is simply unacceptable. These regulations are a necessary step to ensure that colleges accepting federal funds protect students, cut costs and improve outcomes. We will continue to take action as needed.”

In releasing the rules, ED noted that on average, attending a two-year for-profit institution costs a student four times as much as attending a community college. More than 80 percent of students at forprofits borrow, while less than half of students at public institutions do so. Students at for-profit colleges represent only about 11 percent of the total higher education population but 44 percent of all federal student loan defaults.

To qualify for federal student aid, the law requires that most for-profit programs and certificate programs at private nonprofit and public institutions prepare students for “gainful employment in a recognized occupation.”

Under the new regulations, a program qualify for the federal Title IV program if the estimated annual loan payment of a typical graduate does not exceed 20 percent of his or her discretionary income, or 8 percent of total earnings. Programs that exceed these levels would be at risk of losing their ability to participate in taxpayerfunded federal student aid programs.

The Education Department estimates that about 1,400 programs serving 840,000 students — 99 percent of whom are at enrolled for-profit institutions — would not pass the accountability standards. The programs will have the opportunity to make immediate changes that could help them avoid sanctions, but if these programs do not improve, they will ultimately become ineligible for federal student aid, which often makes up nearly 90 percent of the revenue at for-profit institutions, the Education Department said.

The final rules follow a years-long rulemaking process involving public hearings, negotiations, about 95,000 public comments and a federal lawsuit. The regulations reflect the feedback the department received and aim to protect Americans from poor career training programs by targeting those programs that leave students buried in debt with few opportunities to repay it.

The Association of Private Sector Colleges and Universities, the group representing for-profit colleges, vowed to contest the new rules. The group successfully blocked the first version of the rules in 2012, convincing a judge that the GE standards were arbitrary, leading to the recently released rewrite.

“The gainful employment regulation is nothing more than a bad-faith attempt to cut off access to education for millions of students who have been historically underserved by higher education,” said Steve Gunderson, CEO of the APSCU, in a statement. “Regulations created and issued based on bias against certain institutions have no place in our country. Furthermore, the debt-to-earnings metric is arbitrary and capricious.”

The group contended that the rules favor community colleges at the expense of for profit-colleges.

“Once again the Department elected to arbitrarily change metrics and regulations to favor certain institutions over others. In this case, the Department favored public institutions that benefit from generous taxpayer operational subsidies, but have lower graduation rates and higher default rates, over programs at private sector institutions,” Gunderson said.

Gunderson said the group would turn to Congress to address the gainful employment rules.

“We are hopeful that the Congress will consider the best interests of all students when they reauthorize the Higher Education Act and develop policies that apply to all students, in all programs, at all institutions.”

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