Obama’s gainful employment rule

Earlier this year, the Obama administration revived an effort to target for-profit colleges through a proposed rule on “gainful employment.” If implemented, this ill-conceived regulation will prove a huge blow for low-income working families and students from underserved communities, including single parents, veterans and minorities.

Supposedly, the forthcoming rule by the Department of Education intends to make sure students are not saddled with debt they cannot repay. While it may be hard to argue with the stated intention, substantively, the regulation itself will limit opportunities for millions of students to earn a degree and seek better careers.

{mosads}The key provision of the proposed gainful employment rule would classify as “unsuccessful” any private-sector program in which the average student graduates with debt payments that exceed 8 percent of his or her income.

The government’s own data show that the average student borrower at a private, nonprofit institution has a 16 percent debt-to-earnings ratio — twice the proposed standard that the Obama administration wants to use to punish for-profit schools. Even at public institutions, which receive heavy taxpayer subsidies, the average student borrower has a 12 percent debt-to-earnings ratio.

The proposed regulation, which may be finalized as early as this month, does not judge for-profit schools based on the quality of the education they provide, their accreditation or graduation rate. It is no wonder that a federal judge struck down the Department of Education’s first attempt at gainful employment rules, writing: “No expert study or industry standard suggested that the rate selected by the department would appropriately measure whether a particular program adequately prepared its students.”

Assessing schools based on the amount of debt the average student incurs compared to their income, rather than the quality of the education they provide, their accreditation or graduation rate, for example, is just not a fair measure of a program’s worth. The amount of debt students undertake is not an issue colleges control — they may suggest a student take out less than their maximum eligibility, but ultimately it is the student’s decision.

Lower-income students tend to borrow more and make less money immediately after graduation, so colleges that serve them are most at risk under the proposed regulation. The easiest way for them to comply would be to simply stop serving low-income students.

The Obama administration and Department of Education Secretary Arne Duncan would deny nearly 3.4 million students access to career programs of their choice through the remainder of this decade. This includes over 209,000 veterans, nearly 631,000 African-Americans, more than 623,000 Hispanics, and more than 1.8 million Pell Grant-eligible students. These are the nation’s most vulnerable students, yet the Obama administration seeks to limit their educational opportunities, rather than multiply them. This in turn, hinders these students’ chances to secure better jobs.

The fact is that for-profit colleges offer unique opportunities for students who have very few opportunities in the higher education system. They cater to students who have been unable to transition directly from high school to college and offer career and academic services to help them succeed in school and beyond.

For-profit colleges and universities are training the very people our country’s employers need most. Their graduates go on to jobs in high-growth, high-demand fields, such as healthcare, technology and business. They also train people for jobs in critical public-sector areas, including law enforcement and education. Community colleges and other non-profit programs do not have the support programs and other resources to educate the students potentially displaced by the proposed gainful employment rule.

For the Obama administration to target an entire educational sector because of a few bad apples is beyond misguided; it demonstrates an elitist worldview — one that drives them to almost any length. Indeed, the last time the Department of Education tried to implement the gainful employment rule, both the Department of Justice and the Department of Education’s Inspector General investigated for ethics violations. The Department of Education allegedly went so far as to collaborate with Wall Street short sellers, including a notable Obama campaign donor, to reap profits illegally from the devastation that the rule would produce.

Even without the illegality or the completely arbitrary nature of the gainful employment rule, the effect of fewer educational opportunities and job opportunities for students — especially those from underserved communities — would be unjust and destructive. Anyone who cares about helping more students and working families have a fair chance at the American Dream should be up in arms about why President Obama and Secretary Duncan would be hellbent on such a tragic end.

Lopez is president of the Hispanic Leadership Fund, a national advocacy organization that promotes liberty, opportunity and prosperity.