Private schools: New regs to hurt minorities

A group of private colleges and universities is blasting the Obama administration's effort to tackle burdensome student loan debt, because they say it would force them to turn away low-income students, and in particular, minorities.

They also charge the proposed law unfairly targets private institutions while leaving their public counterparts unscathed.

Steve Gunderson, president and CEO of the Association of Private Sector Colleges and Universities (APSCU), said the move was an "ideological declaration of war" against private schools by the Obama administration.  

"Millions of prospective students — particularly working adults, minorities and people with scarce financial resources — will see their access to higher education and prospects for better employment dramatically reduced," Gunderson added.

Republicans criticized the rule, while Democrats said it did not go far enough.

The Department of Education released its second attempt at "gainful employment" regulations on Friday morning, aimed at schools that "prey on students" by charging exorbitant amounts of money without providing adequate job training.

The regulations would apply to thousands of for-profit programs, as well as certificate programs at both nonprofit and public institutions. They would look at certain fields of study and measure the amount of debt students would face compared to their projected earnings, as well as the default rate among former students. Schools that perform poorly would lose federal student aid funding.

The Obama administration says this is part of an effort to push back against schools that saddle students with unreasonably high debt only to graduate and find a low-paying job, or no job at all.

"Higher education should open up doors of opportunity, but students in these low-performing programs often end up worse off than before they enrolled: saddled by debt and with few — if any — options for a career," Education Secretary Arne Duncan said in a statement. 

But Gunderson said the new rule would provide a "perverse incentive" for private colleges and universities affected by the rule to restrict access to educational opportunities for low-income and minority students, who often depend on loans to go to college.

The private schools also say it could create divisions within a single college or university among students who will graduate into high-paying jobs and those who will not. These schools might even be forced to scrap programs that train students for initially low-paying jobs.

"Individuals interested in careers with lower starting salaries, such as communications, psychology, visual and performing arts, and social work will be barred from receiving the same federal aid as their classmates choosing more lucrative fields," Gunderson said.

Gunderson also expanded on his view that the gainful employment regulations unfairly target for-profit private schools.

"If the regulation were applied to all of higher education, programs like a bachelor's degree in journalism from Northwestern University, a law degree from George Washington University Law School, and a bachelor's degree in social work from Virginia Commonwealth University would all be penalized," he said.

An earlier 2011 version of the rule was scrapped after a federal court struck it down. But the Education Department is taking another crack at it.

Meanwhile, Sen. Tom Harkin (D-Iowa), chairman of the Senate Health, Education, Labor, and Pensions Committee, said the rule would not go far enough to protect students from subpar educations.

"Based on what I've seen so far … I once again have serious concerns with this proposed rule's ability to protect students and taxpayers from costly programs that consistently over-promise and under-deliver," Harkin said in a statement.

But Republicans disagree.

House Education and Workforce Committee Chairman John Kline (R-Minn.) said in a statement he was “extremely troubled” by the new version of the proposed rule.