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Gainful employment

To determine if these programs are eligible, ED wants to tie its federal loans to students’ debt-to-income ratio as well as the repayment rates of the for-profit institution. While there has been much debate over the origin of this proposal, its impact could not be more clear: for-profit colleges would suffer and, more significantly, low-income and minority college enrollment would drop precipitously.    

Practically speaking, the new regulations would raise the loan qualifying standards for the citizens with the most acute needs. As a result, the most vulnerable citizens–those President Obama says he wants to see further their education–would have less access to college loans.

Vehement opposition has emerged against the proposed regulations from a variety of sectors. The National Black Chamber of Commerce, the Hispanic Leadership Fund, Rev. Jesse Jackson and several legislators are demanding that ED do an assessment of the proposed rule’s likely impact on minority students. In addition, a bipartisan group of congressmen pushed through a measure in the House of Representatives that would temporarily ban ED from adopting the new rules.

Still, the Obama administration is committed to enacting the new rules. Why? The Department continues to claim that its main goal is to go after bad programs, not the students. Fine, but wouldn’t it make more sense to sit down with service providers and look at better self policing and licensing, as opposed to weighing programs based on students’ incomes? 

But the real answer may be more simple. After reviewing the correspondence between ED officials and parties with a financial interest in increased regulations of for-profit colleges,  Sen. Mike Enzi asked for the U.S. Attorney in New York to investigate. Already, the Department of Education’s Inspector General is looking into conflict of interest charges. Slowly, yet ever so clearly, a cloud is forming around the motives of those crafting the gainful employment rules and short sellers who stand to profit if private-sector education stocks tumble.

But even if there is no surreptitious motive, suspicions are always likely to arise when the ultimate effect of any government regulatory action would disproportionately benefit one competitor over another. Keep in mind that for-profit student enrollment numbers have grown from about 300,000 to more than 1.8 million students in recent years.  Many traditional state and private colleges and universities view for-profit colleges as a direct threat and have been the leading voices for the new ED regulations.

The Obama administration needs to take a more balanced and forward-looking approach. In that vein, they should first do no harm. Any proposal that would severely curtail the enrollment of minority, working class and low-income college students is shortsighted and must be stopped. Second, ED should sit down with all higher education providers and develop a process in which each side can learn from each other and best practices can be explored and, possibly, codified to the benefit of the students all seek to serve. Finally, ED needs to send a clear and unequivocal message to everyone that its higher education policy thrusts will be tailored to the best interests of the students and not designed to advantage one service provider sector over another. 

Kevin is a former Member of the Council of the District of Columbia and member of the 2008 Obama for President Education Policy Committee.

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