Colleges sue feds over 'gainful employment' rule

Private colleges are suing the Obama administration over a new set of Education Department regulations they warn would limit students' access to education.

In a lawsuit filed Thursday, the Association of Private Sector Colleges and Universities (APSCU) challenges "gainful employment" regulations issued in recent days as part of a move to penalize schools that do not prepare students to find jobs in their chosen career paths after graduation.

The industry group says the rules are misguided.


“This regulation, and the impact it will have on student access and opportunity, is so unacceptable and in violation of federal law, that we were left with no choice but to file suit," APSCU chief executive Steve Gunderson said in a written statement. "If successful, our suit will protect student access and opportunity to higher education at a time when the U.S. Department of Education seems interested in limiting choices for students by closing private sector programs."

The Education Department announced new rules last week to ensure colleges students are not being "buried in debt" to obtain inadequate degrees that do not prepare them for the workforce.

“Career colleges must be a stepping stone to the middle class. But too many hard-working students find themselves buried in debt with little to show for it,” Education Secretary Arne DuncanArne Starkey DuncanStripping opportunity from DC's children Catherine Lhamon will make our schools better, fairer, and more just Providing the transparency parents deserve MORE said upon unveiling the rule. "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.”

For-profit schools will be required to show their students are earning enough money after graduating to comfortably pay for their student loans. The salaries of their former students, compared to how much debt they have, will be monitored.

But APSCU argues many of these metrics are "beyond institution control."

"The regulation measures factors that are unrelated to program quality and beyond institution control — including students’ individual employment choices, local job-market conditions, and students’ financial circumstances," APSCU noted.

Furthermore, APSCU says the rule would force many students to leave their schools.

According to the Education Department, nearly 1,400 college programs serving 840,000 students will fail the new requirements, which could ultimately lead to lost federal aid unless schools take steps to correct the problem.

The move is targeted at low-performing colleges, but APSCU says it could have the unintended effect of hampering students who are left without a school.

The case is Association of Private Sector Colleges and Universities v. Arne Duncan.