Minority Leaders Oppose “Gainful Employment” Rules for For-profit Colleges

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by Kenneth J. Cooper

Some African-American and Hispanic leaders have taken a stand against proposed federal rules designed to curb student-loan defaults at for-profit colleges, arguing the strictures would reduce the educational options of minority students, who represent a large part of the enrollment at the schools.

Rev. Jesse Jackson of the Rainbow PUSH Coalition and some members of the Congressional Black and Hispanic caucuses have sent letters to the U.S. Department of Education opposing draft regulations that would cut off access to federal student aid to for-profit schools that appear to have prepared too few of their graduates for “gainful employment.”

The Career College Association, which represents the schools, states that 43 percent of their 2.8 million students and 39 percent of their graduates are minorities. It says 23 percent of African-Americans and 18 percent of Hispanics with associate degrees attended career colleges, as the trade association calls its 1,500 members.

“I am concerned that the proposed rule casts too broad and too general a brush on many institutions, some of whom are doing an excellent job at serving economically disadvantaged and minority students,” Jackson wrote in a Sept. 15 letter to Education Secretary Arne Duncan. “The department’s proposed approach will hinder the access of minority students to higher education and will make it even more difficult to realize President (Barack) Obama’s goal of leading the world in the percentage of college graduates by 2020.”

Similar criticisms are made in letters to Education Department officials signed by 12 of the 39 voting members of the Congressional Black Caucus and four of 23 voting members of the Congressional Hispanic Caucus. The signers include three of the four Black members of the House Education and Labor Committee: Reps. Donald Payne of New Jersey, Bobby Scott of Virginia and Yvette Clarke of New York, all Democrats. Among Hispanic critics are Ed Pastor, an Arizona Democrat who is the third-most senior Hispanic in the House, and Ileana Ros-Lehtinen, a Florida Republican.

A Sept. 8 congressional letter to the department predicts the proposed rules would “disproportionately impact the many low-income, first-generation students, single parents, minority and veteran students served by these institutions.” Payne, Scott and two other Black Democrats, Alcee L. Hastings of Florida and Edolphus Towns of New York, were among the 10 House members who signed the letter.

The department maintains that the proposed rules, released for public comment in July and slated to be finalized by Nov. 1, would protect students who find out too late their occupational training does not impress employers.

“Our proposal is to protect students from taking on debt they can’t afford in exchange for a certificate they can’t use,” said Justin Hamilton, Duncan’s press secretary. “This is no way affects a student’s ability to access federal student aid at programs that would be helpful to them. Our proposal would cut off federal student aid to ineffective programs.”

If for-profit schools fail two tests, the schools would lose their eligibility to accept federal student loans and grants. At least 35 percent of former students — both graduates and dropouts — have to be paying down their federal loans, and those loans have to amount to less than 12 percent of their total income.

In 2007-2008, the department says 55 percent of student borrowers from for-profit schools were paying on their loan balances, compared with 80 percent at public colleges and 88 percent at private, nonprofit ones.

The aid cutoff could apply only to certain training programs that fail both tests, rather than entire schools. The department estimates about 5 percent of such programs would become ineligible to receive federal student aid.

Critics have also argued that the proposed rules unfairly single out for-profit schools while, as the congressional letter suggests, “ignoring legitimate questions that have been raised about some elements of traditional higher education” with similar demographics and student loan default rates.

Under existing federal regulations, traditional colleges can lose federal aid if default rates exceed 25 percent for three consecutive years. The department says the 98 historically Black institutions eligible for federal student aid meet that standard.

Since the 1970s, federal law has imposed a different standard on for-profit schools, allowing only those that prepare students for “gainful employment” to be eligible for federal aid, Hamilton said. This is the first time, he added, federal regulations have attempted to define what that provision means.

Besides Jackson and the members of Congress, a few Black and Hispanic organizations have opposed the new rules, including the National Black Chamber of Commerce, National Congress of Black Women and Hispanic Leadership Fund. But larger organizations, such as the NAACP, National Urban League, League of United Latin American Citizens and National Council of La Raza, do not appear to have taken a similar stance.

 

 

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