Trump Administration Plans to Scrap Obama Rule Cracking Down on For-Profit Schools

The Trump administration has released a plan that would rescind an Obama-era rule that essentially blamed for-profit colleges and career programs for students’ accumulation of massive amounts of debt.

The “gainful employment” rule, put in place by the Obama administration in 2014, penalized for-profit higher education programs if the student loan payments of their graduates were higher than 12 percent of their incomes. The penalty to these schools was the threat of being cut off from federal student aid.

Under Obama-era education Secretary Arne Duncan, the rule’s premise sought to have the federal government protect students from for-profit schools that were portrayed as predatory – compared to government-funded public schools.

The rule came about after some students claimed they had been defrauded by for-profit chains such as Corinthian Colleges and ITT Tech when they did not receive the types of job offers they had anticipated upon graduation.

In a statement about the plan to rescind the rule, the U.S. Education Department said it was necessary “to treat all institutions of higher education fairly.”

“Students deserve useful and relevant data when making important decisions about their education post-high school,” said education Secretary Betsy DeVos, adding:

That’s why instead of targeting schools simply by their tax status, this administration is working to ensure students have transparent, meaningful information about all colleges and all programs. Our new approach will aid students across all sectors of higher education and improve accountability.

The federal Education Department continued:

The Department continues to believe that data such as debt levels, expected earnings after graduation, completion rates, program cost, accreditation, and consistency with licensure requirements are important to consumers, but not just those students who are considering enrolling in a gainful employment program. Therefore, in the NPRM [Notice of Proposed Rulemaking] the Department invites public comment concerning whether or not the Department should require institutions to disclose, on the program webpage, information about the program size, its completion rate, its cost, whether or not it is accredited, and whether the program meets the requirements for licensure in the State in which the institution is located.

Sen. Elizabeth Warren, a Democrat from Massachusetts, immediately criticized the Trump administration’s proposed rule:

Referring to for-profit schools as “shady,” Warren tweeted that DeVos “just issued a new rule that would ensure for-profits face NO consequences for graduating students with huge debts & no job prospects. Another big favor for industry hacks.”

The Education Department said in its press statement that it plans to update the College Scorecard web tool or design a similar tool to provide information about program outcomes, including median debt and median earnings, for all higher education programs.