Blog: The Educated Reporter

Did Obama, Duncan Suffer a Loss in Court’s ‘Gainful Employment’ Ruling?

If federal courts are the officiating crew, then one in Washington, D.C., just gave for-profit colleges a big assist in their efforts to overturn the “gainful employment” regulations established by the U.S. Department of Education. The ruling puts on hold enforcement of much of the regulatory framework surrounding higher education accountability measures the government body rolled out last year.

But these privately-held colleges shouldn’t celebrate yet: Judge Rudolph Contreras’ ruling established the federal education body can hold schools accountable for falling short on gainful employment rules. The policy kink that put implementation of gainful employment on hold—and now becomes the Department of Education’s conundrum to solve—is the requirement that at least 35 percent of a program’s former students pay back their federal student loans. Contreras argued that provision smacked of “arbitrariness” because unlike the other two provisions that checked schools on debt-to-income levels, the debt repayment criterion “was not based upon any facts at all.” He continued: “No expert study or industry standard suggested that the rate selected by the department would appropriately measure whether a particular program adequately prepared its students.”

Education policy analyst Kevin Carey, now with New America Foundation, writes the Obama administration should appeal the ruling vigorously:

“The problem with requiring a research basis for a repayment rate threshold is that ‘embarrasingly low’ isn’t a concept that can be proven empirically. It relies on the informed, expert judgement of the U.S. Department of Education. … The Department can move aggressively to fix and improve the regulations, or it can dilly-dally and allow them to die a slow death.”

Was the judge right to effectively toss the regulations out on the account of one flawed provision? Should the government appeal the ruling—and what does the Obama administration look to gain or lose in an election year?