For-profit colleges sue over new rules

Jan. 22, 2011 at 9:27 PM

WASHINGTON, Jan. 22 (UPI) -- The Association of Private-Sector Colleges and Universities has filed a lawsuit trying to undo new U.S. regulations aimed at for-profit schools.

The group represents about 1,500 schools that are privately owned or run by publicly traded companies. A complaint filed Friday in U.S. District Court in Washington alleges the rules, which take effect July 1, are unconstitutional, The Washington Post reported.

The regulations would require states to have stronger regulation of for-profit colleges whose students are eligible for federal grants or loans. Other regulations bar for-profit schools from compensating recruiters based simply on how many students they sign up and give the government more power to penalize deceptive marketing.

"They will have a chilling effect on job creation and innovation," Harris Miller, the association president, said.

Another regulation, "the gainful employment rule," which is still being drafted, is not included in the lawsuit. The regulation aims to increase loan repayment rates and would make college programs ineligible for student loans if they do not have a good track record on job placement.

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