Judge rules in favor of gainful employment rule for for-profit colleges

By Danielle Haynes

NEW YORK, May 28 (UPI) -- A federal judge in New York ruled the Obama administration has the right to impose rules limiting the amount of debt students can carry from career-training programs.

The Association of Proprietary Colleges, which represents 23 schools in New York, filed a lawsuit against the U.S. Department of Education in November after the Obama administration made the gainful employment rule. The group said the rule would unfairly affect for-profit colleges.


Under the rule, colleges must ensure the graduates of career-training programs receive gainful employment or they would lose key federal student aid funding.

The administration said it would keep students from drowning in debt and would help identify poorly performing higher education programs that often aggressively recruit students, spending more money on promotion than students' education. APC called the rule is unconstitutional, arbitrary and capricious.

U.S. District Judge Lewis Kaplan in Manhattan ruled Wednesday that the administration has the right to impose the rule.

"DOE has a strong interest in ensuring that students -- who are, after all, the direct (and Congress's intended) beneficiaries of Title IV federal aid programs -- attend schools that prepare them adequately for careers sufficient for them to repay their taxpayer-financed student loans," Kaplan wrote in his ruling dismissing the lawsuit. "When students are unable to repay their debt, the cost of their unpaid loans is borne by U.S. taxpayers, making DOE's asserted interest in ensuring that 'students are not unduly burdened with debt' one and the same with its interest in 'safeguard[ing] the Federal [i.e., taxpayer] investment in the [federal student aid] program.' "


Donna Stelling-Gurnett, executive director of APC, said she was disappointed by the ruling. She said the group would be exploring other options and would continue to advocate against the rule.

"While we agreed with the department's goals for this rule from the outset, we remain steadfast in our conviction that this regulation does not achieve those goals," she said in a statement emailed to UPI. "Namely it does not distinguish between successful programs and those that are not. Despite headlines suggesting otherwise, most proprietary colleges are providing strong programs and producing strong outcomes, and the best interests of their students are worth championing."

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