Release: Senators Call for 'Gainful Employment' Dept. of Education Rule

Senators Support Department of Education Effort to Protect Students and Taxpayers Call for Adoption of Strong ‘Gainful Employment’ Rule
 
 
WASHINGTON, D.C. – Senator Tom Harkin (D-IA), Chairman of the Senate Health, Education, Labor and Pensions Committee, was joined by Sens. Dick Durbin (D-IL), Frank Lautenberg (D-NJ), Russ Feingold (D-WI), Bernie Sanders (I-VT) and Al Franken (D-MN) in a letter to Education Secretary Arne Duncan urging the Department to strengthen the proposed ‘gainful employment’ regulation, and to implement the regulation swiftly. 
 
The Department of Education proposed a definition for ‘gainful employment’ at the end of July following a year of public hearings and negotiating sessions.  The rule will ensure schools are preparing students for the workforce, not just saddling them with debt they can’t repay.  The for-profit college sector, most of which would be covered by the rule, accounts for ten percent of students but approximately forty-four percent of student loan defaults.
 
“We applaud your efforts to protect students and taxpayers and encourage you to look for ways to strengthen the final ‘gainful employment’ rule,” the Senators wrote in a letter that was delivered to the Department yesterday evening.
 
“Preparing students for gainful employment in a recognized occupation” is used in the Higher Education Act as one of the eligibility requirements that most for-profit programs, and many less than two year non-profit programs, must meet to receive federal student aid.  According to data recently released by the Department of Education, students who attend for profit institutions default on their students loans at much higher rates than those who attend public and not-for-profit schools.
 
“One of the important functions of this “gainful employment” rule will be to address alarming trends in for-profit higher education,” the Senators wrote.  “Over the last 10 years, enrollment has increased from 600,000 students to more than 3 million students.  While some students have benefited from educational innovation, this growth has also resulted in a growing number of students with large debts that they are unable to repay.  By the Department of Education’s own estimates, for-profit colleges account for approximately 10 percent of college students but 44 percent of student loan defaults.”

The full text of the letter follows.
 

September 9, 2010


The Honorable Arne Duncan
Secretary of Education
U.S. Department of Education
c/o Jessica Finkel
1990 K Street, NW, Room 8031
Washington, DC 20006-8502

Re: Docket ID ED-2010-OPE-0012

Dear Secretary Duncan:

We applaud your efforts to protect students and taxpayers and encourage you to look for ways to strengthen the final “gainful employment” rule.  Postsecondary education is the gateway to the middle class for millions of Americans.  For that reason, Congress has supported students through a range of grants, subsidized loans and tax benefits for more than fifty years.  As a society, we make these investments because postsecondary education benefits not only students, through increased earning potential and greater health, but also our nation in the form of a more skilled workforce and stronger civil society.  Americans increasingly require some form of postsecondary education to gain access to many of the fastest growing employment fields and family wage-jobs.

Over the past several years Congress has met the need for a more educated workforce with significant new investments.  The Ensuring Continued Access to Student Loans Act of 2008 increased federal student loan limits while the College Cost Reduction and Access Act of 2007, the American Recovery and Reinvestment Act of 2009 and the Health Care and Education Reconciliation Act of 2010 provided more than $65 billion in additional funding for Pell Grants.  In fiscal year 2010 alone, the federal financial aid to postsecondary students is expected to total $145 billion.  These investments are intended to help millions more Americans access and finance their college educations.

As college costs continue to soar, we must do all that we can to ensure there are strong protections in place for students and taxpayers.  We applaud your leadership following the passage of the American Recovery and Reinvestment Act of 2009 in holding public hearings that allowed the public to voice these concerns and to develop and debate solutions through negotiated rulemaking sessions.  That transparent process has led to the promulgation of the proposed “gainful employment” rule.

Since 1965, programs at for-profit schools and many at non-profit community colleges (offering non-degree programs) are required by law to provide “an eligible program of training to prepare students for gainful employment in a recognized occupation,” in order for students enrolled in these programs to be eligible for federal financial aid.  This requirement is a measure of insurance that the federal investment is paying off for students and taxpayers.  Unfortunately, there are alarming reports suggesting that some schools may be benefiting from federal student aid dollars without providing a quality education that leads to gainful employment. 

The proposed “gainful employment” rule is a significant tool to ensure students do not just have more options to get their education, but better options.  High student loan debt coupled with low repayment rates signal a questionable investment for students and taxpayers.  It is a particularly risky investment for students who are prohibited from discharging loans in bankruptcy.  The Department of Education should be pushing poor performing schools to do better and limiting subsidies to programs with a documented track record of failing to help students.

One of the important functions of this “gainful employment” rule will be to address alarming trends in for-profit higher education.  Over the last 10 years, enrollment has increased from 600,000 students to more than 3 million students.  While some students have benefited from educational innovation, this growth has also resulted in a growing number of students with large debts that they are unable to repay.  By the Department of Education’s own estimates, for-profit colleges account for approximately 10 percent of college students but 44 percent of student loan defaults.

Not only do students enrolled at for-profit colleges default at higher rates, but they are also more likely to borrow, and borrow larger loan amounts, than their peers at other types of institutions.  Nearly every student who attends a for-profit school borrows to pay the tuition.  While only 38 percent of 2008 community college student graduates took out loans, 98 percent of for-profit students graduated with debt.  

Federal funding for postsecondary education is a solid investment in our future.  To ensure the efficacy of that investment, we encourage swift implementation of the gainful employment regulation and would be concerned with any efforts to weaken the proposal.  Under the proposed rule, programs with less than a third of its students able to repay their loans could continue to receive federal aid dollars, which seems to be a case of shockingly low expectations. 

We look forward to continuing to work with you to ensure that all Americans have the opportunity to access and succeed in postsecondary education.

Sincerely,
                       
Sen. Tom Harkin
Sen. Richard J. Durbin                                          
Sen. Russell D. Feingold                                                                
Sen. Bernard Sanders
Sen. Frank R. Lautenberg                                                              
Sen. Al Franken