Responding to complaints that it was regulating in a vacuum, the Education Department agreed late Wednesday to a third negotiating session over its controversial “gainful employment” rule.
Just minutes before the second, and final, session was set to end, John Kolotos, the department’s representative on the rule-making panel, announced that the group would meet again, for a daylong session in December, to discuss a delayed analysis of the proposal.
Throughout this week’s three-day session of negotiations, Mr. Kolotos had repeatedly promised that the department would provide data, “as soon as possible,” detailing how the proposed rule would affect colleges. But by the end of the session, the information still wasn’t ready. Negotiators had complained that they couldn’t vote on a proposal without understanding its effect.
The department’s offer was welcomed by the negotiators, with one panel member, Kevin Jensen, a financial-aid adviser at the College of Western Idaho, arguing for a two-day follow-up session.
“The work we’re doing affects millions of families, and thousands of colleges,” he said. “We are not doing them right if we cut this conversation short because we didn’t manage our time effectively.”
Mr. Kolotos said the department would consider a two-day session.
Still, it seems unlikely that the delayed data will lead to fundamental changes in the department’s approach, no matter what the analysis shows. Asked by Brian Jones, general counsel of Strayer University, if the department was open to revisiting some of the “core components of the rule,” Mr. Kolotos said “yes,” with a caveat: “We believe we put forward the right policy, and we don’t think the data should drive the policy,” he said. “It may inform the policy, but not drive it.”
Looking at Student Debt
Under the department’s latest proposal, vocational programs at public and private colleges, and all programs at for-profit colleges, would be judged based on their graduates’ student-loan-debt burdens and their former students’ ability to repay their loans. Programs that repeatedly failed any of the tests would become ineligible to award federal student aid, a death sentence for many programs.
So far, the department has resisted efforts to change the measure, rejecting proposals by student and consumer groups that would have tightened the rule, as well as proposals by for-profit education representatives that would have softened it. The department refused to lower expectations for programs that enroll high percentages of low-income and minority students, or to exempt institutions with very low student-loan-default rates from the rule, and it offered only limited relief to community colleges with few borrowers.
The department did make one major concession to for-profit colleges, agreeing to a proposal by Marc Jerome, executive vice president of Monroe College, to allow failing programs to temporarily avoid penalties by reducing their current students’ debt burdens through scholarships to a level that would pass the department’s tests. Mr. Kolotos called Mr. Jerome’s suggestion “the most proactive approach this committee has heard.”
That proposal was met with skepticism, however, from student and consumer groups, who worried that programs would set tuition “to fly right below the radar,” as Barmak Nassirian, director of federal policy analysis for the American Association of State Colleges and Universities, put it.
But Mr. Jerome insisted he was “acting in good faith” and argued the change would have “the single biggest immediate effect” on student debt “of anything we’ve talked about.”
He pointed out that colleges have no way to retroactively change the debt burdens of the prior cohorts of students on which the department will base its initial analyses, so “all we can do is sit and watch our programs fail.”
The department also agreed to include Perkins loans in its debt-to-income calculations, an addition sought by student and consumer groups.
Potential Political Backlash
But the department will have to make broader changes in its rule if it hopes to win consensus by the end of December’s negotiating session. For-profit colleges remain unhappy that the rule would calculate debt-to-income ratios based on a 10-year standard repayment plan; they want the department to revert to a 2011 version of the rule that assumed longer repayment periods for some students.
And community colleges are unsatisfied with the department’s offer to exempt programs with 10 or fewer students from the loan-repayment and debt-to-income metrics. They want the threshold for all the measurements to be set at 30 students, and they want the department also to exclude from consideration programs with a borrowing rate below 50 percent or tuition and fees below the maximum Pell Grant.
At the end of Wednesday’s session, Mr. Jensen, of the College of Western Idaho, warned that the rule could compel low-cost programs to shut down or leave the federal student-loan program, creating “political problems” for the department.
“We don’t want the rug to be pulled out from under these rules because of the political viability of what we’re doing,” he said.
If the department agrees to some of the changes sought by community colleges and for-profit institutions, it just might get agreement on a final rule next month. Student and consumer groups will be disappointed that the department didn’t provide broader debt relief to students who attend failing programs, but they may accept the package out of concern that the department could water down the rule if it isn’t held to the negotiated version.
If the department doesn’t offer such concessions, and the panelists can’t reach consensus, the department will be free to propose whatever rule it wants, without regard to compromises reached during the negotiations.
