New federal rules that the U.S. Department of Education is now expected to propose next week are dominating many conversations here at the annual meeting of the Career College Association, which represents more than 1,400 for-profit colleges.
Thousands of for-profit-college operators, financial analysts, faculty members, investors, and companies converged to take part in the three-day national conference being held by the association, which announced Wednesday that it will be changing its name to the Association of Private Sector Colleges and Universities.
The rules, which will mostly affect the for-profit-college sector, cover an array of issues, including misrepresentation of consumer information and how to define a high-school diploma. The most-contentious issue has become a proposed rule, known as the “gainful employment” rule, that would withhold federal aid from for-profit programs whose graduates are likely to carry high debt-to-income loads.
The department has said its goal is to crack down on colleges that overcharge and underdeliver in training students for jobs right after graduation.
Similar issues are also gaining the attention of Congress. On Thursday, Sen. Tom Harkin, the chairman of the U.S. Senate Health, Education, Labor, and Pensions Committee, announced that his panel would hold hearings, beginning this month, to examine “issues related to the growing role of the for-profit higher-education sector, including the scope and rapid growth of the federal investment in for-profit higher education and the corresponding opportunities and risks for students and taxpayers.”
Harris N. Miller, the president of the career-college association, said Thursday that the group welcomed the hearings. “The education landscape in America is shifting,” he said. “Federal student aid in private-sector education is an incredibly important way to provide postsecondary access for all.”
Standing-Room Only
Because of the forthcoming federal rules’ possible effects on the for-profit sector, it is not surprising that many of the sessions at the conference revolved around legislative and regulatory issues. One session went in-depth into the issue of how to compensate student recruiters without running afoul of the federal ban on paying employees based on how many people they enroll, while another gave attendees an overview of state issues facing for-profit colleges, such as complying with licensure fees and state grant eligibility.
It was standing-room only at a session called “Neg Reg 2010: There Is a New Sheriff in Town!” with a number of attendees forced to stand outside the door and listen from the hallway. The panel gave an overview of the 14 rules the federal Education Department plans to unveil.
Sharon H. Bob, a higher-education consultant at the Washington-based law firm of Powers Pyles Sutter & Verville, urged the attendees to take full advantage of the 30-to-40-day comment period that will begin after the department releases its rules to make sure the department understands all the concerns of the for-profit sector.
“You want the full weight of the sector on the issues,” she said.
The panel left the most-contentious issue, “gainful employment,” last for discussion. A hush came over the room when the panelists finally started talking about it.
The Higher Education Act of 1965 requires that proprietary and vocational colleges, other than those clearly designated as “liberal arts” and vocational programs not designed to lead to a degree, provide “an eligible program of training to prepare students for gainful employment in a recognized occupation.” Compliance with the rule is a condition for those colleges’ students to be eligible to receive federal financial aid.
The higher-education act does not define “gainful employment” as described by the proposed rule. So the Education Department set out to do that late last year, convening a panel that included consumer advocates, for-profit-college officials, and student advocates to re-examine the rule.
At Thursday’s session, Elaine Neely, senior vice president of regulatory affairs at Kaplan Higher Education Corporation, said the department has never produced data supporting the need to define “gainful employment.”
The department’s most-recent draft of the “gainful employment” rule would bar federal aid for programs where a majority of the students’ loan payments would exceed 8 percent of graduates’ expected earnings based on a 10-year repayment plan.
In April the career-college association released a report on a study of more than 10,000 for-profit college programs. It estimated that nearly one-fifth of those programs would become ineligible for federal student aid and forced to close under the proposed rule.
Ms. Neely urged for-profit college operators to talk with nonprofit colleges to find out how the rule would affect them.
“This is a slippery slope that traditional schools need to be aware of,” she said.
Another panelist, Lawrence Brown, president of Beam Reach Education, which focuses on acquiring and developing specialized trade schools, said everyone agrees that graduates of a career college should leave gainfully employed, but he has a problem with the department “picking arbitrary numbers” to define what that means. A lot of heads in the room nodded in agreement. He said if the issue is that much of a problem, then Congress, not the department, should deal with it.
Jitters and Advocacy
The talk of gainful employment was inescapable at the convention, which, the association said, is set to break records, with an estimated 2,500 attendees.
Outside the exhibit hall, financial analysts talked among themselves about the forthcoming rules. Some said they were jittery about the proposals and how they might hurt profits. Talk of the rules spilled into elevators and even the casino, with a conference attendee making a joke about the rules before playing a hand during a poker game.
A newly formed group called Students for Academic Choice says it will represent the interests of career-college students and graduates. At the conference, the group’s leaders said their first order of business was to send Education Secretary Arne Duncan a letter expressing their concern about the proposed gainful employment rule. The group said the proposal would adversely affect hundreds of thousands of students. The group has gathered over 32,000 signatures for the letter.
Dawn Connor, a student at Globe University in Wisconsin and the group’s president, said the proposed rule would take away a student’s choice of where to attend college.
Ms. Connor said the group plans to put together a full public-policy agenda in the future. She said the voice of students who attend for-profit colleges has been overlooked and unheard on issues and that the new student association wants to change that.
Jane A. Nickles, an instructor at Le Cordon Bleu College of Culinary Arts in Austin, Tex., says discussion of the proposed federal regulations has just started to trickle down to faculty members. She says some instructors are concerned about how the rules may affect them.
However, Ms. Nickles said she planned to attend sessions on faculty development and teaching rather than those dealing with legislative or regulatory issues. She will lead a session on Friday called “Teacher Vs. Twitter” that focuses on how to better engage students in the classroom. She said she is dealing with tech-savvy students with short attention spans and will tell instructors that “We have to be as engaging as video games.”