The day after Donald J. Trump secured a victory in the U.S. presidential election, Wall Street traders voted with their money. Among the winners were some of the nation’s largest for-profit college companies, such as Bridgepoint Education Inc., Career Education Corp., and DeVry Education Group Inc., which all saw big gains in their share prices.
The markets were sending a clear message that they expect Mr. Trump to limit or end the Obama administration’s heavy regulatory focus on proprietary colleges. Policy experts pointed to several areas where the new president could significantly lower the level of federal scrutiny of for-profit colleges, such as seeking to change the “gainful employment” rules around students’ earnings after graduation and allowing a controversial accreditor of proprietary colleges to continue to operate.
A rollback of higher-education regulation could also give traditional public and nonprofit private colleges some relief from government oversight, including newly issued requirements for teacher preparation and yet-to-be-released rules on state authorization of distance-education programs.
The new administration could also simply choose to enforce some laws and regulations less stringently than the current administration, such as its guidance on how colleges should handle sexual assault under Title IX, the law that requires gender-equity in education.
Revoking the teacher-preparation rules would cause a “cheer across the spectrum” of higher education, said Barmak N. Nassirian, director of federal relations and policy analysis for the American Association of State Colleges and Universities.
But how far the Trump administration is willing to go will depend heavily on whether it wants to invest the time and political capital, and its willingness to engage both parties in Congress, said Sarah A. Flanagan, vice president for government relations and policy development at the National Association of Independent Colleges and Universities, which represents mostly private, nonprofit colleges.
Donald J. Trump won election as the 45th president of the United States in an astonishing upset of Hillary Clinton, a Democrat who had long led her Republican rival in the polls. Here is extended coverage of the unexpected result of their contest, and news and commentary about the coming Trump administration.
Most policy analysts, however, agreed that proprietary colleges could see the most immediate benefits under a Trump administration.
In recent years, the U.S. Department of Education has taken several actions that were seen as directly targeting corporate-owned colleges, such as the so-called “gainful employment” regulation that penalizes institutions whose graduates don’t earn enough to repay their loans.
More recently, the Education Department has taken direct actions to shut down Corinthian Colleges Inc. and ITT Educational Services Inc., and has issued rules that would forgive federal loans for some former students of such institutions.
Steve Gunderson, president of Career Education Colleges and Universities, the for-profit sector’s main trade association, said it’s clear to him that the Education Department’s furthest-reaching regulations have had a negative effect on his group’s members and would not have been issued under a Trump administration.
‘Defense to Repayment’ at Risk
One of the department’s latest actions that could be scuttled by the new administration is the “defense to repayment” rules that would allow students who are defrauded by a college to have their federal student loans dismissed, said Mr. Gunderson.
The proposed rules would forbid colleges from barring class-action lawsuits by students and would also require colleges to post a letter of credit with the department in the case of a “number of triggering and early-warning events.”
The Education Department has already forgiven about $247-million in loans from former students of Corinthian Colleges.
The final price tag for those new rules could be at least $16-billion, Mr. Gunderson warned, which could raise concerns of fiscal conservatives in Congress.
Another possibility is that the new administration would allow the Accrediting Counsel for Independent Colleges and Schools to continue operating. The Education Department has decided to remove federal recognition from the accreditor, which oversees more than 900 campuses nationwide.
The accreditor has appealed the decision, but it’s not clear if Education Secretary John B. King Jr. will be able to finalize his decision before January 20, when Mr. Trump will take office said David Bergeron, a former department official who is a senior fellow at the Center for American Progress.
“Hearing appeals and reviewing the case against ACICS takes time,” he said. And deciding the appeal is the most important step that could protect the department in a likely lawsuit from the accreditor, he added.
Also, it’s not clear that the Trump administration would work very hard to defend the department from a lawsuit, Mr. Bergeron said.
One alternative would be for the next administration to allow the accreditor another year to come into compliance and then try to make its case to the federal panel that advises the education secretary on accreditation, said Mr. Gunderson.
Mr. Gunderson said he hopes the new education secretary is more receptive to for-profit colleges, because they will be an important part of helping the administration achieve its goals of improving the economy. “You can’t do that without a skilled work force,” Mr. Gunderson said. “Our ability to respond quickly means we will have to play a key role in training workers.”
There is a potential problem with Republicans controlling both the White House and Congress, he said, because along with reduced regulations could also come reductions in the amount the government spends on student aid. Mr. Nassirian said public community colleges and regional comprehensive institutions are already important to the regions where Mr. Trump’s economic messages resonated most strongly.
And softening the regulations and enforcement against the for-profit colleges will not be enough to save many of the colleges, which have suffered significant enrollment declines in recent years, he said.
The main reason for the sector’s woes is not federal regulation, but scandals and its bad reputation, Mr. Nassirian said. “And that no government can change, so they will continue to have huge challenges.”
Eric Kelderman writes about money and accountability in higher education, including such areas as state policy, accreditation, and legal affairs. You can find him on Twitter @etkeld, or email him at eric.kelderman@chronicle.com.
