Tag: gainful

  • Federal judge dismisses legal challenge to gainful employment rule

    Federal judge dismisses legal challenge to gainful employment rule

    This audio is auto-generated. Please let us know if you have feedback.

    Dive Brief: 

    • A federal judge dismissed a case Thursday that challenged the legality of the Biden administration’s gainful employment rule, which aims to ensure that graduates of career education programs earn enough to pay off their student loan debt. 
    • U.S. District Judge Reed O’Conner — a George W. Bush appointee — rejected arguments from cosmetology school groups that the gainful employment rule overstepped the U.S. Department of Education’s authority and violated their constitutional rights. 
    • Although the Biden-era rule survived the legal challenge, the Trump administration is considering potential changes to the gainful employment regulations in the coming months. 

    Dive Insight: 

    The Biden administration finalized the gainful employment rule in 2023. Under the rule, career education programs must prove that they provide graduates with an earnings bump and don’t leave borrowers with more debt than they can manage. 

    To do so, the gainful employment rule establishes two separate tests. Under one, the median program graduate must pay no more than 8% of their annual earnings or 20% of their discretionary income toward their debt. Under the other, at least half of a program’s graduates must outearn workers in their state with only a high school diploma. 

    College programs that fail either of these metrics in two out of three consecutive years risk losing access to federal financial aid. The rule primarily impacts programs at for-profit colleges, but also applies to certificates at all institutions. 

    Thursday’s ruling addresses two consolidated lawsuits against the rule. The cosmetology school groups had argued that the Education Department had overstepped its authority when issuing the regulations, as the Higher Education Act doesn’t define gainful employment.

    However, O’Connor wrote that the Education Department’s rule follows the plain meaning of the statute. 

    “Although the 2023 Rule is in the form of an equation, it no less does the same work as the words ‘gainful employment,’ by ensuring the programs lead to profitable jobs, instead of loan deficits,” O’Connor wrote. 

    The plaintiffs had also alleged that they would be unfairly penalized by the rule, arguing that a large share of income in the cosmetology industry goes unreported because it is earned through cash tips. Because of that, they said, the Education Department’s calculations would fail to accurately capture how much their graduates earn. 

    O’Connor rejected those arguments, noting that the Education Department had cited studies showing that underreporting is not widespread. 

    National Student Legal Defense Network, an advocacy and legal group for students, praised the ruling Thursday. 

    “Higher education is supposed to offer students a path to a better life, not a debt-filled dead end,” Student Defense Vice President and Chief Counsel Dan Zibel said in a statement. “The 2023 Gainful Employment Rule reflects a common-sense policy to ensure that students are not wasting time and money on career programs that provide little value.”

    Jason Altmire, president and CEO of Career Education Colleges and Universities, an association that represents the for-profit college sector, decried Thursday’s ruling but sounded optimistic about forthcoming regulatory changes under the Trump administration. 

    “Although we strongly disagree with the ruling today, we look forward to this issue being revisited by the current Department of Education,” Altmire said in a statement that day. “We are confident the Biden Gainful Employment Rule will be revised to incorporate a fairer accountability measure that will apply equally to all schools, ensuring all students can benefit.”

    Source link

  • Judge Upholds Biden-Era Gainful Employment Rule

    Judge Upholds Biden-Era Gainful Employment Rule

    A federal judge rejected an effort to overturn the gainful-employment rule, which was put in place during the Biden administration.

    In an opinion issued Thursday, Judge Reed O’Connor from the Northern District of Texas sided with the Education Department on every point. One of the plaintiffs, a trade association representing cosmetology schools, had argued in its lawsuit that the regulations jeopardized the “very existence” of cosmetology schools and used flawed measures to determine whether graduates of career education programs are gainfully employed.

    Under the rules, for-profit and nondegree programs have to prove that their graduates can afford their loan payments and earn more than a high school graduate. Those that fail the tests in two consecutive years could lose access to federal financial aid. The regulations also included new reporting requirements for all colleges under the financial value transparency framework. 

    The lawsuit started under the Biden administration, and Trump officials opted to defend the regulations in court and urged the judge to keep the rules in place. 

    Similar gainful-employment rules survived a legal challenge in 2014 but were ultimately scrapped by the first Trump administration. However, in recent years, lawmakers on both sides of the aisle have become more interested in finding ways to hold colleges accountable for their students’ career outcomes. Under legislation that Congress passed this summer, most college programs will have to pass a similar earnings test. How the Education Department carries out that test will be subject to a rule-making process set to kick off later this year.

    Jason Altmire, president and chief executive officer of Career Education Colleges and Universities, which represents the for-profit sector and opposed the Biden rule, said in a statement that he looks forward to revisiting the issue during the rule-making process.

    “We are confident the Biden Gainful Employment Rule will be revised to incorporate a fairer accountability measure that will apply equally to all schools, ensuring all students can benefit,” he said. “We look forward to a full consideration of these issues during the months ahead.”

    Dan Zibel, vice president of the legal advocacy group Student Defense, applauded the court ruling in a statement. 

    “Higher education is supposed to offer students a path to a better life, not a debt-filled dead end,” he said. “The 2023 Gainful Employment Rule reflects a common-sense policy to ensure that students are not wasting time and money on career programs that provide little value.”

    Source link

  • Another reprieve for gainful employment, financial value transparency reporting deadline

    Another reprieve for gainful employment, financial value transparency reporting deadline

    This audio is auto-generated. Please let us know if you have feedback.

    Dive Brief:

    • The U.S. Department of Education is extending the reporting deadline for the gainful employment and financial value transparency regulations to Sept. 30, according to an agency announcement last week. 
    • The seven-month extension aims to give college officials more time to submit the required information and to allow institutions that have already sent in their data to make corrections. 
    • The Education Department has pushed back the reporting deadline several times amid concerns that colleges didn’t have enough time or guidance to provide the data required under the new regulations. This extension, the first one under the Trump administration, will be the last, the announcement said.

    Dive Insight:

    The Education Department originally asked colleges to submit the gainful employment and financial value transparency data by July 2024, but higher education institutions requested more time given last year’s bumpy rollout of the revamped Free Application for Federal Student Aid. 

    The Biden administration released final gainful employment and financial value transparency regulations in 2023. 

    Under the gainful employment rules, career education programs must prove that their graduates earn enough money to pay off their student loans and that at least half of them make more than workers in their state who only have high school diplomas. Programs that fail those tests risk losing their access to Title IV federal financial aid. 

    Although the financial value transparency regulations don’t threaten federal financial aid, they create new reporting requirements for all colleges. Under the rule, the Education Department will post data collected from institutions about their programs — such as costs and debt burdens — on a consumer-facing website to help students make informed decisions about their college attendance. 

    The Biden administration extended the deadline for reporting requirements three times. Despite the delays, Education Department officials said late last year that they still expected to produce data in the spring to help students select their colleges. 

    With its latest announcement, the Trump administration’s Education Department is delaying that timeline also. 

    “The Department does not plan to produce any FVT/GE metrics prior to the new deadline and will take no enforcement or other punitive actions against institutions who have been unable to complete reporting to date,” it said. 

    It’s so far unclear how the Trump administration will handle the gainful employment regulations. In President Donald Trump’s first term, then-Education Secretary Betsy DeVos rescinded the Obama-era version of the rules, saying they unfairly targeted the for-profit college sector. 

    The Education Department is facing at least one lawsuit over the Biden administration’s version of the gainful employment rule. However, a federal judge earlier this month paused legal proceedings for 90 days after the new administration sought more time “to become familiar with and evaluate their position regarding the issues in the case,” according to court documents.

    The National Association of Student Financial Aid Administrators — one of the organizations that pushed for a delay — applauded the move to extend the regulatory reporting deadline.

    The change “is a sensible and welcome decision that will give financial aid offices much needed breathing room while they navigate unresolved issues in submitting their data and make necessary corrections to ensure the data they submit is accurate,” NASFAA Interim President and CEO Beth Maglione said in a statement last week.

    Source link