WASHINGTON — Education Secretary Betsy DeVos formally moved Friday to scrap a regulation that would have forced for-profit colleges to prove that the students they enroll are able to attain decent-paying jobs, the most drastic in a series of policy shifts that will free the scandal-scarred, for-profit sector from safeguards put in effect during the Obama era.
In a written announcement posted on its website, the Education Department laid out its plans to eliminate the so-called gainful employment rule, which sought to hold for-profit and career college programs accountable for graduating students with poor job prospects and overwhelming debt. The Obama-era rule would have revoked federal funding and access to financial aid for poor-performing schools.
After a 30-day comment period, the rule is expected to be eliminated July 1, 2019. Instead Ms. DeVos would provide students with more data about all of the nation’s higher education institutions — not just career and for-profit college programs — including debt, expected earnings after graduation, completion rates, program cost, accreditation and other measures.
“Students deserve useful and relevant data when making important decisions about their education post-high school,” Ms. DeVos said in a statement. “That’s why instead of targeting schools simply by their tax status, this administration is working to ensure students have transparent, meaningful information about all colleges and all programs. Our new approach will aid students across all sectors of higher education and improve accountability.”
But in rescinding the rule, the department is eradicating the most fearsome accountability measures — the loss of federal aid — for schools that promise to prepare students for specific careers but fail to prepare them for the job market, leaving taxpayers on the hook to pay back their taxpayer-backed loans.
The DeVos approach is reversing nearly a decade of efforts to create a tough accountability system for the largely unregulated for-profit sector of higher education. In recent years, large for-profit chains, which offer training for everything from automotive mechanics to cosmetology to cybersecurity, have collapsed under mountains of complaints and lawsuits for employing misleading and deceptive practices.
The implosions of ITT Technical Institute and Corinthian Colleges generated tens of thousands of complaints from student borrowers who said they were left with worthless degrees. The Obama administration encouraged the expansion of public community colleges as it forgave at least $450 million in taxpayer-funded student debt for for-profit graduates who could not find decent jobs with the degrees or certificates they had earned.
The regulations passed in the wake of those scandals remade the industry. Since 2010, when the Obama administration began deliberating the rules, more than 2,000 for-profit and career programs — nearly half — have closed, and the industry’s student population has dropped by more than 1.6 million, said Steve Gunderson, the president of Career Education Colleges and Universities, the for-profit industry’s trade association.
Even for-profit leaders concede the gainful employment rule has had its intended effect. Mr. Gunderson said that for-profit institutions had to adjust programming to be more affordable and responsive to the job markets.
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