POLITCO. September 11, 2013. No clear path toward new regulations for for-profit colleges and vocational programs emerged from a meeting of a federal panel this week.
Even before negotiators began, observers predicted that getting the panelists to agree on new rules to hold vocational programs accountable for their graduates’ debt burdens and ability to repay them could be a tall order.
That turned out to be the case.
The three days of discussion involved plenty of arguments about whether the Education Department should create a new approval process for vocational programs, whether students in programs that don’t meet the department’s requirements deserve to have their federal loans discharged and whether measures besides debt and income should be taken into account.
But there was little agreement. Belle Wheelan, who represented accrediting agencies, questioned whether additional regulations were necessary at all. Others, including Barmak Nassirian, a longtime critic of for-profits, advocated stronger regulations than a previous version written by the Education Department that was thrown out in court.
The panel includes representatives of colleges, accrediting agencies, consumer groups and other stakeholders, some of whom are outspoken critics of for-profit colleges pressing for more stringent regulations.
Negotiators meet again in October for more discussion and a final attempt to reach consensus. Their second meeting will be informed by reports from subcommittees tasked with considering different facets of the regulation. If panelists fail to agree — and they function like a jury, where one dissenter can hang the process — the Education Department writes the rules.
The process, known as negotiated rulemaking, is the latest step in the department’s ongoing attempt to regulate for-profit colleges and vocational programs. The department issued final regulations in 2011 that tried to ensure the programs’ graduates found jobs and were paying back loans, but a federal judge nixed the regulation, saying one measure it used was too arbitrary.
Now the Education Department is trying again, working from a draft regulation that drew criticism from for-profit colleges. It would judge vocational programs, and all programs at for-profit colleges, based on graduates’ debt and incomes. Programs whose graduates’ debts are considered too big relative to their earnings would eventually lose eligibility for federal financial aid.
The panel spent relatively little time on the central features of the Education Department’s proposal, discussing instead other ways to judge vocational programs. They also spent hours on issues the department decided weren’t germane, such as whether colleges should be able to limit how much students borrow.
One idea from Nassirian, which got some support from negotiators representing student and consumer groups but pushback from higher education representatives, would require the Education Department to create a more stringent approval process for individual programs.
The colleges argued that accreditation already fulfills that role without the need for federal involvement. But the consequences of regulations based on outcomes — such as student debt and earnings — measured years after graduation was a recurring theme. Colleges argued that they shouldn’t be judged on debt that students incur before the regulations take effect. And student and consumer advocates said they were concerned that there isn’t enough recourse for students enrolled in programs that could eventually fail to meet Education Department standards.
“As an intellectual proposition, I find it very problematic that the secretary can sit back with hundreds of thousands of human beings being sent into these programs with almost sort of a lack of interest in what happens to those people,” Nassirian said.
Negotiators also discussed other ways to judge outcomes, including loan default rates, a suggestion from the Education Department. Some negotiators argued that placement rates are the most important factor for students seeking out career education. But they’re difficult to measure, in part because federal law prohibits creating a database to link students’ educational records with their Social Security wage data.
And using graduation rates in federal regulations is often a sticking point for community colleges, because the rates don’t include returning dropouts and transfer students.
But Brian Jones, general counsel for Strayer University, said that the department should consider more measures when judging all colleges and programs.
“If you combine completion, repayment and default rates, you should be able to identify problematic institutions across sectors,” including but not limited to for-profit colleges, Jones said.