The rules criticized by regulation advocates who hoped for more comprehensive reform were greeted with scorn from groups that have long opposed any regulations on for-profit institutions.

Harry Alford, CEO of The National Black Chamber of Commerce, called ED’s “gainful employment” rules a “draconian proposal aimed at killing career colleges” and called on ED Secretary Arne Duncan to suspend the rules while Congress has a chance to review the proposal.

“Congress must step in to create reform that is fair, effective, and a remedy for colleges across the board — not just the career college sector,” Alford said, adding that ED’s rules were illegal.

In a statement, the Association of Public Sector College and Universities (APSCU) criticized the government’s measurements for how for-profits must comply with the new regulations.

“We remain very concerned that the gainful employment regulation, while reflecting the fact that the department has listened to the sector and made changes to its initial proposal, is still using the same ill-advised metric approach to this matter and is clearly outside of its statutory authority,” the statement said. “Our concern is that the regulation will still penalize programs with great outcomes while allowing under-performing programs to continue.”

ASPCU said officials there would review the rules before deciding its “next step.” The statement did not mention a lawsuit against ED.

Investors weren’t discouraged by the government’s new regulations. Shares in for-profit companies jumped upon news of the softened federal rules, with for-profit firms like Corinthian Colleges, DeVry, Apollo Group, and ITT Educational Services gaining upwards of 30 percent less than a day after ED unrolled its “gainful employment” rules.


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