The Obama administration has seen legal setbacks in its push for gainful employment rules.

The U.S. Department of Education (ED) will kick off a new round of public hearings on the oft-discussed “gainful employment” regulations, which the for-profit college industry has successfully fought in ongoing legal battles.

ED announced April 15 that it would launch a series of rulemaking proceedings covering a number of higher education issues, including the rules pushed by the Obama administration that would have prevented career-training programs, mainly at for-profit colleges – many with expansive online programs — from leaving students with unaffordable debt and limited employment options.

The rules were first proposed by the administration in 2009 after growing evidence and congressional inquiries showed that as the for-profit college sector grew – bolstered by the easy access of web-based courses – completion rates remained dismally low at some schools and students proved unprepared for the workforce.

Under the rules eventually implemented – described by many in education as watered down – a career training program would have to fail to meet three thresholds before that program was deemed ineligible for federal student aid funds.

For-profit college critics point to the public funding of many schools, as the industry receives about 85 percent of its revenue from taxpayers.

“That means all of us are paying for their ubiquitous advertisements, which promise students a better future, for their big CEO salaries, and for their high-priced lawyers and lobbyists,” David Halperin, a senior fellow for United Republic, a site that tracks how money is used in national politics, wrote in an April 15 blog post. “If the gainful employment rule is helping to eliminate some of the worst excesses of the for-profit college sector, those that have truly been ruining students’ lives, can it go further and actually force the industry to offer programs that are reasonably priced and actually train students for careers? I think that will take some time.”

A contingent of advocacy groups, including several representing military veterans who have long supported more stringent regulations on for-profit schools, sent a letter to President Obama urging him to “promptly [propose] a strong new gainful employment rule.” The group said the federal court ruling that struck a blow to gainful employment rules also “confirmed the need for the regulation.”


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