For Immediate Release:                                                                       

Contact: Carrie Wofford, (202) 838-5050

August 10, 2018

Betsy DeVos Ignores Veterans on Gainful Employment

Education Department failed to consider veterans’ perspectives in gutting the Gainful Employment rule, which imposed accountability on the lowest-performing schools that left students with worthless degrees, crushing loan debt

 WASHINGTON, DC — As part of Education Secretary Betsy DeVos’s ongoing rollback of policies that protect student veterans from predatory for-profit colleges, Secretary DeVos today gutted the Gainful Employment rule — a rule that gives the lowest-performing career education colleges a three-year warning and then, if they don’t improve, strips them of federal funding for consistently leaving students with worthless degrees and student loan debts they cannot repay.

“Betsy DeVos’s ruling today is a big gift to the lowest quality bad actor college programs that are notorious for deceiving veterans out of their hard-earned GI Bill,” said Carrie Wofford, president of Veterans Education Success.

“We are gravely disappointed that Betsy DeVos and the former for-profit college executives surrounding her in leadership positions at the Education Department failed to listen to any of the testimony they received from national veterans’ organizations or from recommendations that received 100% support at the Department’s Negotiated Rulemaking process earlier this year,” Wofford said.

Thirty four of the nation’s largest veterans and military service organizations wrote several letters urging the Department not to weaken the Gainful Employment rule, because servicemembers, veterans, and their families and survivors are often targeted by the lowest- performing colleges that want their GI Bill. Also see The American Legion’s Resolution.

The Education Department’s decision today goes contrary to veterans’ recommendation, and benefits only bad-actor schools at the expense of those who are serving or have served our country.

Numerous national veterans’ organizations testified at the Education Department’s public hearings in 2017 about the importance of the Gainful Employment rule:

  • Student Veterans of America: “This common-sense requirement applies to career education programs at all types of colleges (public, nonprofit, and proprietary) and protects both students and taxpayers from waste, fraud, and abuse. Additional resources ought to be committed to ensure this regulation is fully implemented, to prevent schools with poor outcomes from continuing to deceive student ”1
  • Vietnam Veterans of America: “Too many veterans have been scammed by for-profit institutions of higher learning for which profit is the bottom line and educational opportunities have little importance. VVA has heard countless stories of benefits wasted on bogus degree programs.”2
  • Blue Star Families: “The families of our All-Volunteer force make unprecedented sacrifices as it is. Military families should not have to experience [being targeted] to fulfill their personal goals and/or to financially contribute to the essential and vital dual-income family lifestyle that they live…. Gainful employment provisions that address this issue on the front-end are 100% necessary. The rules and provisions must be implemented; not today, or tomorrow, but yesterday”3
  • Veterans Education Success: “Since 2012, the FTC, CFPB, Justice and numerous state Attorneys General have concluded 17 settlements with for-profit schools. The basis for these settlements were findings of misleading and deceptive advertising and recruiting, including misrepresenting costs, quality, accreditation and the transferability of credits, job placement rates, and post-graduation salaries. Gainful Employment will help protect veterans by shutting down and requiring warnings for career education programs that leave students with too much debt relative to income. In fact, many such programs have already been eliminated because of the ”4
  • Iraq and Afghanistan Veterans of America: “Of strong concern to IAVA is the delayed implementation of the Gainful Employment Rule. This rule was established to protect students from the predatory practices of inadequate schools that seek to sell them useless education programs, and burden them with large student loan debt and little access to the jobs that they wanted. We should fully enforce the Gainful Employment Rule to reduce the odds of situations like [Corinthian and ITT] occurring again. [The] Rule encourage[s] reforms by distinguishing the worst actors in the for-profit sector from those that are delivering quality education programs.”5

Wofford explained, “Stopping waste, fraud, and abuse in higher education should not be controversial. We remain convinced that there are enough members of Congress on both sides of the aisle who will stand with national veterans and military service organizations in weeding out the lowest-quality schools that bilk taxpayers and students and in standing against waste, fraud and abuse of taxpayer funds.”

BACKGROUND:

 What is the Gainful Employment Rule?

  • The Gainful Employment Rule, finalized in 2014 and upheld by federal courts multiple times, implements the requirement in the Higher Education Act that career education programs (whether for-profit, public, or non-profit) must “prepare students for gainful employment in a recognized ”6
  • The rule applies to specific programs within a school, but not to schools as a
  • The two-part rule focuses on accountability and transparency:
    • Accountability: The rule measures graduates’ debt compared to their incomes to ensure that federally-funded career education programs are preparing students for gainful employment. Programs are given several years of warning and then are cut off from federal student aid if they consistently leave students with debts they cannot
    • Transparency: the rule ensures informed college choice by requiring schools to provide information about graduates’ earnings, debt, and success in finding a job in their

Why is the Gainful Employment Rule important to Veterans?

  • The Gainful Employment Rule helps protect student veterans from programs that consistently leave students with debts they cannot repay. The rule weeds out substandard programs that leave students worse
  • Veterans are often bombarded with misleading and aggressive marketing and recruiting by substandard colleges hoping to use GI Bill dollars to get around the 90/10 rule; veterans are treated as “nothing more than dollar signs in uniform,” as Holly Petraeus 7
  • 7 of the 10 schools receiving the most GI Bill dollars were under law enforcement investigation for defrauding student veterans, according to a 2014 Senate Report. Eight of those schools received about $1 billion in GI Bill dollars, but nearly half a million veterans withdrew from those institutions within their first year. In those same eight schools, 54 percent of students withdrew from the Bachelor’s program, and two-thirds withdrew from an Associate’s program without
  • At these substandard schools, the institutional spending on instruction can be relatively low compared to other schools, sometimes even lower than what is spent on marketing and profit. These schools also provide questionable academic rigor, few student services, and insufficient job placement
  • For example, in the 2014-2015 school year, private non-profit schools spent $17,567 per student on instruction in 4-year programs, as compared to $10,221 at public schools, and only $3,948 at for-profit schools.8 In the 2014-2015 school year, the school receiving the most GI Bill funds, The University of Phoenix, spent only $2,126 on instruction, per student on their largest campus.9
  • Undercover agents from the U.S. Government Accountability Office found programs granting credit for obviously plagiarized work and for unacceptable work, including a submission of celebrity photos as a response to an essay 10
  • In 2010, substandard colleges that were examined employed two and a half recruiters for every student support 11
  • University of Phoenix, for example, had a student population of nearly 500,000, but zero career placement staff as of 2010. Similarly, Ashford University, employed one career placement official for their entire student population of over 77,000, as of 12
  • Without the Gainful Employment Rule, Veterans can be left worse off than they started, unable to secure employment in their chosen field, but burdened with student loan

Has the current Gainful Employment Rule been effective?

  • Kevin Carey for the New York Times, wrote in June 2017, “data released in the final days of the previous administration shows that the existing [gainful employment] rules have proved more effective at shutting down bad college programs [than expected].”13 According to the Education Department’s published data under the first years of implementing the Gainful Employment threshold, five percent of programs failed.14 These include obvious failures:
  • Art Institute of Pittsburgh Associate’s degree in graphic design costs $44,804. Only 12 percent of students finish on time. Graduates typically earn less than $22,000, but owe more than $40,000 in federal student 15
  • McCann School of Business Associate’s degree program in medical assisting results in graduates typically earning less than a high school graduate with no college education, and carrying more than $26,000 in
  • A Master’s degree in acupuncture from the Seattle Institute of Oriental Medicine costs

$76,800, but results in median earnings for graduates of just $16,256 per year.16

  • Fortis College’s Associate’s degree program in criminal justice produced graduates carrying debts of almost $32,000 but earnings of only $15,400 after
  • Administrators now have a clearer idea of their programs’ effectiveness thanks to the Gainful Employment Rule, and can now act more 17

Why is the Gainful Employment Rule important to taxpayers?

  • As of 2012, the career college industry had received up to $32 billion18, about 25 percent, of all federal financial aid in a single
  • The career college industry serves only 9 percent of college students but accounts for 33 percent of the nation’s student loan 19
  • The Congressional Budget Office (CBO) estimates that repealing the Gainful Employment Rule would increase spending by $1.3 billion over ten years by leaving students in subpar programs that will cost taxpayers through wasted student aid and loan
  • The Gainful Employment Rule ensures taxpayer dollars are being spent effectively, and that taxpayer-backed federal student aid is investing in future employment and self-sufficiency for students.

1https://static1.squarespace.com/static/556718b2e4b02e470eb1b186/t/59d585dbf7e0abe5b1ab9876/150
7165660380/SVA+Public+Comment_ED+EO+13777+Hearing.pdf
2https://static1.squarespace.com/static/556718b2e4b02e470eb1b186/t/59dd05a48419c2bc5a9f07dd/15
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3https://static1.squarespace.com/static/556718b2e4b02e470eb1b186/t/5964bc05414fb52a415d2d74/149
9773961275/Blue+Star+Families+Testimony_Dept+of+Ed_HJD_07102017.pdf
4https://static1.squarespace.com/static/556718b2e4b02e470eb1b186/t/5963daebbf629af21c096f6f/1499
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6 20 U.S.C.A. § 1088.
7 www.nytimes.com/2011/09/22/opinion/for-profit-colleges-vulnerable-gis.html?mcubz=0
8 https://nces.ed.gov/fastfacts/display.asp?id=75

9 https://nces.ed.gov/ipeds/datacenter/institutionprofile.aspx?unitId=afb3afb1acae
10https://static1.squarespace.com/static/556718b2e4b02e470eb1b186/t/56112384e4b0521c793b0c4d/14
43963780937/harkins-full-report.pdf
11 Id.
12 Id.
13 https://www.nytimes.com/2017/06/30/upshot/new-evidence-shows-devos-is-discarding-college- policies-that-are-effective.html
14 https://studentaid.ed.gov/sa/about/data-center/school/ge/data
15 https://ticas.org/blog/-/78
16 https://www.nytimes.com/2017/06/30/upshot/new-evidence-shows-devos-is-discarding-college- policies-that-are-effective.html
17 Id.

18https://static1.squarespace.com/static/556718b2e4b02e470eb1b186/t/56112384e4b0521c793b0c4d/14
43963780937/harkins-full-report.pdf
19 https://ticas.org/sites/default/files/pub_files/cdr_nr_sept_27.pdf