Federal Judge Rejects Second Gainful Employment Challenge

A federal judge on Tuesday rejected the Association of Private Sector Colleges and Universities' (APSCU) legal challenge to the U.S. Education Department's gainful employment rule. The decision follows the recent dismissal of a lawsuit brought by the Association of Proprietary Colleges, which represents for-profits in the state of New York.

The rule, originally introduced in 2011, would judge career-oriented programs on their graduates' ability to repay their student loans. In 2012, a federal court invalidated a section of the rule as a result of an earlier court challenge by APSCU, the main lobbying group for for-profit colleges. The association's second challenge, to a revised rule, used many of the same arguments, asserting that the department had exceeded its authority in issuing the rule and that the rule was capricious and arbitrary.

In his decision on Tuesday, Judge John D. Bates of the U.S. District Court for the District of Columbia dismissed those claims, saying the association "throws a host of arbitrary-or-capricious arguments against the wall in hope of a different outcome. None of them stick."

His ruling upholds the gainful employment regulations, including the debt-to-earnings test and disclosure, and reporting and certification requirements.

The final regulation, released last fall, is expected to cause 1,400 programs, 99 percent of them at for-profit colleges, to be put at risk of losing eligibility for federal student aid.

While the rule is slated to take effect on July 1, it is still a target for repeal. Both House and Senate appropriations subcommittees advanced spending bills this week that would block the regulation. Additionally, lawmakers in both chambers of Congress previously introduced legislation to bar its implementation, with Senate Health, Education, Labor, and Pensions (HELP) Committee Chairman Lamar Alexander (R-TN) pushing to halt gainful employment through the Higher Education Act reauthorization.


Related Links

U.S. District Court for the District of Columbia Ruling


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