Federal Judge Upholds Gainful Employment Rule

A federal judge on Wednesday dismissed a lawsuit that challenged the U.S. Department of Education's new gainful employment regulations, handing a victory to the Obama administration in its longstanding regulatory battle with for-profit colleges, Inside Higher Ed reported.

The lawsuit, brought by the Association of Propriety Colleges (APC), was one of two filed last year in response to the department's final rule. The association, which represents a group of 23 New York for-profit colleges, unsuccessfully argued that the rules deprive its campuses of due process, are beyond the department's statutory authority, and are arbitrary and capricious. The other lawsuit in opposition to the rule, filed by the Association of Private Sector Colleges and Universities, is still pending.

In his decision this week, U.S. District Judge Lewis Kaplan in New York upheld the new regulations stating that APC's claim that the department had overstepped its bounds in issuing the rule "is quite surprising, but not for its merit. It is surprising because it is at best ill-conceived and at worst misleading."

Kaplan went on to argue that the department "has a strong interest in ensuring that students – who are, after all, the direct (and Congress's intended) beneficiaries of federal aid programs – attend schools that prepare them adequately for careers sufficient for them to repay their taxpayer-financed student loans."

The ruling is the first time a judge has evaluated the Obama administration's latest iteration of the gainful employment regulation, after the first version of the rule was largely invalidated by a federal court in 2012. Following that defeat, the Obama administration last October rewrote the regulation, dropping the loan repayment metric and focusing only on whether a program graduates students with high levels of debt compared to their earnings.

Dorie Nolt, press secretary at the Education Department, said in a statement that the department was pleased the court "upheld the gainful employment regulations as reasonable steps to ensure that programs are preparing their students for gainful employment in a recognized occupation."


Related Links

Inside Higher Ed