Black, Hispanic Groups Call for Study of Gainful Employment Regulations

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Leaders of the National Black Chamber of Commerce and the Hispanic Leadership Fund today asked the Obama administration to conduct a “minority student impact” assessment before imposing planned new rules that could limit the access of some for-profit colleges to federal student aid.

Harry Alford, president and CEO of the chamber, and Mario Lopez, head of the Hispanic group, said in a teleconference with reporters that the new so-called “gainful employment” rules now under consideration by the Office of Management and Budget could block access to higher education for 1 million black and 1 million Hispanic students by the year 2020.

The rules are designed to ensure that students attending career colleges – whether public, private or for-profit – do not pay far more for their training than they can possibly expect to earn as graduates. Under the planned rules, programs that graduate students who are unable to repay their college loans would be limited in their access to additional federal financial aid. If the repayment rate is especially low, probably about 35 percent, the program would be unable to participate in student loan and grant programs.

Alford and Lopez, who were joined by lobbyist Lanny Davis – former President Bill Clinton’s special counsel – said the rulemaking process had been corrupted by meetings between Education Department officials and Wall Street traders who have predicted dire failures of for-profits because of the high debt burden of students. They said a “minority student impact” study would be similar to environmental studies of birds, fish and predators that the Environmental Protection Agency requires for some development projects.

A total of 58 Democratic members of the House voted with Republicans in an effort to block the new gainful employment rules with an amendment to the 2011 budget. The amendment was removed by the Senate and did not appear in the final bill.

“Gainful employment is a very poor measure,” Rep. Bobby Scott (D-Va.), said in an interview. “The ability to get a job after education isn’t necessarily linked to the quality of the education you get. If you provide a high level of education, and students are convicted felons, they’re still going to have trouble getting jobs. The entire discussion is about how much we dislike the for-profit industry.”

Davis also called attention to the department officials who met with the Wall Street traders, emphatically spelling each individual’s name, and giving details of the person’s job or role in writing the gainful employment regulations.

The news conference came as other groups opposed to the planned rules also stepped up their public statements against them.

The Coalition for Education Success, a for-profit lobbying group, today asked the Securities and Exchange Commission to investigate possible insider trading by the Wall Street traders who met with Education Department officials before last summer’s release of the initial gainful employment rules.  The Education Department’s inspector general announced earlier that she is investigating contacts between the traders and officials.

During the first three months of the year, for-profit colleges and their allies spent more than $4.5 million lobbying against the new regulations – engaging many of Washington’s most influential and well-connected lobbying firms. The same groups spent a total of $8.1 million lobbying for all of late year.