House Hearing Skates Around ‘Gainful Employment’

The Education Department’s proposed “gainful employment” rule got scant attention today at a full House Education and the Workforce Committee hearing called by Chairman John Kline (R-Minn.) to discuss just that. The proposed rule would link a career college’s participation in federal loan programs to whether its graduates could earn enough to repay their loans.


  •  One witness told of her struggle for a better job and her success with a for-profit school, but also noted her education was largely underwritten with tuition reimbursements from her employer. She didn’t take out any loans, so nothing about gainful employment applied to her.
  •  Another, a supervisor at an electrical manufacturing company, said he prefers hiring graduates of career technical schools for entry level jobs because they know more about new technologies. But he went to a public community college, followed by a state university, and he said he didn’t know anything about his employees’ debt burdens.
  • The chief operating officer for a Minnesota-based for-profit college conceded that the proposed gainful employment rule wouldn’t really affect her school because it met all the standards set in the regulations.
  • The head of a group that helps low-income, first-generation college students testified that too many low-income, minority students are going to expensive for-profit colleges, often because they don’t know the alternatives. He summarized the situation as “a sophisticated business with a high cost product and a poorly informed consumer.” Often, the students are left, he said, “in a kind of permanent bondage” by their large debts.

Much of the hearing focused on other higher educational matters, from a new Education Department rule requiring for-profit schools to get department approval for any new program to the effect of possible elimination of two federal loan programs and a steep cut in funding for Pell grants. Under budget cuts proposed by House Republicans, Pell grants – which go to low-income students – would drop from the current $5,500 maximum a year, to $4,705.

Rep. Timothy Bishop (D-N.Y.) turned the focus on loan and Pell grant changes,  asking panel members how it would affect students.

“The financial aid cuts are going to be devastating,” replied Arnold Mitchem, president of the Council for Opportunity in Education. “[They] are going to force more low-income students out of college.”

Jeanne Hermann, chief operating officer of Globe University/Michigan School of Business, answered with a we’re-all-in-this-economic-downturn-together statement, saying repeatedly that the cuts would have to be made, without really addressing Bishop’s question.

He then asked if Globe would consider freezing tuition or using some of the school’s profits to provide student aid, a question that Hermann quickly sidestepped.

She stumbled when asked by Rep. Lou Barletta (R-Pa.) about how the college worked with local businesses to respond quickly to their demands. “Students go where it’s convenient and accessible,” Hermann said, noting that they would take student preferences into consideration when deciding to open a new campus.

Even Kline’s questions centered on a new rule that would require state approval for new programs, asking Hermann what effect it would have on Globe. She replied that it would add another layer to an astringent approval process that already includes the state board of education and various accrediting groups.

Imposition of the new rule will not “allow us to be as responsive to the workplace,” Hermann said.

Some members of the committee questioned singling out for-profit schools. One asked why  for-profit were being singled out and asked why graduation rates aren’t used against football and basketball teams in NCAA tournaments. Another suggested that outcomes – graduation rates and job placement percentages  – would be better gauges for determining how good an education students are receiving.

When the conversation finally turned to the controversial gainful employment rule, Hermann said she believed that the rule would present “serious roadblocks” to her school. “It’s not for the department to direct students to certain types of jobs,” she said. “Students are consumers who vote with their feet.”

She praised members of the House for including in the continuing resolution a halt on further consideration or implementation of the gainful employment regulations for this year, saying it would allow for more thoughtful consideration.

But the Senate has yet to consider H.R. 1, the main continuing resolution for the remainder of fiscal 2011, and the matter has now been pushed back for three more weeks.


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