Assistant Secretary of Ed endorses gainful employment rules

Scott Jaschik reports in Inside Higher Ed:

On Friday, the Assistant U.S. Secretary of Education for Postsecondary Education, Eduardo M. Ochoa, told a meeting of college presidents that the Department was proceeding with "gainful employment" regulations that would bar federal aid from career-oriented programs at which large percentages of graduates fail to earn enough money to pay back their student loans.

The proposed regulations have been opposed by the for-profit higher education industry -- which would feel most, but not all, of the impact. Last week Ochoa gave another talk in which he suggested that there would be major changes in the next version of the regulations. The next version will be "significantly different," Ochoa said in a talk at the meeting of the Council for Higher Education Accreditation.

But on Friday, Ochoa spoke only positively of the regulations. He acknowledged that the regulations represented “a new direction for federal regulation” of higher education in that they moved beyond reliance on accreditation for quality control. But he said that the additional oversight they involved was appropriate, and was required by statute. In the interview, he sidestepped questions about whether his position had changed since he predicted major changes in the regulations earlier in the week. But he said that the talk here was to a different audience and with a “different context.”

Ochoa also reassured those here that they need not fear that the regulations would be applied to all of higher education – as some advocates for for-profit colleges have suggested would be appropriate. And recent articles about the high prices and questionable job outcomes for graduates of law and other professional schools have also raised this possibility.

He said he understood that some educators at colleges not covered by the regulations have “a legitimate concern about the danger of conflating the operational definition of quality” with the debt/income ratios in the proposed rules. The concern, he said, is that such a policy would “flatten the definition of quality.” Ochoa said he wanted “to assure you that the department is fully cognizant” of the role of “liberal education as the foundation not only of degrees in liberal arts and sciences but also for professional degrees.” He said that, as a business dean earlier in his career, he was aware of the importance of courses outside the business school to broaden his students’ education.

Educational quality, Ochoa said, “cannot be reduced solely to the ability to get a first job after graduation.” But at the same time, he said, for career-related programs, definitions of quality “must include employability,” and “that’s what gainful employment is all about

For-Profit Colleges Face Beefed-Up Aid Audits From Education Dept.

The U.S. Department of Education plans to increase its scrutiny of how colleges award federal grants and loans to their students, and a department official told The Chronicle it will pay particular attention to for-profit colleges owned by publicly traded companies and on all institutions with large distance-education programs.

The department, which has been beefing up the compliance-office staffing in its Office of Federal Student Aid, expects to conduct about 300 program reviews of student-aid operations next year, in contrast to about 200 this year. Program reviews are audit-like examinations of student-aid operations designed to ensure that students receive only the grants and loans they are entitled to and that institutions make refunds in accordance with the law in cases where students withdraw.

With the focus on the nation's deficit, the Obama administration wants to be sure the billions of dollars in new federal funds for student-aid programs are serving students, said James Kvaal, deputy under secretary of education, speaking on Friday at a meeting of the Association of Private Sector Colleges and Universities. "People are taking the budget very, very seriously."

Mr. Kvaal said the administration also wanted to protect Pell Grants from cuts. Some members of Congress have proposed reducing federal spending to 2008 levels. "The White House is calling that 'economic unilateral disarmament,'" Mr. Kvaal said.

That was welcome news to people in the audience, many of them operators of for-profit colleges. About 30 percent of all Pell Grant funds now go to students in the for-profit sector. Mr. Kvaal said colleges that educate such needy students with good programs are performing "a service to those students and a service to the country." But he said then, and at several other times during his talk, that the department remained very concerned about for-profit colleges that rely on "deceptive and high-pressure sales tactics" to enroll students or leave them with unreasonable levels of student debt.

He said the department's proposed "gainful employment" rule, aimed at curbing such abuses, was designed not as an attack on the for-profit industry but as a means to deal with some of the "worst-performing programs."

For-profit colleges have undertaken a vast lobbying and public-relations campaign that assails the rule as an ill-conceived approach that will hurt students and their own companies. At the session on Friday, Mr. Kvaal said that the proposal, as released in July, "was not perfect" and that the department would consider the criticisms, including more than 90,000 comments pro and con, before issuing a final version of the rule in early 2011.

By Goldie Blumenstyk , Chronicle of Higher Education