News: Federal Policy & Advocacy

Holding For-Profit Schools Accountable is a Civil Rights Issue – A Brief on 'Gainful Employment'

Friday, October 25, 2019  
Posted by: MorraLee Keller, Director of Technical Assistance
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A recently released brief that focuses on the federal rules, or lack thereof now, for “gainful employment” paints a dismal picture for African American and Latino students who enroll in for-profit institutions.

The Leadership Conference Education Fund’s brief points out that, according to the Higher Education Act of 1965 (HEA), for institutions to be eligible for Title IV aid grants and loans, they must “prepare students for gainful employment in a recognized occupation.” During the Obama administration, the U.S. Department of Education (ED) developed a regulation to clarify this definition and enhance accountability of for-profit institutions to address the poor outcomes for African American and Latino students who enrolled at these institutions. The Trump administration formally rescinded this regulation in 2019.

Let’s look at some of the data shared in this brief:

  • African American and Latino students are overrepresented at for-profit institutions. These students make up 34% of all students enrolled in postsecondary institutions, but they represent 51% of students at for-profits.
  • African American students pursuing a bachelor’s degree at a for-profit have a graduation rate that is one-third of that for their peers enrolled at four-year public or private nonprofit colleges.
  • For-profit colleges cost more than public institutions.
  • 90% of African American and Latino students who graduate from a for-profit program borrowed at least $10,000 more than students who attended public colleges.
  • One-third of all student loan defaults come from the 9% of postsecondary students enrolled at for-profits.

HEA was a powerful piece of legislation aimed at providing equal opportunity in higher education. Adding the Pell Grant in HEA was especially helpful to African American and Latino students, as we saw the enrollment for African American students double from 1972 to 2017. We also saw Latino enrollment almost triple during that same time frame.

However, enrollment at for-profits at disproportionately high rates has not served these students well. Aggressive recruiting and predatory lending practices take advantage of these populations.

Strong gainful employment regulations are needed to hold institutions accountable to the government and more importantly, their students. We cannot afford to have these students graduating at lower rates, borrowing more money, being in default, and attending these high-cost institutions, and this has garnered the attention of civil rights organizations.

The brief suggests some aspects that should be included in new gainful employments rules:

  • Remove Title-IV eligibility from programs that consistently fail to meet gainful employment standards.
  • Provide full financial relief to students in programs that lose eligibility.
  • Ensure that the debt-to-earnings standards are sufficient to protect students and taxpayers.
  • Reward rather than burden low-cost programs where most graduates do not borrow.
  • Require transparency, in addition to accountability, to ensure current and prospective students have the information they need.

Informed advising about college choice can help students become fully aware of their postsecondary options. You can put this under the “fit and match” banner, so that we can help students make responsible choices that will have the desired outcomes leading them to a successful career path.

(Photo by ZACHARY STAINES on Unsplash)