For-Profit Colleges Getting New Oversight from U.S. Education Agency

The U.S. Department of Education met a Nov. 1 deadline for unveiling regulations to police for-profit colleges, after making extensive revisions in the package due to public push-back. The set of rules, scheduled to go into effect next July, include a requirement that for-profits, receiving federal aid, get approval from the U.S. government in some cases before offering new courses in the future.

The regulations include most of the changes Secretary of Education Arne Duncan's wants to bring "program integrity" to the industry. The department reports that students at for-profit schools use 26 percent of all student loans and represent 43 percent of all loan defaulters. The new rules will require any school taking federal student assistance to win approval before expanding into new course areas.

Owners of the University of Phoenix, Apollo Group Inc., say they are expecting a 40 percent drop in enrollment next quarter as a result of the regulations.

Lanny Davis, a lobbyist for a group of career colleges, accused the Obama administration of making a hasty decision that would impair training for jobs of the future, such as those in the environmental realm.

"How do you see green jobs five years ahead of time?" Davis said in a conference call last week.

A spokesman for Duncan, Justin Hamilton, said the schools got notice of the Nov .1 deadline for issuing the regulation in late September. And he said the process to get approval of new programs at colleges has been made simpler than under the initial proposal. Prior to revisions, the regulations would have allowed the department to reject a school's proposal for a new program because of low student success rate in a subject area different than the course in question.

With the changes, a school would not be penalized for poor performance in the past. The Department of Education expects that "very few new programs will be subject to this type of approval" it said in a news release.

Harris Miller, CEO of the Association of Private Sector Colleges and Universities, said the colleges his organization represents spend time predicting the success of graduates before they start a new program.

"They do the best they can and look at every variable," Miller said. "If [a new program] just shows up there and the market is already at or beyond capacity, you're just throwing money away."

Miller is pleased the new regulations will allow his schools to get programs for jobs like nursing easily approved, so they won't have to wait in line behind those with lesser demand.

One new regulation, however, has been delayed because of concerns -- 90,000 comments on it compared to the 1,200 on those just published. The so-called gainful employment metric would ban federal aid from going to schools that, by agency-defined standards, produce too much student debt and too few graduates. Hearings on it are set for next week in Washington with the goal of announcing a final rule early next year for enactment in July.