ED Announces Consumer Protection Rule Proposals, Delays Gainful Employment

by Daniel L. Bennett

You may recall that the so-called negotiated rule-making committee failed to reach agreement on 14 issues of Program Integrity earlier this year, leaving the final rule setting to The Department of Education (ED). Today (actually I heard about this yesterday), ED released its long awaited draft rules for public comment. It addressed 13 of the 14 issues, with the controversial gainful employment rule being delayed for further study. According to an Inside Higher Ed article

the department has chosen to hold off on proposing a specific "metric" to measure whether programs are preparing their students for gainful employment because “we want to get it right,” as Education Secretary Arne Duncan said in a statement.

Department officials say they expect to release the rest of the gainful employment proposal later this summer, with plenty of time to meet a Nov. 1 deadline for publishing a final version of the rules that would take effect on July 1, 2011.

Although the rule proposals do not at this time include a debt-to-income metric, they did spell out much need and welcome steps in providing consumers with more and better information as part of defining gainful employment. IHE noted that the proposal:

includes regulations requiring institutions to publish on their websites detailed disclosures related to programs that prepare students for gainful employment. At minimum, institutions would have to post the following for each program:

The occupations that it prepares students to enter, with links to the Department of Labor’s O*NET.

The on-time graduation rate of students in the program.

The cost of the program, including tuition, fees, room, board and other institutional costs.

The placement rate for students completing the program (by June 30, 2013).

The median debt load incurred by students who completed the program in the previous three years, broken down into debt from federal student loans, from private educational loans, and from institutional financing.

Although I've advocated for information disclosure as a better alternative to a price control mechanism (also here, here, here, here), I think that for-profit schools could one up this proposal. They should not only publish this crucial information on their websites, but also publish it in their other marketing materials, as well as provide it to students before they can officially enroll in the form of a disclaimer that students sign, indicating that they have received and understand the information.