08.23.19

Rep. Takano and Rep. Shalala Introduce the Student and Taxpayer Protection Act to Reinstate Gainful Employment Rule

Washington, D.C. – Today, Rep. Mark Takano (D-Calif.) and Rep. Donna Shalala (D-Flor.) introduced the Student and Taxpayer Protection Act, legislation to reinstate the gainful employment rule following the Trump Administration’s elimination of the rule in July. The gainful employment rule, finalized during the Obama-era, set clear standards of accountability and transparency for all programs at for-profit institutions and non-degree programs at public and private, non-profit institutions with a track record of leaving students with mountains of student loan debt and inadequate job prospects.

“The Department of Education’s primary responsibility is to protect students and taxpayers, but under the Trump Administration, it has abandoned this duty by prioritizing the interests and bottom-lines of predatory for-profit institutions,” said Rep. Mark Takano. “Failure by the Department to put students first requires Congress to step in and ensure that every student has access to a quality and affordable education and to hold predatory for-profit institutions accountable for taking advantage of students and providing them with low-quality instruction. We cannot allow for-profits to continue preying on low-income students, minority students, and student veterans by driving them deep into debt they cannot repay. I want to thank Rep. Shalala for joining me in this effort to hold for-profits accountable and protect students and taxpayers.”

“I am proud to be introducing this bill with Rep. Takano because reinstating the gainful employment rule is not just the smart thing to do, it is the right thing to do,” said Rep. Shalala. “The Obama administration put this rule into place to help prevent disreputable institutions from taking advantage of students by giving them worthless degrees and loads of student debt. By reinstating this rule, we will be restoring an essential protection for those who may otherwise fall prey to exploitative institutions whose only interest is padding their bottom line – not educating students.”

“Chairman Takano is a longtime leader in protecting students against predatory colleges. The Trump Administration’s elimination of the gainful employment rule will cost taxpayers $6 billion in wasted student aid, and puts students at risk of taking on debt they will be unable to repay. By reinstating the gainful employment rule, the Takano Shalala bill would restore sensible measures to ensure that career colleges focus on their students’ success, not just their bottom lines,” said TICAS President James Kvaal.

“We are pleased to see Representatives Takano and Shalala introduce the Student and Taxpayer Protection Act, which would write essential student and taxpayer safeguards into law,” said Wil Del Pilar, Vice President of Higher Education at The Education Trust. “Maintaining and strengthening accountability provisions that work to combat bad actors in the higher education system—especially any institution that continues to prey upon students from low-income families, students of color, and veterans—must be a priority.”

“NACAC strongly supports this legislation and thanks Congressman Takano for introducing it,” said David Hawkins, the Association’s Executive Director for Educational Content and Policy.  “For years, we have seen unscrupulous colleges defraud students and taxpayers of billions of dollars.  This legislation will help ensure that our tax dollars help send students to colleges that will educate them and allow them to find adequate employment after graduation.  NACAC urges Congress to pass this legislation as soon as possible.”

“With a $1.6 trillion student debt crisis burying an entire generation of young people, it’s as critical as ever that we ensure higher education institutions are holding up their end of the deal as they take students’ tuition dollars. By holding schools accountable for giving their students the knowledge and skills they need to find a good job when they graduate, we can ensure that every student has a real chance to begin their career and accomplish their financial goals. Congress needs to pass the Student and Taxpayer Protection Act to protect the students, families, taxpayers, and responsible colleges and universities who are harmed when predatory, for-profit schools outrightly abandon their responsibility to set up our young people for a stable, financially secure future,” said Rachel Fleischer, Executive Director of Young Invincibles.

The Higher Education Act (HEA) requires that all career education programs “prepare students for gainful employment in a recognized occupation” in order to receive Title IV funds. However, the HEA does not define “gainful employment.” In 2015, the Department of Education established a gainful employment rule to define how career training programs could demonstrate that they met this requirement. These standards created an accountability framework by requiring institutions to demonstrate that their programs provided quality education and training that would lead students to jobs and earnings that would allow them to pay back their student loans. It also established a transparency framework by requiring institutions to disclose student outcomes that would help students make informed decisions on which program or credential to pursue.

The gainful employment rule protected students and taxpayers by identifying low-quality programs that left students with burdensome debt, low-quality degrees, and poor job prospects. A 2018 study by The Institute for College Access and Success (TICAS) found that more than 350,000 students completed programs at schools that failed to meet the guidelines established by the gainful employment rule and these students hold nearly $7.5 billion in student loan debt they will be unable to repay. Predatory for-profit institutions comprised the majority of low-performing institutions that failed to meet gainful employment standards. 

Additionally, by setting standards for transparency, students would have the information they need to assess whether or not they should attend a particular institution. And taxpayers, as well as the federal government, would be able to evaluate the quality and performance of these institutions receiving federal aid. Rescinding this rule will cost an estimated $6.2 billion over ten years and will incentivize fraudulent and predatory for-profit schools to continue their irresponsible practices.

The Student and Taxpayer Protection Act holds colleges and universities accountable by ensuring that they prepare students for gainful employment after graduation. The bill codifies the 2015 Obama Administration gainful employment (GE) regulation that is intended to protect students from the worst-performing career education programs and for-profit colleges that leave students with debt they are unable to repay. This bill applies to all career education programs (non-degree programs) at public and private non-profit institutions, as well as all programs at for-profit institutions.

This legislation:

  • Requires the Secretary of Education to establish performance metrics that includes debt-to-earnings ratios of all programs and a threshold rate that each career program must meet to be eligible for Title IV funds. The performance metrics will be used to determine whether the program is truly preparing students for gainful employment as required by the law. Student debt-to-earnings ratios are intended to ensure that students can earn enough money after graduation to pay down the debt they accrued.
  • All programs are required to disclose to enrolled and prospective students, as well as on their websites, information about student debt-to-earnings rate, whether the program is eligible for Title IV funds or has received sanctions.
  • Programs that consistently fail to meet the debt-to-earnings benchmarks must improve or become ineligible for Title IV funds under the Higher Education Act (HEA).

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