Marc Jerome, executive vice president of Monroe College, has been appointed to a committee of stakeholders convened by the U.S. Department of Education to rewrite regulations on for-profit colleges.
Jerome will represent the For-Profit industry against industry critics.
Both sides of the looming gainful-employment fracas said the department appears determined to push hard for gainful employment rules that will seek to crack down on for-profits.
In April, Inside Higher Ed reported on the Obama Administration was renewing efforts to take on abuses by For-Profit Colleges.
The Education Department announced Monday that it would seek to rewrite controversial regulations on for-profit colleges, tighten underwriting standards for some student loans and introduce new rules on using preloaded debit cards for financial aid — a wide-ranging regulatory agenda for the first year of President Obama’s second term.
According to Politico, names of appointees began to be made public.
Names of the stakeholders chosen to rewrite the controversial “gainful employment” regulation beginning in September are starting to slip out. Some are prominent critics of the sector, indicating the Obama administration isn’t backing off from tightening regulations on vocational programs despite a court challenge to its last attempt. Among the names Morning Education has heard as negotiators or alternates…representing the for-profit sector: Marc Jerome, executive vice president of Monroe College…
David Halperin has a terrific article on Huffington Post which explains the “gainful employment” rule along with context of federal efforts to curb predatory practices by for-profit colleges.
The Problem:
More than half of the students who enrolled in for-profit colleges in a recent year dropped out within about four months, without a degree or certificate. For-profit colleges have 13 percent of the students, but 47 percent of student loan defaults. Twenty-three percent of their borrowers default on their loans within three years of graduating or dropping out.
A comprehensive report on the for-profit college industry released in 2012 (after the gainful employment rule was issued) by Tom Harkin (D-IA), chair of the Senate Health Education Labor and Pensions Committee, as well as numerous media investigations over the past three years, have shown how egregious the abuses by this industry have been — and that irresponsible predatory behavior is not confined to a few bad actors but instead is widespread across the industry.
The Solution:
The gainful employment rule, issued in June 2011, was designed to implement a law, passed decades ago by Congress, requiring that career education programs receiving federal aid actually train students to earn a living. The new rule focused not on whether students had formally defaulted on their loans, but rather on whether they were earning enough money to be able to actively pay their loans back. As eventually watered down by the Obama administration under industry pressure, the rule removes a career training program, whether at a for-profit, non-profit, or state school, from federal aid eligibility only if it fails all three of these tests three years in a row:
(1) at least 35 percent of former students are repaying their loans (defined as reducing the loan balance by at least $1);
(2) the estimated annual loan payment of a typical graduate does not exceed 30 percent of his or her discretionary income;
(3) the estimated annual loan payment of a typical graduate does not exceed 12 percent of his or her total earnings.
Halperin notes that despite skepticism that such lenient criteria would not have much effect, the U.S. Department of Education Department released data from 2011 that tested the “gainful employment rule” and found that 65 percent of the programs failed at least one of the three tests and that 193 programs at 93 different for-profit colleges failed all three tests.
The New York Post recently reported that 23% of Monroe College students default on government loans.
A staggering 23.1 percent of 2,800 students who either graduated or dropped out of Bronx-based, family-owned Monroe College since 2007 have defaulted on millions of dollars worth of government-backed loans, putting taxpayers on the hook.
Jerome protects cash cow
Jerome desires to be on this committee to protect his cash cow. The “for profit” colleges are amongst the colleges with the lowest graduation rates and lowest job placement and the highest drop-out and student loan default rates of all colleges. The 90-10 Rule is the for profit colleges’ cash cow.
The “90-10” Rule is a federal law barring for-profit colleges from receiving more than 90% of their revenues from Department of Education federal student aid.