The U.S. Department of Education’s latest rule, the “gainful employment” or GE rule, mandates that for-profit colleges cannot saddle students with debt at an arbitrary rate. However, it affects only for-profit colleges such as Kaplan, DeVry and University of Phoenix, representatives of Kaplan claimed during a Washington, D.C. briefing recently.
At the meeting organized by the Independent Women’s Forum, former Dallas mayor Thomas Leppert, now the CEO of Kaplan, explained how the rule itself is not fair to for-profit colleges. “A regulation should apply to any institution,” said Leppert, who noted “it only applies and targets the for-profit sector.” He also pointed out that U.S. courts threw out the rule in 2011.
The rule will disband any college program offered by for-profit institutions if the debt-to-student ratio is above 8%. Typically, there is a public comment period on proposed federal regulations such as this one from the Department of Education. Nevertheless, with this proposal, when more than one student from a university or institution writes a comment to the department, the D.O.E. now counts all comments from that university as one single comment. Kaplan estimated the rule generated about 57,000 reactions this year supporting the for-profits’ position, which they said was astonishingly high and unexpected.
A public four-year college, on average, has a 12% debt-to-student ratio, with private non-profits at 13% and for-profits 16%. And, if one applies the rule to the University of Texas, 54% of classes would fail the standard, including English, geography, Russian studies, public health education and women’s studies courses.
On average, enrolling at for-profits costs $9,162 in tuition, and for public institutions $5,161 per semester. But, the advantage for taxpayers is that for-profit students, on average, receive only $2,405 from taxpayers compared to $15,540 in loans for students at public universities.
Delayed enrollment students make up 95% of Kaplan’s student body, compared to 20% for the rest of U.S. colleges, both public and private non-profit. Eighty-five percent of Kaplan students are 25 years or older, compared to 21% for other colleges, and 39% of Kaplan students are single parents compared to just 8% for other colleges. Sixty-three percent of Kaplan students are Pell grant-eligible versus 36% for non-profit or public colleges, and 83% of Kaplan students are financially independent. Only 26% of all college students (at non-profit, state or for-profit colleges) are financially independent. At Kaplan, 60% of students have dependents (i.e. children) compared to 17% for non-Kaplan institutions.
Thirty-one percent of black graduates have graduated from career colleges such as Kaplan, along with 28% of Hispanic graduates. Thus, the implementation of the rule will hurt minorities and their chances to achieve higher education.
The rule will not help build a better American society, and Leppert admonished that “Today we’re 12th and are not moving” in rankings in higher education. For additional information on what the gainful employment rule means and its possible consequences, check out the Independent Womens’ Forum policy paper.