APSCU Files Suit Against Anti-Student Gainful Employment Regulation

Washington, D.C., November 6, 2014 – Today, in the United States District Court for the District of Columbia, the Association of Private Sector Colleges and Universities (APSCU), representing over 1,400 institutions educating millions of students, filed suit challenging the U.S. Department of Education's new gainful employment regulation.

"This regulation, and the impact it will have on student access and opportunity, is so unacceptable and in violation of federal law, that we were left with no choice but to file suit. If successful, our suit will protect student access and opportunity to higher education at a time when the U.S. Department of Education seems interested in limiting choices for students by closing private sector programs," said Steve Gunderson, president and CEO of APSCU.

In the complaint, APSCU makes clear:

• "The final so-called 'gainful employment' rule […] is unlawful, arbitrary […] and will needlessly harm millions of students who attend private sector colleges and universities";
• The regulation is "unconstitutional […] arbitrary and capricious; and otherwise in violation of the [Administrative Procedure Act]";
• The Administration's previous regulatory attempt "spanned several years; left policymakers, schools, and their students facing uncertainty; and needlessly imposed costs on taxpayers.  The United States District Court for the District of Columbia struck down that previous attempt to regulate because a central feature of those regulations—the loan repayment rate test—lacked any reasoned basis";
• "Instead of correcting the flaws that rendered its 2011 rule invalid, the Department's new rule only repeats and exacerbates them";
• In the final regulation, the Department "jettisoned the [proposed] pCDR measure, leaving only a single test […] as the regulation's sole measure of whether programs prepare students for gainful employment.  […] The Department did so despite its admission in the previous litigation that it 'has found no perfect single test,' […] and the Department's conclusion that it is necessary to have multiple tests working together, to mitigate the errors and inaccuracies in any single test."

APSCU asks the Court to declare the regulation unlawful and set aside the regulation.

"While we seek relief from the United States District Court for the District of Columbia, we are hopeful that the Congress will stop the Department's regulation and consider the best interests of all students when they reauthorize the Higher Education Act and develop policies that apply to all students, in all programs, at all institutions," added Gunderson.

The case is the Association of Private Sector Colleges and Universities v. Arne Duncan.  APSCU is represented by Douglas Cox and Timothy Hatch of Gibson, Dunn & Crutcher LLP.

Background on the gainful employment regulation
The Department's gainful employment regulation prohibits students enrolled in programs at certain institutions of higher education—primarily private sector institutions—from receiving federal student aid under Title IV of the Higher Education Act of 1965 unless the program satisfies a biased and arbitrary earnings metric.

The debt-to-earnings metric is set at eight percent – a level that would disqualify a law degree from George Washington University Law School, a bachelor's in hospitality administration from Stephen F. Austin State University and a bachelor's in social work from University of Texas. Further, according to the Department's own data, 43 percent of graduates from public colleges and 56 percent from private non-profit colleges would fail the metric.

Although the Department states that its new debt-to-earnings metric evaluates whether programs "prepare students for gainful employment in a recognized occupation," the Department's metric does not in fact assess program quality.  Instead, the regulation measures factors that are unrelated to program quality and beyond institution control—including students' individual employment choices, local job-market conditions, and students' financial circumstances.  The regulation also imposes on institutions an array of new reporting and disclosure requirements.