APSCU Files Motion for Summary Judgment in Gainful Employment Regulation Litigation

Washington, DC, February 6, 2015 – Today, the Association of Private Sector Colleges and Universities, representing over 1,400 institutions educating millions of students, filed a motion for summary judgment in its suit challenging the U.S. Department of Education's new "gainful employment" regulation (APSCU v. Arne Duncan).

In 2012, the United States District Court for the District of Columbia invalidated the Department's prior effort to impose a "gainful employment" regulation because a central part of the regulation lacked a reasoned basis and "was not based on any facts at all." As APSCU explained in its brief filed today, the Department has adopted a regulation that is even "more irrational and arbitrary" than the vacated regulation. APSCU's motion asks the Court to "hold unlawful the Department's new rule and repudiate the Department's stubborn disregard for controlling law and administrative procedure."

Key arguments in the motion include:

Exceeds the Department's Statutory Authority

• Neither the "gainful employment" provisions nor anything else in the statute authorizes the agency to limit programs' Title IV eligibility based on students' earnings and debt.  The statutory structure, purpose, and legislative history confirm that the test is unlawful.

• In the new rule the Department improperly seizes the role of policing program quality, and it supplants the congressionally mandated accrediting criteria with contrived debt metrics mentioned nowhere in the statute.

• Congress could not have intended a program's eligibility for national aid programs to turn on local idiosyncrasies or on students' circumstances—none of which has anything to do with the quality of an educational program.

Harmful to Student Access

• The Department admitted that its new rule will force programs serving hundreds of thousands of students—including fully one-third of the programs offered by private sector institutions —to close.  […]  The programs that survive will not have the capacity for many displaced students.  The agency estimates that "about 32%" of students whose programs are deemed failing or in the "zone" "will not have nearby transfer options."  

• Private-sector institutions serve a greater proportion of disadvantaged students than other schools, as the Department conceded.  Private-sector institutions also produce graduates at a lower cost, and often have higher graduation rates, than other schools.   Yet the new rule irrationally targets private sector institutions. 

Arbitrary and Capricious In Violation of the Administrative Procedure Act

• The agency's metrics contradict its own prior position and accepted economic methodology, impose arbitrary thresholds, and are based on incomplete, unreliable data.

• The Department's debt and earnings metrics thus do not measure program quality. Instead, there is strong evidence that those "outcomes" really measure student demographics.  […]  The agency itself found that demographics and other factors unrelated to program quality account for 44% of the variance in students' debt-to-earnings rates, […] and another study found that nearly half (47%) of the variance was explained by such factors.

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.