Stacking the Deck at the Career College Association

Last week, Harris Miller, the president of the Career College Association (CCA), made an unusual request of the U.S. Department of Education. He asked the agency to bring only his group’s members to the table when it starts negotiating changes to regulations designed to protect students from unscrupulous trade schools.

“Allowing others without a direct connection to this issue to participate is like allowing non-pilots to help fly the plane,” Miller stated in testimony he delivered at a public hearing the Department held on potential rule changes. “They may have a point of view, they may find the proceedings interesting, but giving them a seat at the controls would simply be wrong for the millions of students depending on career education as the ‘flight path’ to a better life.”

Miller’s gambit is just the latest in a fierce campaign CCA has waged over the last 15 years to kill the “90-10 rule,” a key consumer provision in the Higher Education Act. The rule requires for-profit colleges to receive at least 10 percent of their revenue from sources other than federal student aid in order to participate in the government’s financial aid programs.

Congress introduced the requirement in 1992 (at that time it was the “85-15 rule”) as part of a broader effort to crack down on trade schools set up to reap profits from the federal student aid programs. At the time, lawmakers felt that the provision was important because it required proprietary institutions to prove that the training they offered was valuable. They figured that schools that offered worthwhile training would be able to derive at least a small portion of their revenue from students willing to spend their own money on it.

Trade school lobbyists have spent years and lots of campaign cash trying to get lawmakers to eliminate the requirement or at least weaken it so much that their institutions could easily evade it. And they have largely succeeded in this pursuit.

In fact, in August, Congress gutted the provision as part of legislation it approved reauthorizing the Higher Education Act. Among other things, lawmakers substantially expanded the sources of funds that trade schools can count toward the 10 percent threshold, including tuition discounts and loans the schools make to their students. They also reduced the penalties that schools face if they violate the rule (Offending schools will no longer be automatically removed from participating in the federal student aid programs.) In addition, they temporarily exempted from the 90-10 calculations recent federal loan limit increases Congress approved as part of the Ensuring Continued Access to Student Loans Act. As a result, some federal student aid will not be counted against the cap.

But trade school lobbyists apparently are not satisfied. In recent weeks, they have been fanning out across the country to urge the Department to enact the changes in a way that will ensure that the 90-10 rule is entirely toothless.

For example, trade school officials are not entirely happy with one change Congress made that they have long sought. Under the reauthorization bill, schools, for the first time, can count revenue they receive for non-degree programs they offer – ones that don’t qualify for financial aid — toward the 10 percent threshold. Revenue from these programs, however, will count only if they lead to an “industry-recognized” credential. Apparently some trade school officials believe that this is too high a bar to meet.

Speaking at a public hearing that the Education Department held last week in Washington, DC to prepare for the negotiated rulemaking sessions, Miller asked the Department to interpret that language liberally. “Interpretation of ‘industry-recognized’ is apt to vary among competing professional and certification testing bodies,” Miller stated in his testimony. “We suggest, therefore, that the Department allow the marketplace to be the arbiter and allow any credential recognized by some segment of a given industry.” Any credential by some segment of a given industry? Does this mean that standard would be met if a department store like the Gap regularly hires Career Education Corporation fashion students to work its cash registers and stock its shelves?

In his testimony, Miller warned the Department that changes to the 90-10 rule must be made “with surgical precision and exceptional care.” To that end, he argued that the agency should “include in its negotiated rulemaking process on those higher education institutions affected by the 90-10 restrictions — career colleges.”

So what about advocates for students and legal aid officials who often represent students who have been victimized by bad trade schools? Do they have enough of a “direct connection to this issue” or should they be left off the panel too? Does Miller honestly believe that his association truly represents the interests of such students?

We are confident that Education Department officials will reject Miller’s call for stacking the negotiated rulemaking panel. After all, that’s not how the process works. According to Department guidelines, the agency seeks to ensure “adequate representation” for all of “the affected parties.” And while the Department doesn’t always live up to that standard, it’s hard to imagine that it would risk the outrage and ridicule it would endure if it granted Miller’s request.

But in reality, that’s a minor point. The more vital question is whether the Department will buy into CCA’s arguments and weaken the 90-10 rule and other consumer protection provisions further. We certainly hope not.

At Higher Ed Watch, we believe that policymakers should be looking for ways to strengthen regulations that safeguard students from unscrupulous schools and protect the integrity of the student aid programs, rather than trying to find ways to eviscerate them.