Renegotiating Borrower Defense to Repayment and Gainful Employment

The Association of Proprietary Colleges applauds the US Department of Education’s efforts to pause and re-negotiate the Borrower Defense to Repayment and Gainful Employment regulations. APC has participated in past-negotiated rule makings and we look forward to the opportunity to participate in the process as it moves forward for these two regulations.

Borrower Defense to Repayment

The Association believes strongly that students who have been defrauded or mislead should have redress.

Student debt challenges and weak graduation outcomes – especially for low-income students – are pervasive across the higher ed landscape. Nothing is more catastrophic for a student borrower than default. A student borrower that defaults faces any number of long- term financial challenges, including ruined credit, possible wage garnishment, a debt that is non- dischargeable in bankruptcy, the inability to seek future grant aid, and problems securing employment due to bad credit. We believe that the consequences associated with default are so much more severe than those associated with low repayment rates, that warnings for defaults would be more appropriate than warnings for low repayment rates.

Compounding these concerns is the Department’s acknowledgment last year that it had to recalculate all of the repayment rate data on the College Scorecard due to a “coding error”. This coding error translates to incorrect data that confused both students and institutions.

A Washington Post article on this topic by Danielle Douglas-Gabriel is available here: and

A Wall Street Journal Editorial calling on Congress to overturn U.S. Department of Education errors in student-loan records can be accessed via this link “Obama’s Student-Loan Fiasco
(Please note: a subscription is required to view the entire article).

Gainful Employment

On July 1, 2015, the U.S. Department of Education’s controversial Gainful Employment Rule took effect. While our membership has always agreed with its stated aim – to ensure that students enrolled in certain higher education programs receive a quality education that adequately prepares them for gainful employment – we have questioned the relevance of the metrics the regulation relies on to assess program value, arguing that they are unrealistic and politically biased.

As the two attached four-minute videos succinctly explain, the way in which the Gainful Employment Rule metrics were designed doesn’t really distinguish between poor- and strong-performing programs by measures that you would expect. For example:  There’s a well-respected, highly competitive fine arts college in New York City that happens to be a for-profit. It has a high graduation rate (66%) and a low student loan default rate (7%), which are undeniably exemplary outcomes. However, because its graduates pursue creative and fine art careers that simply do not pay a lot in the first few years after graduation, its programs won’t pass the regulation. The metrics don’t consider student outcomes; they focus solely on loan metrics. So, although nearly every fine arts program in the country would fail the GE Rule, only for-profit college programs will fail and be shut down because they are the only institutions subject to the GE Rule.

Quality programs with strong academics, exceptional graduation rates, and enviable job placement outcomes should not face closure. After watching these videos, we hope we can count on you to support our efforts to persuade the Department of Education to reassess its approach. Proprietary colleges doing right by their students must have the opportunity to make program adjustments to meet the new Gainful Employment loan metric mandates.

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Strengthening Gainful Employment


Gainful Employment's Failing Grade