For-profit colleges wasted no time in challenging the U.S. Education Department over the latest version of its gainful-employment rule, filing a lawsuit on Thursday in the U.S. District Court here that seeks to overturn the measure.
The rule, which the department released last week, will judge career-oriented programs on the basis of their graduates’ ability to repay student-loan debts. Programs that repeatedly fail the rule’s debt-to-earnings tests will become ineligible to award federal student aid.
The complaint, filed by the Association of Private Sector Colleges and Universities, revives many of the arguments the trade group made against a 2011 version of the measure: that the department had exceeded its authority; that the rule lacks a reasoned basis; that it unfairly takes aim at the for-profit sector; and that it is “arbitrary and capricious.”
At least one of those arguments has worked before. In 2012 a federal judge on the same court vacated portions of the earlier rule, finding that the department had failed to justify a metric that would have judged career-oriented programs according to their graduates’ loan-repayment rates. <Read more.>