DC Court Upholds Gainful Employment Rule

Earlier today, the District Court for the District of Columbia held that the US Department of Education’s (“Department”)”‘gainful employment‘ regulations—including the current debt-to-earnings test and disclosure, reporting, and certification requirements—survive this court challenge in their entirety.”  [JUNE 24 UPDATE – here are the Chronicle of Higher Education and Inside Higher Ed reports on the decision.] [ANOTHER JUNE 24 UPDATE – here are the statements from Department Secretary Arne Duncan and  APSCU’s General Counsel Sally Stroup.]  This follows a disappointing decision from the Southern District of New York also upholding the validity of the Department’s Gainful Employment Rule (“GE Rule”) published by the .  In so doing, the Court dealt an important win to the Department, although the effort does not seem to have concluded.  Not only may plaintiff Association of Private Sector Colleges and Universities (“APSCU”) appeal this decision, but the currently pending spending limitations in the Labor HHS appropriations bill preventing the Department of Education from using federal funds to “implement, administer, or enforce” the gainful employment rule (see page 119).

We will have a complete analysis of the decision in short order.    On a first read, however, it was interesting that the court accepted the Department’s argument that the clause “in a recognized occupation” in the phrase “gainful employment in a recognized occupation” sufficiently modified “gainful employment’ to make the phrase ambiguous enough to allow the Department to impose a debt-to-income metric.  Whatever the merits of the the GE Rule or the other merits of the decision, this seems pretty tenuous.  Indeed, the plain meaning of that phrase “recognized occupation” would seem to referred to something like Standards of Occupational Classification Codes.

Also interesting is that the Court disregarded the prior administrative rulings in cases like In re Academy for Jewish Education, where the Department argued that the program did not lead to gainful employment because the education did not provide skills to the student that would enable to them to hold a job.  This APSCU Court found that the because the training in question did not lead to any employment, “the Department had little reason to settle on a more nuanced definition for the full ‘gainful employment’ provision.”  This seems to miss the mark – the point is that the Department’s position in that case (and other administrative cases like it) was the Department’s interpretation of the whole phrase. Continue reading “DC Court Upholds Gainful Employment Rule”

Analysis of APC v Duncan – NY Case Upholding Gainful Employment Rule

On May 27, 2015, in Association of Proprietary Colleges v. Duncan, the District Court for the Southern District of New York ruled that the U.S. Department of Education’s (“Department”) “Gainful Employment” rule was valid in its entirety. The Court also held that:

  • Proprietary colleges do not have a constitutionally protected property or liberty interests in their continued eligibility to participate in federal funding programs under the Higher Education Act (“HEA”), and the GE Rules afford affected schools all the due process that is constitutionally due.
  • The GE rules do not have a retroactive effect.
  • The GE Rules are a reasonable interpretation under the HEA of an ambiguous statutory command.
  • The GE Rules – and the debt-to-earnings ratios (“D/E rates”) contained therein – are the product of reasoned decision making and are not arbitrary or capricious.

For more information, please review our analysis of this decision.

Court Upholds Validity of Gainful Employment Rule

In a decision issued earlier today, the federal court sitting in the Southern District of New York upheld the Department of Education’s gainful employment rule and dismissed the challenge brought by the NY Association of Proprietary Colleges (APC).   The APC put out a statement disagreeing with the ruling and noting they “will be looking quite closely at all options.”

We are still reviewing this decision, but wish to note that there is still a pending lawsuit in the DC federal court being brought by the Association of Private Sector Colleges and Universities.  Argument was held in that matter on May 20, 2015.  Although the Court in DC will likely need to address the points raised by the APC court (especially if the DC court disagrees with the APC Court), the APC Court decision is not dispositive on the matter and the DC Court is free to rule as it sees fit.

MAY 28, 2015 UPDATE: Here’s Inside Higher Ed‘s report on the decision.