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.