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October 16, 2017

Iowa Joins Multistate Lawsuit against U.S. Department of Education for Refusing to Enforce Gainful Employment Rule

Regulation designed to protect students from predatory for-profit schools

DES MOINES – Attorney General Tom Miller today joined a group of state attorneys general in a lawsuit filed against the U.S. Department of Education and Education Secretary Betsy DeVos for refusing to enforce the gainful employment rule, a federal regulation that took effect in 2014 that protects students from predatory for-profit schools.

The complaint, filed in U.S. District Court for the District of Columbia, alleges the Education Department violated federal law by refusing to enforce the rule, which implements the requirement in the Higher Education Act that all for-profit schools, all vocational schools, and non-degree programs at all other schools “prepare students for gainful employment in a recognized occupation.”

The rule mandates transparency for schools offering career-oriented programs. The regulation requires schools to provide prospective students with information about a program, including its average debt load, the loan repayment rate of all students who enroll, the percentage of students who graduate, the number of graduates who obtain employment in a related field, and the average earnings of graduates.

The regulation also cuts federal funding to for-profit schools whose students end up with higher debt than earnings.

“The gainful employment rule protects student borrowers from predatory schools,” Miller said. “The Education Department’s failure to implement and enforce it prioritizes the schools’ profits over defrauded students and taxpayers.”

In July and August, the department announced it would delay large portions of the rule without soliciting, receiving, or responding to any comment from any stakeholder or member of the public, and without engaging in a public deliberative process. The department also announced it has no plans to calculate the necessary metrics to determine whether programs are failing the gainful employment rule’s minimum requirements. In their lawsuit, the attorneys general argue the delays have no legal justification and the department’s actions are “arbitrary and capricious and an abuse of discretion.”

The lawsuit asks the court to declare the department’s delay notices unlawful and to order the department to implement the rule.

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