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September 24, 2010 2:00 PM New Timeframe for “Gainful Employment” Rules

By Daniel Luzer

The Department of Education announced today that it will delay putting into action “gainful employment” rules—under which schools wouldn’t be eligible for federal financial aid if average graduates need to spend more than 8 percent of starting salaries to service student loans—for for-profit colleges.

According to an article by Jennifer Epstein in Inside Higher Ed:

Officials announced… that they would delay until early 2011 publication of final rules aimed at ensuring that vocational programs prepare students for “gainful employment.” Department officials said the move would not delay the ultimate implementation of the gainful employment proposals past their current July 2012 date, and characterized the decision as an opportunity to hold public hearings and other meetings to give the many people who’ve weighed in on the rules more time to “clarify the comments they’ve submitted and respond to questions from department officials.”

The Department has received about 80,000 comments on the new rules, a great deal of them en masse from for profit colleges and their employees.

Expecting the delay, apparently stock prices of for-profit education companies went up Thursday afternoon; investors took it as a sign that the Department might be considering revising the gainful employment rules. As Epstein noted, however, “a delay by no means ensures a more favorable outcome.”

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer