Gainful Employment Guidelines Calendar: Save the Dates!

January 6, 2016

MONEY-BubbleJanuary 6, 2015

The Gainful Employment guidelines can force the closure of as many as 1,000 for profit post secondary schools in California. This could take place over the next 24 months. Here are the dates to keep in mind.

2009: US Secretary of Education Arne Duncan leads the White House initiative to close predatory for-profit schools that specifically market to students eligible to take on federally backed student loans.

2014: Final Rules for the Gainful Employment Guidelines are published by the USDE. Lawsuits that challenge the Guidelines follow which are defeated.

April 2015: Corinthian Colleges is indicted by the Federal Government for falsifying workforce placement outcomes. Corinthian closes 80+ campuses within 30 days. 350,000 students are abandoned. Anticipating the Guidelines job placement requirement, Corinthian created false graduation employment data.

July 1 2015: The effective date for implementation of the Guidelines arrives. All for-profit private post secondary schools will be evaluated in terms of meeting Guideline standards. All predatory for-profit schools have been required to report the same data for six years, however, they have never been held to the standards with sanctions in play.

August 2015: The White House announces a $3.6 billion pool will be set aside to help all 350,000 Corinthian students pay off their loans; approximately $10,000 per student.

Winter 2015/2016: The first announcements are made identifying for-profit private post secondary schools that are not in compliance with Guidelines. On Dec 23 Le Cordon Bleu announced it will close all 16 culinary schools, including two in California. The corporation cites federal guidelines as the cause. EDMC settles with 39 state Attorney’s General for more than $100 million while admitting fraudulent practices. Failures still to come will focus on loan default ratios, low graduation rates, and high percentages of graduates who fail to find work in their field. As a result these schools must publish these findings on their websites for the benefit of current and prospective students.billion pool will be set aside to help all 350,000 Corinthian students pay off their loans; approximately $10,000 per student.

Spring 2016: Students attempt to transfer out of the for-profit private post secondary schools. They realize their credits will not transfer to other schools with similar programs. However, their accounts can be sold!

Summer 2016:

ed debt

The second year of for-profit private post secondary schools reporting under the Guidelines begins.

Fall 2016: Enrollment in schools sanctioned for thir 2nd consecutive year drops off a cliff. The first wave of for-profit private post secondary schools begins cutting back operations.

Winter 2016/2017: The second announcements are released identifying for-profit private post secondary schools not in compliance with the GE Guidelines. Schools that have failed their second consecutive year must post on their websites enrollment warnings for current and prospective students. Calls for legislation are made across the nation to address the loans and workforce predicaments for effected students. California becomes ground zero for school failures and finger pointing chaos.

Spring 2017: Students begin to drop out and new enrollments go to zero. Schools begin closing overnight in droves. Crisis mode ensues in state legislatures and Congress.

30% (~2,000) of all for profit schools in the US are in California. The BPPE has oversight authority of these schools. The big name corporations such as Corinthian, ITT, Devry, EDMC and Phoenix (Apollo Group) account for no more than 10% of the for-profit private post secondary schools at risk in California. The greater danger is the small for-profit private post secondary schools owned by individuals and single shareholders. These small operations (as many as 1200) have far fewer financial resources than the large corporations and as a result will shut down immediately under the slightest financial pressure. Even though the signs are obvious that this collapse will take place, the BPPE has shown no initiative in making plans to prevent or mitigate the inevitable disaster. I believe at least 200 for-profit private post secondary schools will close in California impacting as many as 20,000 to 200,000 students. This will overwhelm and exhaust the $25MM Student Tuition Recovery Fund. I believe the riskiest for-profit private post secondary schools can be identified yesterday. The prudent and just action is to close these predatory operations before further damage is done to individuals, institutions and the state.

Writer’s note: The amount of news and documentation on the collapse of the for-profit private postsecondary schools is abundant. I plan to post a list of news articles and documented research on the phenomenon.

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