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Publicly traded for-profit schools including DeVry Education, Strayer, and Grand Canyon Education, have seen their shares rise ever since Donald Trump won the election. Additionally, their stock didn’t fall after nominee for Education Secretary Betsy DeVos was confirmed after a contentious Senate confirmation hearing.
The reason: investors are anticipating a friendlier regulatory environment under the Trump administration, reported the New York Times. In other words, the gainful employment rule, a major regulatory tool of for-profit colleges, may not survive the next four years.
Why? Ever since Trump became president, officials in Washington who were behind the crackdown of the for-profit college industry have been replaced. With this in mind, the New York Times contends that the new administration replaced the old with those who would profit from the for-profit college industry.
The cornerstone of Obama’s crackdown on the for-profit industry requires for-profit schools to graduate students into jobs with good wages or lose federal financial aid. This policy is commonly known as the gainful employment rule. Weeks before the inauguration, the Department of Education said there were 800 programs that were failing under the gainful employment rule. Of the 800 failing programs, the New York Times reported that 98% were for-profit colleges.
On top of this, DeVos, who has investment holdings in for-profit educational companies, is at the head of the Department of Education. She wouldn’t commit to keeping former President Obama’s gainful employment rule active; furthermore, DeVos and the Department of Education declined to comment on the rule.
While government officials have been silent on the matter, Steven Gunderson, president and CEO of Career Education College and Universities, the for-profit industry trade group, expects regulatory relief under President Trump. Gunderson is no friend to the gainful employment rule, alluding that it exists as a tool for “political motivation and harming institutions.”
The closing of for-profit programs was a byproduct of heightened scrutiny of the for-profit industry, mainly due to the gainful employment rule. The shutdowns spurred political actions to relieve students of their for-profit education debt. On top of student loan forgiveness, considerable attention was drawn to the idea of free college and improving financial literacy.
Author: Dave Rathmanner
As the VP of Content at LendEDU, Dave regularly plans and writes content to help consumers with their personal finances. Dave’s work has been featured in the Chicago Tribune, Bloomberg, CNBC, US News, Yahoo Finance, NPR, and more.