Agree to Disagree

WASHINGTON – If the first day of its meetings was any indication, the odds of a federally appointed panel reaching consensus on gainful employment regulations are slim to none.

The 14 negotiators include both aggressive critics of for-profit higher education and representatives from that industry. They are tasked with reaching unanimous consensus on rules that would measure the employment outcomes of vocational programs at for-profits and community colleges, to ensure they are helping their students to find "gainful employment."

The meetings are scheduled for this week and next month. If negotiators cannot reach a consensus on the rules, the U.S. Department of Education can still propose its own final version.

The department wants to release a final version of the regulations for public comment by next year, an official said Monday. A previous effort by the feds to enact gainful employment, which would restrict the flow of financial aid to underperforming programs, was halted by a federal court.

Rather than starting from scratch this time around, the department last week introduced draft language for negotiators to consider. The proposed regulations would affect more programs but are also somewhat simplified, with fewer rules.

For-profit colleges have argued that they are being targeted unfairly. The sector’s advocates have called for the regulations to be considered as part of the looming, broader debate over the reauthorization of the Higher Education Act -- the law that governs federal financial aid.

Consumer groups, however, say the final language of the last version of gainful employment was too weak, having been watered down during a bruising fight. And some said the new, draft rules are missing a key component by eliminating measurements that would factor in how many students fail to earn credentials in a program.

Both sides were on display Monday. Perhaps the most substantive debate centered on an addition to the agenda from Barmak Nassirian, the director of federal relations and policy analysis at the American Association of State Colleges and Universities.

Nassirian, a negotiator and oft-quoted critic of for-profits, pushed for the department to add an additional gainful employment requirement to its front-end review process for allowing new and current vocational programs to participate in the federal student aid programs.

Under its current proposal, the department would wait until after federal student aid dollars have already been flowing to a vocational program for several years before it would penalize underperforming institutions. But the Education Department is required under the Higher Education Act, Nassirian argued, to conduct an upfront check that a program is prepared to meet its gainful employment obligation; the department cannot only kick out the poor performers after the fact, he said.

Brian Jones, the general counsel of Strayer University, a for-profit institution, responded that the department’s current process for granting new vocational programs approval to receive federal student aid was  sufficiently rigorous since it involved meeting myriad state, federal and accreditors’ standards.

The department would be open to considering Nassirian’s proposal if the committee put forward more details about what gainful employment metrics should be added to the front-end review of vocational programs, said John Kolotos, the department’s representative on the panel.

Accreditor Weighs In

Throughout the daylong session Monday, negotiators touched on a wide range of issues in a discussion that, at times, was freewheeling. The panel members addressed issues ranging from how the regulations would affect low-cost institutions to how colleges calculate the cost of attendance to whether the department should be using the median or mean (or both) in calculating debt and earnings data.

One of the more surprising exchanges Monday came between Nassirian and Belle S. Wheelan, who is president of the college commission of the Southern Association of Colleges and Schools.

As president of a regional accreditor that is generally considered to be one of the toughest on underperforming colleges, Wheelan is a powerful member of the higher education establishment. Yet she made a strong argument against the central premise of gainful employment rules.

Colleges can’t control the economy, said Wheelan, who questioned efforts to hold programs accountable for the labor market successes and failures of their graduates.

“I just don’t see the correlation,” she said, asking whether gainful employment was like using a “sledgehammer to kill a gnat.”

Nassirian, however, said the panel had been tasked with considering possible rules, not with questioning the broad philosophy behind that effort.

Monday’s rule-making session -- which will continue this week and for several days next month -- is a do-over for the Education Department, whose last set of gainful employment regulations was tossed out by a federal judge earlier this year. This time around, however, the broader landscape is much changed.

Last month President Obama essentially proposed a much more sweeping version of gainful-style regulation with his plan for a rating system of colleges. His proposal, if enacted, would eventually become federal performance-based funding by linking financial aid to the ratings.

As a result, all colleges are now feeling some of the heat that had previously  been reserved for for-profits and some programs at community colleges.

“This is not just affecting for-profit institutions,” Wheelan said. “That’s the bigger concern.”

Common Ground

Given the faint hope of the panel reaching consensus, observers likened the rule-making session to a public hearing. If no consensus emerges, some of the discussion could find its way into the rules. But the federal agency would have the final say.

Either way, for-profits aren’t excited about their prospects under the Obama administration.

The Association of Private Sector Colleges and Universities, the sector’s primary trade group, was shut out of the negotiations. None of its member institutions was represented on the panel, except for an alternate negotiator. The association said in a written statement that the meeting was “stacked with individuals opposed to the very existence of our institutions.”

The U.S. Chamber of Commerce nominated two possible additions Monday, both of whom would have been sympathetic to for-profits. Also nominated was the interim dean of the for-profit Florida Coastal School of Law.

However, members of the panel, led by Nassirian, lodged their dissent about the additional panelists. The lack of a consensus was enough to scuttle the three nominations.

While the negotiators appeared far from a consensus on the substance of the new regulations, they did reach an agreement Monday on whether to allow their proceedings to be recorded.

The committee members decided, without any dissenting voices, that they did not want the Education Department to provide a transcript or audio recording of their discussions. Panelists across a wide range of interests said they thought that such recordings would limit the candidness of their discussions and would not adequately capture the complexity of the gainful employment regulations.

The committee also said that members of the public attending the meeting were not to produce recordings of the proceedings. It was unclear how such a prohibition would be enforced. A spokesman for the Education Department declined to comment on Monday night.

The negotiated rule-making sessions are open to the public at a conference room in the department’s K Street office in downtown Washington. The room was filled to capacity on Monday, and about a dozen people listened to the proceedings from just outside the room.