Which for-profit law schools failed DOE’s gainful employment standard?

By Tyler Roberts

Two for-profit law schools — Florida Coastal School of Law and Charleston School of Law — flat out flunked the Department of Education’s gainful employment standard.

Three more are in danger of failing.

If these law schools cannot improve post-graduation employment results in coming years, the DOE says students could lose access to federal financial aid — and the schools could be forced to close. 

The DOE introduced the gainful employment standard in 2010 in an attempt to strengthen the federal student aid program and protect students from misleading recruitment practices of for-profit education institutions, which have graduates with deteriorating employment prospects. This is the first year that the DOE’s findings have been made available, and some schools are challenging the legitimacy of the findings.

 But, the standard could very well be on the chopping block.

The for-profit college industry is hopeful that the new presidential administration will scrap the gainful employment standard. (After all, President-elect Trump was the former commander and chief of the embattled Trump University).

When Sen. Elizabeth Warren (D-Mass.) asked the nominee for Education Secretary, Betsy DeVos, during her confirmation hearing whether the new administration would overturn the regulation, DeVos stated the administration “will review that rule.”

But, for now, to meet the standard, an education program must lead to a degree at a non-profit or public institution, or the program must otherwise prepare students for “gainful employment in a recognized occupation.”

Gainful employment is determined by calculating the debt-to-income ratio of a program’s graduates two years after completing the program. To pass the DOE’s test, the graduates’ loan payments must be less than 12 percent of their annual earnings, or less the 30 percent of their discretionary income. Programs must achieve a passing score to remain eligible for funding under Higher Education Act Title IV student assistance programs. 

“Too many for-profit colleges have misled students, leaving them unable to find jobs that earn enough to pay off their crushing debt,” U.S. Sen. Sherrod Brown (D-Ohio) said in a press release. “The Department of Education’s gainful employment rule is critical in holding for-profit schools accountable and we must continue fighting to make sure students come before profits.”

Florida Coastal School of Law and Charleston School of Law failed to meet the gainful employment standard, with debt-to-income ratios of 21.35 percent and 20.42 percent, respectively. Both schools have one year to pass the gainful employment standard, or else they face losing access to federal financial aid.

Three other for-profit law schools — Arizona Summit School of Law, Charlotte School of Law and Western State College of Law — received a “zone” rating.  Programs that fall into this slightly less substandard category must obtain a “pass” rating at least once in the next four years.

The loss of federal financial aid would spell disaster for any of the for-profit law schools blackballed under the gainful employment standard. Just last month the DOE announced that it would cut off financial aid to students at Charlotte — a move which placed the school in near-certain jeopardy.

The InfiLaw System owns three of the schools: Charlotte, Florida Coastal and Arizona Summit. As Charlotte Law works out a teach-out with its sister school Florida Coastal, there are concerns that students will bounce from one under-performing school that’s potentially facing its death to another.

Dean Scott DeVito of Florida Coastal sent a letter to students following the DOE’s report, insisting that a debt-to-earnings determination does not accurately reflect the value of a law school education. DeVito contends the gainful employment standard fails to consider graduates working in low-wage states.

“[Gainful employment] is not about protecting students and taxpayers,” Dean DeVito wrote. “It is part of an anti for-profit political agenda. 

Florida Coastal and Charleston are appealing the DOE’s findings while working toward obtaining non-profit status, the National Law Journal reports.

 
 
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