July 21 An association of for-profit colleges in
the United States has sued the Department of Education to block
the implementation of a controversial rule, saying the
rulemaking process was flawed and the agency was overreaching in
its capacity to frame such rules.
The Association of Private Sector Colleges and Universities
(APSCU), representing more than 1,650 colleges, filed a lawsuit
in the federal District Court in Washington DC seeking to block
the department's final 'gainful employment' regulations.
In June, the department finalized the rule which threatens
to cut off federal aid -- a key source of revenue -- to colleges
if they do not meet certain student debt criteria.
The final version of the rule is a much softer one than the
draft published earlier as the industry fought back the strict
rules through lobbying.
The rule is part of a larger package of regulations framed by
the Obama administration to reduce student debt at for-profit
colleges and make them more accountable for the taxpayers money
they get to fund student loans.
For an industry TAKE A LOOK:
"By issuing the gainful employment regulations, the
Department of Education has clearly exceeded its statutory
authority," APSCU's interim CEO Brian Moran said in a statement
The department could not be immediately reached for a
The group had sued the department in January over a
different set of rules, and had won one claim while losing two.
APSCU members include Career Education Corp ,
Corinthian Colleges , DeVry Inc , Education
Management Corp , ITT Educational Services and
Lincoln Educational Services .
Sector leader Apollo Group is not a part of APSCU.
The colleges, accused of having high student default rates,
had made changes to their admissions policies as they braced for
a more stringent set of rules, leading to sharp declines in
enrollment numbers. They had also cut jobs and scaled back on
The case is Career College Association vs Arne Duncan,
secretary of Department of Education, and the department, U.S.
District Court, District of Columbia, No. 11-cv-01314.
(Reporting by A. Ananthalakshmi in Bangalore; Editing by