For-profit colleges looking forward to Trump presidency

Companies that run for-profit colleges said the election of Donald Trump will help stall or roll back Obama administration regulations.

The stocks of companies that run such colleges rose after Election Day, signaling the expectation that rules governing the industry will be loosened.

The industry’s trade group, Career Education Colleges and Universities (CECU), said a number of rules introduced, or proposed, in recent years are now more likely to be scrapped or at least halted before implementation.

CECU’s CEO, Steven Gunderson, said one target will be the “gainful employment” rule.

The gainful-employment rule is aimed at ensuring students attending courses have a realistic chance that they will earn an income that would allow them to pay back loans. It says that programs in which students have annual loan payments greater than 12 percent of total earnings and greater than 30 percent of discretionary earnings fail the requirements laid down by the Department of Education.

Programs that fail in two out of any three consecutive years or are close to those numbers for four consecutive years are denied access to federal funding.

“Gainful employment in its present structure cannot and should not survive,” Gunderson told NPR’s "Marketplace" program.

When President Obama put the new regulations into place, he cited government data that showed more than 80 percent of students borrowed money to attend for-profit schools, compared with less than half of public-college students.

Proposed new rules on higher education debt forgiveness are also likely to come under scrutiny under a Trump administration.

Those arguing against the soon-to-be-finalized Department of Education rules on debt forgiveness, including limits or bars on mandatory arbitration, believe it will lead to a rash of legal actions and increased costs to colleges, which will be passed down to students.  

Andrew Kloster, until recently a legal fellow with the Heritage Foundation, said the proposed rules are an abuse of federal power, as they seek to leverage ownership of loans to regulate in an area beyond the governments' scope.

Frederick Hess, director of education policy studies at the American Enterprise Institute, told the Washington Business Journal that for-profit schools can likely look forward to a much better regulatory environment under a Trump administration.