Federal District Court Strikes Down Department of Education’s “Gainful Employment” Requirement for Proprietary Colleges
Summary: Under the Department of Education’s “debt measure rule” in its “gainful employment” regulations, a for-profit postsecondary school will (as the culmination of an escalating series of sanctions) fail to qualify for federal financial aid for its students if, subject to certain transition rules, it does not satisfy any of the three following tests with respect to its former students in any three out of four consecutive years:
- At least 35 percent of former students must be current in their loan repayments or have repaid their loans in full;
- On average, student loan repayments may not constitute more than 30 percent of the borrower’s discretionary income; and
- On average, student loan repayments may not constitute more than 12 percent of the borrower’s total income.
The District Court held that the first standard was arbitrary and capricious, and invalidated the entirety of the gainful employment regulation (other than a reporting requirement).
Also of Interest
- Tax Alert: Final Debt Regulations Have Limited Scope of Application November 30, 2016 • Client Alerts
- Golodner Quoted in IFLR on Proposed NYS Digital Security Laws November 29, 2016 • Media Mentions
- The Strategic View—Aviation UK November 17, 2016 • Articles
- JUVE Handbuch Recommends Frankfurt Office and Lawyers November 14, 2016 • Recognitions
- Who’s the Lender? Two “True Lender” Cases with Implications for Marketplace Platforms November 10, 2016 • Client Alerts
- Chambers UK 2017 Recognizes London Partners and Aviation Finance Practice November 7, 2016 • Recognitions
- Kaye Scholer Advises Biohaven on Oversubscribed Private Financing November 4, 2016 • Client Successes
- US News–Best Lawyers Recognizes 32 Kaye Scholer Practices and 41 Lawyers November 1, 2016 • Recognitions
- Benchmark Litigation Recognizes Kaye Scholer Practices and Partners Nationwide October 24, 2016 • Recognitions