PHOENIX (CN) — Twelve private colleges of acupuncture and oriental medicine sued Secretary of Education Betsy DeVos this week, challenging a Department of Education “gainful employment” regulation that labels them as failing to prepare students for work.
The Department of Education’s gainful employment regulation requires that schools demonstrate that their programs prepare graduates for employment in their field for the school to qualify for federal financial aid.
These regulations were introduced in 2009 and amended in 2011 and 2014 to “protect students at career colleges from becoming burdened by student loan debt they cannot repay,” according to the Department of Education press.
The department cited troubling statistics about the cost-to-benefit ratio of profit-seeking colleges, whose students constitution only 11 percent of the total higher education population, but 44 percent of federal student loan defaults.
A Government Accountability Office report in 2010, “Undercover Testing Finds Colleges Encouraged Fraud and Engaged in Deceptive and Questionable Marketing Practices,” eviscerated profit-seeking chain colleges. Two major chain schools, Corinthian Colleges and ITT Technical Institute folded in succeeding years.
DeVos, as a major promoter of private schools and critic of public education, despite her Cabinet post, is expected to look more kindly upon private, profit-seeking schools.
After the GAO report made headlines, the Department of Education began applying a debt-to-income metric measuring the income of recent graduates against their school loan debts to determine which schools were adequately preparing their students for employment.
The 12 plaintiff schools, including Phoenix Institute of Herbal Medicine and Acupuncture, the Pacific College of Oriental Medicine in California, and the Colorado School of Traditional Chinese Medicine, claim in the lawsuit filed in the District of Arizona that the regulation does not accurately measure the success of their graduates.
Because acupuncture and Oriental medicine are not covered by most insurance plans, the schools say, most graduates of their advanced programs start independent practices, which take time to build. They say their students understand this from the time of enrollment, and are making an educated decision about their futures.
By measuring only the income of graduates from 18 to 36 months after graduation, the Department of Education is not taking into account the reality of a career path in alternative medicine.
All 12 schools have been labeled as failing under the gainful employment regulation and will have to warn to incoming students of it. But the schools say that measured in other ways they could prove their programs are successful.
Despite the low early-career income averages, the schools say, they "turn out graduates who become entrepreneurs and small business owners, who pay back their loans and enjoy successful careers in the practice of AOM [acupuncture and oriental medicine.]”
Their attorney Ron Holt said in an interview that the plaintiff schools have high graduation rates and low percentages of student loan defaults.
“This one-size-fits-all methodology doesn't work,” Holt said. “We probably wouldn't need to file this lawsuit if [loan default percentage] was factored in.”
The Department of Education did not reply to a phone call seeking comment.
The schools seek an injunction preventing the Department of Education from enforcing the gainful employment regulation against them, as arbitrary and capricious.
Holt is with Kirsten Clemenger of Douthit Frets Rouse Gentile & Rhodes in Kansas City, Mo.
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