Your Take: Halting Pell Grants at For-Profit Schools Will Hurt Minorities

The federal government's new rules on "gainful employment" would make many students ineligible for financial aid at career-oriented schools.

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The Department of Education has proposed new rules for students attending career-oriented schools that could disproportionally harm minority students. The rules, which would go into effect in November, could cut off support for those students who need the most financial assistance in getting their education. The new rules would make ineligible for-profit schools that do not meet certain graduation rates or levels of student debt.

While the for-profit college industry -- as with any sector -- has bad actors, the Department of Education's blanket fix is shaping up to do more harm than good. Student debt is a national problem, one that must be addressed, but imposing regulations on schools that are effectively educating students is unnecessary. Instead, the Department of Education should be encouraged to isolate bad actors -- without imposing harmful regulations on schools that are working to train students for careers where they can succeed.

According to the Department of Education's website, Pell Grants "provide need-based grants to low-income undergraduate students to promote access to postsecondary education." The description goes on to claim, "students may use their grants at any one of approximately 5,400 participating post-secondary institutions." 

There is nothing in the description of eligibility that differentiates between traditional colleges and universities, or traditionally black colleges and universities, or career-oriented colleges and universities. Any of those 5,400 institutions that are duly accredited can offer Pell Grants to students to pursue their educational goals.

There are 89 historically black four-year colleges and universities (HBCUs). Not counting those schools, only about a third of the student population at traditional not-for-profit schools are minorities. However, at career-oriented schools, the minority population is greater than 50 percent.

With that as background, we must examine the Department of Education's headlong rush to effectively remove career-oriented colleges from the quiver of educational arrows available to minority students. The new "Gainful Employment Rule" uses a formula that would disproportionately harm low-income students because their student load-to-income ratio or their rate of repaying loans would not meet the federal bureaucrats' threshold.

If students in a program don't meet the "gainful employment" test, then schools may not offer Pell Grants to students enrolled in that program -- effectively sending them out onto the streets to join a growing army of minority unemployed. Many might say, "Good. If career-oriented colleges aren't a good investment for students or the government, then something should be done."

However, because minority students as a group tend to need more student aid to meet their college expenses, they are far more likely to fall short of the "gainful employment" guidelines. This rule is aimed at career-oriented schools, but if the same test were run on students at traditionally not-for-profit black colleges and universities, 93 percent would fail the "gainful employment" test because of unacceptable repayment rates.

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