NBCC Opposition to Gainful Employment
How short-sellers are shorting minority students
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Today’s lesson shines a spotlight on another reason why the National Black Chamber of Commerce is calling for the Department of Education to do away with the Gainful Employment rule. On top of proposing bad policy that will harm minority students – DoED is working behind the scenes with Wall Street short-sellers who have launched an aggressive campaign to bring down the stocks of for-profit colleges and make millions. These money-grubbing short-sellers are playing a destructive role in promoting a rule that will limit opportunities for minority students who wish to attend career colleges.
The Wall Street Journal recently featured a front-page story detailing how “A Short Plays Washington.” How are short-sellers shorting minority students?
Education has always been an important priority for the National Black Chamber of Commerce. From K-12 to college and beyond, we need to give Black students every possible opportunity to get an education. Recently the Department of Education proposed a rule that will limit federal financial aid to students who wish to attend career colleges. These schools are highly attended by minorities because they offer a unique alternative to traditional universities and allow students to take flexible course loads and graduate on a path that is customized for them. They prepare minorities with the necessary skills that will help them in workplace.
NBCC has often spoken out about the department’s “Gainful Employment” rule and now with a newly elected Congress we will continue to urge our elected officials and Sec. Duncan to give all Black students the same opportunity as everyone else and do away with unfair regulations.
“Fix this, Secretary Duncan” (Politico, 11/17/10)
"Gainful Un-Employment" (Washington Post)
Arne Duncan, Secretary
US Department of Education
400 Maryland Ave., SW
Docket # ED-2010-OPE-0012
Dear Secretary Duncan,
On behalf of the National Black Chamber of Commerce I want to register our concerns with the proposed Gainful Employment rule. We believe this measure would limit education and economic opportunities for thousands of African American and other minority students throughout the nation.
The chamber represents 95,000 Black-owned businesses with 190 affiliated chapters operating internationally to sustain Black communities through opportunity. We recognize that opportunity is built largely on getting a good education and obtaining the skills necessary to gain employment. That is why we believe the Gainful Employment rule would disproportionately impact minority, low-income, non-traditional and other underserved students who rely on Title IV financial aid to pay for higher education.
The proposed rule is solely directed at private-sector career colleges and technical schools that offer training, flexible schedules, on-the job experience and marketable skills to prepare students for high demand jobs. At present, African American students account for nearly 18 percent of enrollees in these schools, and many would be unable to pursue their chosen careers if federal financial aid was withdrawn from certain programs.
We recognize the department’s desire to act in the best interest of students while ensuring that they fulfill their obligation to repay government loans. However, we believe the Gainful Employment rule discriminates against students – particularly those from minority, lower-income and other at-risk backgrounds – who need financial aid to get a good education and a good job. We urge the department to reconsider and to withdraw this arbitrary rule without delay.
Thank you for considering our views.
Harry Alford, National Black Chamber of Commerce
Good afternoon. I am very grateful to have this opportunity to come here and speak today about a concerning rule, that on behalf of the National Black Chamber of Commerce, I believe will limit education and economic opportunities for thousands of African American and other minority students throughout the nation.
Unemployment rates have hovered around 10% for the past two years. What is more disconcerting is that Black unemployment numbers are even higher – the latest figures showed 16.1 percent in September. Today’s workforce is more competitive than ever and it’s harder and harder for people to get jobs.
The National Black Chamber of Commerce represents 95,000 Black-owned businesses with 190 affiliated chapters operating internationally to sustain Black communities through opportunity – several of our local chapters have weighed into this debate – including the IL Black Chamber from Sec. Duncan’s hometown. We recognize that opportunity is built largely on getting a good education and obtaining the skills necessary to gain employment.
We recognize the department’s desire to act in the best interest of students while ensuring that they fulfill their obligation to repay government loans. However, we believe that the rule will have the opposite effect and in reality will discriminate against the students – particularly those from minority, lower-income and other at-risk backgrounds – who need financial aid to get a good education and get a job.
Gainful Employment is an inappropriate response to a very complicated issue that will have serious repercussions in the Black community. Students who receive Pell Grants often have less family resources and face a tougher time paying back loans than many of their peers – if you look across the board, default rates are similar based on background, regardless of the school they attend. Because private sector schools enroll more low-income and minority students – there are higher default rates. Making entire programs ineligible for Title IV financial aid if they fail to meet two arbitrary formulas derived from a debt-to-income ratio and loan repayment rates is overly simplifying a problem that is rooted much deeper.
Minority students as a group tend to need more student aid to meet their college expenses and are far more likely to fall short of the Gainful Employment guidelines. This rule is aimed at career-oriented schools, but if the same tests were run on students at traditionally not-for-profit Black colleges and universities, 93 percent – ninety-three percent – would fail the gainful employment test due to unacceptable repayment rates.
As a country we should be working to open doors for students to go to college and pursue degrees in fields about which they are passionate. We should be looking for every conceivable pathway to get African Americans off the unemployment lines and into the classroom. Unfortunately, this rule is going to serve as roadblock, limiting options and access.
Career colleges are a success story when it comes to minority students. At private not-for-profit colleges, 17 percent of their graduates are minority. At public not-for-profit institutions the percentage is barely higher at one-in-five. However, at career colleges and universities 39 percent of all graduates are minority students.
These schools are able to cater to nontraditional students and help them acquire skills that will translate in to a job. Many local businesses and businesses that the NBCC represents, really rely on students who attend career colleges.
For example, in Illinois, Jared Elliot, the Vice President of Operations for Americaneagle.com relies on graduates from The Illinois Institute of Art — Schaumburg because he believes that Art Institute students have become “fantastic assets” in his organization and that the areas that the students are exposed to within the program are “very well suited for the real-world work flow.”Americaneagle.com has been hiring several students from many institutions over the last several years and he is the most pleased with the students coming out of The Illinois Institute of Art who are always the students “at the top of the list.”
Although there are thousands of stories like Jared’s – the press has been busy telling a different story - casting a dark shadow on these schools, making them out to be much worse than they are. While there may be bad actors in the field, there are numerous schools that provide quality training and skills to help African Americans succeed – and businesses count on them year after year when recruiting for new positions. I urge you to reconsider the Gainful Employment rule and to help our struggling minority communities get degrees that will better their lives.