For-profit college investors bid up stock prices in anticipation of a lenient Trump administration. Were they wrong?
For-profit colleges were supposed to thrive under a Trump administration staffed by officials known to be friendly to the industry. President Donald Trump and Republican allies in Congress had made broad promises either to revisit or to repeal federal rules governing the schools. That gave hope to for-profit colleges and their investors, driving up their stock prices. Meanwhile, consumer protection advocates worried about a resurgent for-profit college sector unburdened by Obama-era rules.
A legal filing from last week suggests perhaps those assumptions were premature.
In late March, the Trump administration offered a forceful defense of the so-called gainful employment rule, the 2015 regulation that threatens to shut off the spigot of normally free-flowing federal funds that sustain career programs if the typical graduate’s annual loan payments exceed 20 percent of her discretionary income or 8 percent of total earnings. It also called on suspect career programs to warn prospective students if they risked running afoul of the guidelines. Colleges mostly opposed the rule.