2 Law Schools Fail Government's Gainful Employment Test, 3 More On Chopping Block

Uh-oh! Which schools came up short?

Pass Fail ExamIn 2010, the Department of Education introduced a landmark initiative designed to keep students from being buried beneath mountains of debt after obtaining degrees that had otherwise proved to be useless when it came to securing meaningful employment. Schools that failed the Department’s gainful employment standard — a test that measures graduates’ debt-to-earnings ratios — would risk losing access to federal loan funding. Degree programs fail this test if a typical graduate’s loan payments exceed 20 percent of his discretionary income or 8 percent of his total earnings.

These regulations took effect in July 2015, and earlier this week, the Department released its first gainful employment report, and while three law schools were notified that they were in danger of failing, two law schools failed outright.

Which schools came up short?

Both Florida Coastal School of Law and Charleston School of Law flunked the Department’s gainful employment test, meaning that if they fail again next year, they will lose access to the federal student loan program. Florida Coastal’s debt-to-earnings annual rate was 21.35 percent, and its debt-to-discretionary-income rate was 34.63 percent. Charleston’s debt-to-earnings annual rate was 20.42 percent, and its debt-to-discretionary-income rate was 31.7 percent. Arizona Summit Law School, Charlotte School of Law, and Western State College of Law received a “zone” rating, meaning that they came precariously close to failing the gainful employment test, and must pass at least once in the next four years to remain in the government’s good graces.

(The Infilaw System owns Florida Coastal, Arizona Summit, Charlotte (which has already been denied access to federal student loans), and was once in talks to purchase Charleston before the deal was quashed thanks to student and faculty opposition.)

Immediately after finding out that Florida Coastal had failed the government’s gainful employment test, Dean Scott DeVito sent a lengthy email to students, questioning the validity of the gainful employment rule in the first place, and letting them know that the administration had already appealed the results. Dean DeVito also notified students that not only had Florida Coastal been trying to lower its students’ debt loads and improve its admissions criteria, but also that the school had been working to become part of a “non-profit, major university,” and had been in discussions with potential partners for the past two years. Dean DeVito’s six-page letter can be found on the next page in its entirety.

Ben Miller, a higher education expert at the Center for American Progress, said in an interview with the National Law Journal that it would be extremely difficult for Florida Coastal and Charleston to pass the government’s gainful employment test within a year’s time: “They’ve performed very poorly. They’re nowhere near passing. I’d be skeptical that they’re going to pull it off.”

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In the meantime, both for-profit schools may be forced to lay their ultimate hopes for survival with the Trump administration, which could decide to put an end to the regulations. Many things could happen over the course of the next four (or eight) years, but time is of the essence for these law schools, and their time may run out before the Trump administration comes up with a plan.

(Flip to the next page to see Dean Scott DeVito’s letter to Florida Coastal law students about the school having failed the Department of Education’s gainful employment test.)

Education Department Releases Final Debt-to-Earnings Rates for Gainful Employment Programs [Department of Education]
Two Law Schools Get an ‘F’ for High Student Debt from Education Dept. [National Law Journal]
Department of Education flags 5 law schools’ debt-to-income ratios, including 3 in Infilaw System [ABA Journal]


Staci ZaretskyStaci Zaretsky is an editor at Above the Law. She’d love to hear from you, so feel free to email her with any tips, questions, or comments. You can follow her on Twitter or connect with her on LinkedIn.

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