For-profit schools lose two, win one in US ruling Law Advisor

July 10th, 2011 by Cooper Speckman

For-profit schools lose two, win one in US ruling

WASHINGTON, July 12 – For-profit trade schools and colleges, the subject of a U.S. government crackdown over education standards and recruiting, lost a court challenge of two new rules but prevailed on a third.

The U.S. District Court for the District of Columbia upheld on Tuesday a rule that barred payments of commissions and incentives to recruiters for the schools and another that barred deception in recruiting students.

But Judge Rosemary Collyer ruled for the Association of Private Sector Colleges and Universities, which represents more than 1,500 schools, by tossing out a rule requiring states to authorize post-secondary schools for their students to be eligible for federal loans.

Collyer said the schools had not been given adequate time to review that rule and to comment on it.

The three rules were among a series issued by the U.S. Education Department. The most feared was one that threatens to cut off tuition aid to some programs run by for-profit colleges if graduates and those who dropped out were unable to find work.

Share prices of for-profit schools, which range from beauty schools to PhD programs, have been hit hard during a year-long battle over the regulations.

the plaintiff: Douglas Cox of Gibson, Dunn & Crutcher and Randolph Moss of Wilmer Cutler Pickering Hale and Dorr

For the defendants: Tony West, Assistant Attorney General, Ronald Machen of the U.S. Attorney’s Office and Sheila Lieber of the Federal Programs Branch.

Laws Explanation