Association of Private Sector Colleges and Universities v. Duncan

Institutions of higher education must prepare students for gainful employment to be eligible to accept federal funds under Title IV of the Higher Education Act. In 2011, the Department of Education (DOE) published a new rule that tested compliance with this requirement by examining the debt, earnings, and debt repayment of a program’s former students. The new rule required reporting of data to the DOE and disclosure of data to prospective students. Schools were required to disclose the occupation that the program prepared students to enter, the on-time graduation rate for students completing the program, the tuition and fees charged, and the placement rate and median loan debt for students completing the program. The DOE developed this rule after holding public hearings and establishing a negotiating committee. The DOE received expert studies and examined industry practice in determining the appropriate levels of debt-to-income levels that would restrict or deny institutions from receiving federal funding. The DOE determined that the appropriate levels of debt repayments would be based on the lowest quarter of programs for former students repaying their debts. This threshold was set, because a lower threshold would not be meaningful, and a higher threshold would impact too many programs. The Association of Private Sector Colleges and Universities (APSCU) (plaintiff) brought a claim against Arne Duncan (defendant), as secretary of the DOE, alleging that the new rule was unlawful.