Education Management Corporation Urges Department of Education to Reconsider Gainful Employment Rule

PITTSBURGH, Sept. 9 /PRNewswire/ -- Education Management Corporation (Nasdaq: EDMC), one of the largest providers of post-secondary education in North America, today provided an official response to the U.S. Department of Education's (the "Department") proposed rule defining "Gainful Employment."

The Company's response suggests that the Department does not have the statutory authority to enact the proposed regulations and requests that, if the Department chooses to proceed with a definition of gainful employment, it postpone issuance of a final rule in order to collect and consider more appropriate and comprehensive data.  In the event that the Department proceeds with the current proposed rulemaking, the Company suggests modest modifications to the proposed regulations to address legal, policy, and fairness concerns.

Todd S. Nelson, Chief Executive Officer of Education Management Corporation, said, "We believe that the proposed rule is counter to President Obama's goal of the United States becoming the world leader in college graduates by 2020, and impacts quality institutions rather than the 'bad actors,' as stated by the Department."

"Over the past year, we have worked closely with Secretary Duncan and his staff, members of Congress, and other stakeholders across higher education to facilitate proposals that focus on the issue of student debt without blocking access to quality education.  By providing students with the tools they need to make fully-informed decisions about their education, we can ensure that all schools – traditional and proprietary alike – are working to address debt concerns, while preserving students' ability to choose which schools best serve their needs in the pursuit of a college degree.  Our proposed modifications to the rule continue in that spirit," continued Nelson.

The Company's post-secondary institutions educate a diverse group of students.  The total student population at the Company's institutions is approximately 46% minority and 64% female.  As of October 2009, 52% of the students were non-traditional students, including 35% who are working adults.  As of May 2010, approximately half of EDMC's undergraduate students were eligible to participate in the Pell grant program, which the Department makes available to lower income undergraduate students.  Students attending the Company's schools have graduation and repayment rates that compare favorably to other schools, including public and non-profit institutions.  According to 2007-08 data for four-year institutions with more than 40 percent of their students receiving Pell grants, the average graduation rate at the Company's institutions exceeded those of public and private non-profit schools, as well as the proprietary school sector.  According to the same data, the average two-year cohort default rate for the same student population in 2007 at the Company's institutions was lower than the rate at public institutions and other proprietary schools and comparable to the rate at private, non-profit schools. 

Though not effective until July 1, 2011, the Company intends to comply by December 31, 2010 with the student placement, graduation rate and indebtedness reporting and disclosure requirements set forth in the Department's June 18, 2010 notice of proposed rulemaking to the extent the information required is readily available and applicable for programs offered by the Company's schools.

To access a copy of the Company's Comment Letter to the U.S. Department of Education in response to the notice of proposed rulemaking related to the proposed Gainful Employment regulation, please visit the Investor Relations section of the Company's website at www.edmc.edu.

Education Management (www.edmc.edu), with over 136,000 students as of October 2009, is among the largest providers of post-secondary education in North America, based on student enrollment and revenue, with a total of 101 locations in 31 U.S. states and Canada. We offer academic programs to our students through campus-based and online instruction, or through a combination of both. We are committed to offering quality academic programs and continuously strive to improve the learning experience for our students. Our educational institutions offer students the opportunity to earn undergraduate and graduate degrees and certain specialized non-degree diplomas in a broad range of disciplines, including design, media arts, health sciences, psychology and behavioral sciences, culinary, fashion, business, education, legal and information technology.

SOURCE Education Management Corporation