ADEA Washington Update

Gainful Employment Regulations Still on Administration’s Agenda

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The Obama Administration has indicated that it is toughening its regulation of for-profit colleges by taking another aim at drafting rules requiring vocational programs to prove that they are preparing students for “gainful employment.” The gainful employment issue encompasses for-profit colleges and non-degree career programs at public and private, nonprofit colleges.

From 2009 to 2011, the administration debated with the for-profit education sector and its allies over proposals to crack down on programs that leave graduates with heavy debts that they are unable to repay. The Education Department issued a rule in 2011 that defined standards for loan repayment rates and the ratio of a graduate’s debt to income. Programs that failed the standards were in jeopardy of being disqualified from participation in federal student aid programs, which would essentially shut them down. But a federal judge in 2012 blocked major provisions of that rule, forcing the department to rethink its strategy.

The latest draft includes standards for debt-to-earnings rates and other language that could generate significant debate (linked is a comparison of final rules compared to the previous rule in a PowerPoint). A chart prepared by the department indicated that 974 programs, or 9% of 11,359 nationwide, could be failing to meet the standards in the draft (click here for the data analysis PowerPoint).

The gainful employment rule has been redrafted and the department has set a schedule for negotiations with representatives from for-profit colleges and others stakeholders. The first session was held September 9-11, 2013, and the second session was scheduled for October 21-22 but was cancelled due to the government shutdown. The next session will take place on November 18-20, 2013.

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