Washington Update

Department of Education Releases Proposed Gainful Employment Rules

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On March 14, the U.S. Department of Education released its proposed regulations for determining whether certain postsecondary education programs, including allied or advanced dental education programs that award a certificate but not a degree, prepare students for gainful employment. The proposal met with immediate criticism from those on all sides of the debate.

In the department’s proposed regulations, nearly all programs at for-profit institutions, as well as certificate programs at public and private non-profit institutions, such as community colleges, would need to meet key requirements to establish that they sufficiently prepare students for gainful employment.

  • Institutions must certify that all gainful employment programs (i.e., all certificate-awarding programs) meet applicable accreditation requirements and state or federal licensure standards.
  • All gainful employment programs must pass metrics to continue eligibility in the student financial aid program, including: the estimated annual loan payment of typical graduates does not exceed 20% of their discretionary earnings or 8% of their total earnings and the default rate for former students does not exceed 30%.
  • Additionally, institutions must publicly disclose information about the program costs, debt and performance of their gainful employment programs so that students can make informed decisions.

According to information released by the department, “students at for-profit colleges represent only about 13% of the total higher education population, but about 31% of all student loans and nearly half of all loan defaults. In the most recent data, about 22% of student borrowers at for-profit colleges defaulted on their loans within three years, compared to 13% of borrowers at public colleges.”

Sen. Tom Harkin (D-IA), who chairs the Senate Health, Education, Labor and Pensions Committee, said in a statement that he had concerns with this proposed rule’s ability to protect students and taxpayers from the negative aspects of for-profit colleges. He said he wanted to see the rule strengthened during the 60-day public comment process.

Congressional Republicans, who generally support for-profit colleges, joined representatives of those institutions in saying the proposal unfairly singled out for-profits and would cause unfair harm to students. Rep. John Kline (R-MN), who chairs the House Education and the Workforce Committee, said in a statement that at a time of great demand, government should seek to increase education opportunities instead of unjustly penalizing institutions.

The public has 60 days from the release of the proposed rules to provide comment. The department will take that feedback and finalize the rule in the following months.

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