Washington Update

Proposed Gainful Employment Rule Released

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On March 14, the U.S. Department of Education (ED) released its proposed regulations for determining whether certain postsecondary education programs, including allied or advanced dental education programs that terminate with the awarding of a certificate but not a degree, prepare students for gainful employment. Since the Higher Education Act was first passed in 1965, it has included a version of the clause “prepare students for gainful employment in a recognized occupation.” Federal student aid requirements mandate that career education programs abide by this provision to receive loan funds disbursed under Title IV of the act.

The current proposal would permit ED to remove advanced certificate dental education programs from federal student aid funding streams if they do not satisfactorily meet two standards on student loan debt. To meet the first standard, a program must graduate students whose estimated annual loan payments do not consume more than 20% of their discretionary income or 8% of their total income. Under the second metric, programs must keep their loan-default rates among former students who began repaying their loans in the past three years below 30%. Institutions that fail to meet one of the standards for at least two years would be removed from the federal student aid program.

Data provided by the department indicates that under the proposed rule, nearly one in five vocational programs would either fail outright or be at risk of doing so. According to the Obama Administration, the 13% of post-secondary students who are enrolled at for-profit colleges account for almost half of all federal student loan defaults.

The regulations contain two other requirements of note:

  • Institutions must certify that all gainful employment programs meet applicable accreditation requirements and state or federal licensure standards.
  • Institutions must disclose both to the ED and publicly, information about the program costs, debt and performance of all gainful employment programs so that students can make informed decisions about matriculating in such programs.

ADEA recently prepared a memorandum detailing the proposed regulation underscoring the unsuitability of applying gainful employment standards to specialized dentistry certificate programs. The ED will continue to accept public comment on the proposed rule until May 26, 2014.

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