News: Federal Policy & Advocacy

Gainful Employment Regs on Chopping Block

Friday, August 10, 2018  
Posted by: Carrie Warick, Director of Policy and Advocacy
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The U.S. Department of Education plans to eliminate the consumer regulation known as Gainful Employment—which ensures certain higher education programs are providing economic benefit to their students—and replace it with expanded program-level data on the College Scorecard. While the increase in available data should inform potential students, the use of a minimum standard with consequences for poor-performers will be eliminated as of July 2019 (following a public comment period – stay turned for more).

“Without the safety net of gainful employment, more students could enter low-quality programs that will not help them improve their futures,” says Kim Cook, NCAN’s executive director.

The gainful employment regulation serves two purposes. One is to prevent student loan dollars from flowing to programs where students will not earn enough to be able to pay back these loans. This is a protection of government funding for both student loans, but also for Pell Grants. For programs that fail the gainful employment threshold, which is measured by two types of debt-to-earnings ratios, they lose eligibility to receive federal financial aid dollars. The second is to signal to students that the program is a risky investment if they cannot receive a student loan, or Pell Grant if eligible, to enroll in the program.

Under the current gainful employment guidelines, non-degree programs at non-profit institutions and all programs of study at for-profit institutions must meet a debt-to-earnings ratios to maintain their federal student aid eligibility. In a statement released to coincide with the announcement, Secretary of Education Betsy DeVos said that, "instead of targeting schools simply by their tax status, this administration is working to ensure students have transparent, meaningful information about all colleges and all programs." Yet, in 2017, 10 percent of all programs reviewed failed to meet these criteria. Of those failed programs, 98 percent programs were housed at for-profit institutions, according to Inside Higher Ed.

Similar to the minimum safety standard a building inspector ensures, gainful employment sets a minimum standard for certain postsecondary education programs. Consumer information alone is not relied upon when a building inspector finds an unsafe building, and similarly, the poorest performing programs should not be able to inflict the harm of debt on students. Better data and these regulations are not mutually exclusive. Better data could be provided while still holding the poorest performing programs accountable via financial aid eligibility.

The Department argues that this change will hold all institutions of higher education to the same standard, stating that if low-cost programs must make changes, they will become more expensive and limit access for low-income students. Yet, it is important to ask, “access to what?” Access to a low-cost, but low-quality program is unlikely to lead the student to a better future.