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Department Proposes Gainful Employment Regulations


March 18, 2014


Department Proposes Gainful Employment Regulations

On March 14, the Department of Education proposed regulations on gainful employment requirements for postsecondary educational institutions offering federal financial aid for career training programs. This proposal comes nearly a year after a federal court struck down the department’s previous attempt to regulate gainful employment.

Under current law, most programs offered at for-profit institutions and certificate programs at non-profit and public institutions, including community and technical colleges and area CTE centers,  must prepare students for “gainful employment” after program completion to participate in federal student aid programs. However, the term “gainful employment” is not defined in current law and has not previously been regulated by the department.

While the department does acknowledge that many postsecondary career training programs provide a high-quality education leading to employment, the primary concern driving this proposed rule is the high student loan default rate of students in programs at for-profit institutions. The department hopes that the proposed regulations will force low-performing programs to improve or lose access to federal student aid.

Under the proposed regulations, gainful employment would be measured on three components intended to distinguish affordable training programs leading to well-paying jobs from programs leading to jobs with poor earnings prospects and high debt or loan default:

  • Certification requirements – Programs would have to certify that they meet accreditation standards and state or federal licensure standards to operate as an educational program.
  • Accountability metrics – Programs would have to meet minimum standards on student debt-to-earnings ratio and program cohort default rate.
  • Public disclosures – Programs would have to make performance and outcomes data, including costs, earnings, debt, default rates and completion rates, available to the public.

These regulations were posted to the Federal Register on March 25, and are available for public comment for 63 days (5/27/2014). If you are a postsecondary stakeholder with a certificate program, I encourage you to read the information on the register’s website and leave your comments for the department. Feedback received from the public will be used to finalize the regulation.

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