For-Profit Colleges Say the Gainful Employment Rule Will Kill Access. Don’t Believe Them. - New Report from The Century Foundation

Monday, September 25, 2023

For-Profit Colleges Say the Gainful Employment Rule Will Kill Access. Don’t Believe Them. - New Report from The Century Foundation

Students who enter career training programs are making an investment in their future. They are also taking a bit of a gamble. Deciding to spend on a college education is a large financial commitment, one that often involves going into debt. Taking that risk is accompanied by many questions: If I take out student debt to pay for education, will I make the income I need to pay it off? If I invest my time and energy to complete a postsecondary program, will I be better off than if I never pursued college at all?

Likewise, the federal government—specifically, the U.S. Department of Education, which issues the vast majority of student loans—has a vested interest in ensuring that federal financial aid supporting students in higher education is spent on programs that represent a good investment of taxpayer dollars. The country needs an educated workforce, and so federal investments in career training programs should be made at institutions that have a proven record of graduates who can actively participate in the national economy while paying off their student loans.

The question is, how can both students and the federal government be assured that career training programs are a good investment? What guarantee is there that these program’s graduates go on to be gainfully employed, rather than jobless and saddled with debt?

One way of assuring students and the federal government alike that a career training program delivers on its promises is through a set of regulations known as the Gainful Employment (GE) rule. Under President Obama, in 2011, the U.S. Department of Education enacted regulations for determining whether career training programs met the Higher Education Act’s standard for eligibility to distribute Pell Grant and student loans. Dubbed the Gainful Employment rule based on the statutory language, the regulations restricted federal financial aid eligibility for nondegree and for-profit programs that leave students with debt their earnings cannot support, signaling to consumers that the program may not be worth their financial investment. However, under President Trump, the Department of Education rescinded the GE rule in favor of posting earnings and debt data online,1 which, the evidence shows,2 is not enough to improve student outcomes.3

In the coming days, the Department of Education is expected to release a new version of the GE rule, putting the regulations on track to take effect in July 2024. Altogether, this rule marks the strongest step taken to date to protect students and taxpayers from investing in low-quality programs that result in rampant debt and low earnings.4 Some groups, however, including the for-profit college lobby, have raised concerns about the unintended consequences of the new regulations, arguing that they may constrict access,5 especially for under-served groups,6 or hold programs to unfair earnings standards.

The analysis done for this report offers a closer look at the data, bringing evidence to bear in a discourse that is too often driven by speculation. When considering how to decide what’s best, the public should not, and cannot, lose the forest for the trees: the GE rule’s benefits to students and taxpayers will far outweigh the costs...

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