The gainful employment rule enforces the Higher Education Act’s requirement that all career education programs receiving federal student aid “prepare students for gainful employment in a recognized occupation.” The rule uses debt-to-earnings ratios to assess whether career education programs at public, nonprofit, and for-profit colleges are leaving their graduates with reasonable debt burdens. Programs that exceed allowable thresholds—those consistently leaving their graduates with more debt than they can repay—must improve or lose eligibility for federal funding. This rule also provides consumers with key information about program costs and outcomes so they can make an informed decision about where to enroll.
The Department of Education has proposed rescinding the gainful employment rule completely, arguing that programs’ performance under the rule can be explained by factors like student characteristics and economic background, program field, and school location. However, similarly located career education programs serving similar students can have very different outcomes.
We recently identified several poorly performing programs that are located near programs that have much lower cost and/or much better outcomes. For example:
- In Birmingham (AL), graduates from the criminal justice administration bachelor’s degree program at Strayer University typically earned almost twice as much and owed $6,600 (20 percent) less than graduates from the same program at Virginia College.
- In South Plainfield (NJ), graduates from the dental assisting certificate program at Central Career School typically earned $6,600 more per year and owed about half as much as graduates from the same program at Everest Institute.
In addition to providing the same program in the same city, the schools in each comparison serve demographically similar groups of students, as measured by the share of the student body that receives Pell Grants, is Black, or is Hispanic/Latino.
These examples demonstrate the need for the gainful employment rule to prevent poorly performing programs from continuing to bilk students and taxpayers, and to keep unscrupulous schools from enrolling as many students as possible without regard to the quality of the training or job prospects. They also show that students have alternative options for where to enroll even if poorly performing programs close.
To learn more, check out:
- Our new analysis for more comparisons.
- Our comments on the Department’s proposal to rescind the gainful employment rule.
- The comment submitted by 68 organizations representing students, consumers, veterans, service members, faculty and staff, civil rights, and college access – demonstrating broad support for affordable, quality career education.