How Much Did Students Borrow to Attend the Worst-Performing Career Education Programs? The Need for a Strong Gainful Employment Rule

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.

The gainful employment rule is needed to prevent programs like those from bilking students and taxpayers. Yet the Department of Education has proposed rescinding the gainful employment rule completely, which would be costly in several ways. Our new analysis illustrates one aspect of the cost to students – quantifying how much they borrowed to attend the worst-performing career education programs.

A single round of Department of Education data showed that more than 350,000 students graduated from the worst-performing career education programs with nearly $7.5 billion in student loan debt. Those programs, rated as “failing” or “zone” in the Department’s existing gainful employment rule, would eventually lose access to federal financial aid if they did not improve.

The table below shows the five states with the most failing and zone program graduates, and the amount they borrowed to attend those programs. For example, more than 56,000 students graduated from the worst-performing programs at California colleges, with $930 million in debt to repay.

(college location)

Graduates at failing and zone programs

Amount borrowed to attend failing and zone programs
















Most of these students graduated in 2010-11 or 2011-12, though smaller programs included graduates over a 4-year period. Note that some colleges based in these states have branch campuses in other states (e.g., ITT Technical Institute, University of Phoenix, and DeVry University); due to data limitations, all graduates are counted under the state where their college’s main campus is located. To see the full state-by-state table and details about our methodology, see our new factsheet.

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