September 27, 2023

New Gainful Employment Rule Is the Least We Can Do For Our Students

New Gainful Employment Rule Is the Least We Can Do For Our Students

The U.S. Department of Education today issued a final “gainful employment” rule, aimed at ensuring that students who attend for-profit and career colleges get lasting value for their time and hard-earned money, and U.S. taxpayers get a real return on their own investment in student aid.

On a call with reporters late today announcing the new rule, U.S. Secretary of Education Miguel Cardona said, “As we fight for greater college affordability, we must demand more accountability.” Cardona said, rightly, that the efforts the Department of Education has been making under President Biden to provide student loan relief, especially for students who were deceived by career colleges, won’t be enough if scam college programs remain in operation, creating new generations of victims. “Career training programs,” Cardona said today, “should lead to careers, not dead ends.”

The gainful employment rule, originally devised under the Obama administration, has been repeatedly attacked by the for-profit college industry and its lobbyists.

Corporate lawyers paid by the industry managed to get the initial version of the rule struck down by a judge, before the Obama team crafted a second, slightly stronger, version that the courts upheld.

Members of Congress, Republicans and Democrats, who take campaign contributions from the for-profit college industry, have tried to overturn the rule.

During the Trump administration, Secretary of Education Betsy DeVos, who staffed her office with former for-profit college executives, cancelled the rule entirely.

But despite the claims of all these defenders of the for-profit college industry that the gainful employment rule will destroy higher education in America, in fact the rule, which requires just a bit more from schools than either Obama version, is about the bare minimum that a responsible government agency could do to protect students and taxpayers from predatory abuses by colleges.

The gainful employment rule at last implements clear language in the federal Higher Education Act passed by Congress decades ago, requiring that all programs at for-profit colleges, and non-degree certificate programs at all colleges, “prepare students for gainful employment in a recognized occupation.”

The rule holds schools to that standard by essentially requiring that graduates earn enough money to be able to afford paying down the federal student loans they take out to pay for their educations.

More specifically, for a school program — in nursing, criminal justice, culinary arts, information technology, or other career field — to comply with the new rule, the share of its graduates’ annual earnings they need to devote to paying their student loan debt must be equal to or less than 8 percent of their income, or equal to or less than 20 percent of their discretionary earnings (meaning annual earnings above 150 percent of the Federal poverty guideline). In addition, at least half of graduates of a program must have higher earnings than a typical high school graduate in their state’s labor force who never pursued a postsecondary education.

Schools whose programs fail at least one of those tests must warn students that the program is at risk of losing access to federal aid. Programs that flunk the standards on the same metric twice in a three-year period will lose access to federal aid.

These metrics — basically, student loans can’t absorb more than eight percent of your income, and graduates must earn more than people who never went to college at all — are not high standards for a college program.

If you asked a person on the street if they would enroll in a school that performed worse than that, or if they would provide their tax dollars to fund a school that performed worse than that, they would laugh at you.

These standards are well below what a reasonable person would expect in terms of a return on investment for students, or a return on investment for taxpayers, or what a federal agency would expect of a government contractor, which is what schools participating in the federal student aid program effectively are. I also think the standard is well below what the relevant language in the Higher Education Act requires.

But the rule is way, way better than nothing. It will weed out the worst of the worst programs.  There is plenty of evidence that the two Obama versions of the rule, and the pending Biden rule, have pushed for-profit schools to eliminate some programs that consistently buried former students in debt and to reform other programs by lowering prices, increasing quality, and avoiding enrolling students whom a program is not strong enough to help.

The Department has the authority and the responsibility to expect at least the new rule’s performance outcomes for schools getting federal aid. That for-profit colleges have become so entitled that they could with a straight face demand continued access to federal aid and to low-income students, when these schools have performed so abysmally, reflects a decades-long failure of federal policy — a failure that Secretary Cardona today took a huge step toward correcting.

Fighting, as usual, to protect the worst performers in its sector, rather than those schools producing the best results for students, the for-profit college industry will now engage in its familiar march to destroy the gainful employment rule, by lobbying, suing, riling up the often-cowardly and selfish traditional education sectors, and spreading cash to buy as their cheerleaders mercenary Washington big-wigs, struggling former journalists, and pay-to-play think tanks.

The for-profit college industry will again whine that the rule will kill access to education programs for Americans. But by design the rule will kill access only to programs that clearly leave students worse off than when they started.

The for-profit college industry also will again whine that it’s unfair that the rule only applies to them. But, as noted, following the federal statute from which the rule derives its authority, the rule applies not only to for-profit colleges but also to certificate programs at non-profits. And to the extent the for-profit college industry complains that the rule doesn’t exceed the statutory mandate and apply to every program at every college, the reality is that the worst abuses, against the poorest students, have for decades been heavily concentrated at for-profit colleges.

Finally, the new rule does impose some accountability on colleges across the board by requiring them to publicly post data regarding their performance on gainful employment measures, even if they are not subject to the rule’s penalties.

It’s absolutely essential that a U.S. administration fight to protect students, and ensure that colleges getting federal aid help students build successful careers, rather than leaving students buried in debt they can never afford to repay. Donald Trump and his education secretary Betsy DeVos only helped the greediest owners of the worst predatory colleges. President Biden, Vice President Harris, Secretary Cardona, and their teams are standing up and doing the right thing. Students, taxpayers, and honest owners of cost-effective career colleges will all benefit.