ED Proposal Scraps Gainful Employment
9/14/2018
On September 13, NACUBO, together with 21 other higher education organizations, joined the American Council on Education (ACE) in its comment letter to the Department of Education expressing concern about the decision to repeal gainful employment rules entirely. In the letter, ACE states that the gainful employment regulations are imperfect and need improvement, but that ED goes too far in its decision to eliminate such standards altogether, stating, “While data and transparency are very useful tools and have the potential to improve the higher education marketplace, they are not a substitute for the sanctions provided by the gainful employment rule.”
The Department of Education recently proposed the wholesale repeal of its gainful employment rules, Obama-era regulations designed to protect students from enrolling in programs that consistently failed to prepare graduates for the job market. These rules restrict Title IV eligibility so that only programs with qualifying debt-to-earnings (D/E) rates can receive federal aid. In place of gainful employment standards, the department instead proposed overhauling the College Scorecard, or a similar online tool, to include program-specific data for all colleges and universities receiving federal student aid under Title IV, a significant upgrade from the institution-level information the platform currently provides.
The Obama-era regulations subject non-degree programs at public and nonprofit institutions and all programs at proprietary institutions to gainful employment standards, which tie Title IV eligibility to debt-to-earning (D/E) rates. Gainful employment programs that neither pass nor fail this measure receive a probationary status, falling into the so-called “zone.” Programs that fail the D/E rates measure for two out of three consecutive years or have a combination of zone and failing overall rates for four consecutive years lose Title IV eligibility. In other words, programs need to earn a passing D/E rate at least once in a consecutive four-year period to remain eligible for Title IV.
ED raised several disparate concerns about gainful employment in its recent notice of proposed rulemaking and ultimately proposed scrapping the rule altogether. In its place, ED wants to create a more robust College Scorecard, or similar online tool, where students can go to a single portal to find program-level information for all Title IV schools. ED envisions that this tool will provide more accessible information on job outcomes for specific programs, including program-level earnings, debt, and other data. Schools with poor outcomes would not be penalized directly; however, students could use this information to make an educated decision about which schools or programs work best for them.
