The U.S. Department of Education is proposing a “gainful employment” rule that could severely limit access to much needed career training for hundreds of thousands of students.
The proposed rule requires individual programs at private sector colleges (and on a more limited basis, some programs at community colleges) to meet restrictive standards regarding student borrowing and loan repayment. Programs that fall short of these standards would eventually lose the right to participate in the federal government’s Title IV student lending program. This in turn would reduce access to career training programs, mainly for minorities and those with low incomes.
This complicated proposal redefines “gainful employment” to mean that an educational program must:
- Ensure that on average, debt incurred by program graduates does not exceed a certain percentage of income.
- Ensure that a certain percentage of borrowers are paying both principal and interest on their student loans.
Many independent experts on higher-education finance, such as Dr. Mark Kantrowitz of finaid.org, have said that the draft “gainful employment” rule is flawed. Even the Department of Education has said it currently lacks the income data and repayment rates needed to calculate the impact of the regulation and that the formula may be “difficult to reproduce accurately.”
Independent analysis by the Parthenon Group has found that the Department of Education has significantly underestimated the impact of the rule. Parthenon has found that educational programs currently serving up to one million students would be made ineligible for federal financial aid and that up to 100,000 Americans would lose their jobs if the proposed rule is adopted.
We owe it to thousands of Americans who are in need of career training skills to get the math right and have all the information, rather than rushing to action on this regulation.
Read more about the real impact of the proposed rule here.
