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The U.S. Education Department has proposed to again impose regulations to measure the gainful employment of graduates of for-profit colleges and nondegree programs at nonprofit colleges.
The proposal was made in advance of next week’s continuation of negotiated rule making on various student aid regulations. Negotiated rule making requires a consensus among those who will negotiate the rules, including representatives of for-profit colleges, who are likely to oppose anything the Biden administration proposes on this topic. However, if the parties fail to reach an agreement—which is expected—the Education Department may propose regulations that it wants (although those regulations will possibly be challenged in court).
The Education Department proposals would return to a system of measuring earnings versus debt of graduates of college programs. But they also would require all institutions, including those that aren’t governed by gainful employment, to provide the department with information on completion rates, debt and other trends by program.
Gainful employment has been the subject of intense debate for more than a decade. The department first proposed rules on the subject in 2011. Those rules were based in part on the debt that graduates incurred in attending the program relative to the earnings they received after completion. Programs that were costly and for which students borrowed a lot to pay tuition but generally failed to earn much after completing were punished by eventually losing eligibility for receiving federal student aid payments. For-profit higher education representatives criticized the rules as being too complicated, among other things. The regulation was reissued in 2014 following a court challenge to the original rules, based on a similar debt-to-earnings structure for gainful-employment programs.
When the data were first released in January 2017, over 800 programs, collectively enrolling hundreds of thousands of students, did not meet the department’s standards.
In 2019, the Education Department (during the Trump administration) rescinded the 2014 rule nearly in its entirety.
The last time negotiated rule makers considered the question of gainful employment, in January, the department didn’t make a formal proposal.
Instead, the department just issued a series of questions, such as, “What metric(s), and what threshold(s) (pass/fail cutoff points) in those metric(s), best distinguish between programs that prepare students for gainful employment versus those that do not, including at different credential levels? For instance, we seek feedback on the use of repayment rates; debt-to-earnings rates; earnings thresholds; and other measures.” And “What are the benefits of allowing institutions multiple consecutive years of failing a metric based on post-college earnings? What are the risks of allowing multiple consecutive years?”
The proposal on covering all colleges (as part of the gainful-employment rules) is as follows: “On a website hosted by the [education] secretary (also where gainful employment warnings will be posted), students and prospective students will be able to access key information to help inform their decisions about where to enroll and what to study. This website may provide information on completion rates, median debt, loan repayment, and median earnings, as well as critical context for that information, such as the occupations for which the program prepares students, the length of the program, enrollment in the program, the cost of the program, and borrowing rates. Institutions will provide the information needed to access this website to prospective and enrolled students to help inform college choices.” (Some of this information is currently in the College Scorecard.)
Although that is the only part of the gainful-employment regulations that the Education Department has proposed applying to all colleges, several observers of the debate said it was significant.
In prior discussions of gainful employment, representatives of for-profit colleges have said repeatedly that they would only accept rules that applied to all colleges.
“Requiring all institutions to provide robust disclosures with student outcome data is a step in the right direction. However, the department’s gainful-employment framework is only targeted at for-profit institutions and nondegree programs … We continue to call on the department to use the quality assurance authority to hold all institutions in all sectors of higher education accountable,” said John Huston, vice president of legislative and regulatory affairs at Career Education Colleges and Universities, the trade group representing for-profit institutions.
David Baime, senior vice president for government relations at the American Association of Community Colleges, supports the proposal.
“Community colleges have long maintained that the types of disclosures now being proposed by ED should be developed for all higher education programs, if they are to be required for those falling under the gainful-employment definition,” he said. “No doubt, all institutions will be looking closely at the processes that the department proposes to use to generate this information, because the costs of implementation can be considerable. But we know that students, families and policy makers are hungry for better data.”
Jon Fansmith, assistant vice president for government relations at the American Council on Education, agreed. He stressed that the details of the proposal, which have yet to be released, were important. But, he said, “The more information you can put in consumer’s hands, the better.”
Fansmith said, “It’s always hard to comment on something that will be changing.” But he said the proposals over all show the seriousness of the Biden administration in moving beyond the Obama administration to go after colleges that have tried “to evade the regulations.”
