ED’s Gainful Employment Proposal: The Good, the Bad, the Ugly

Quality & Outcomes
ED’s Gainful Employment Proposal: The Good, the Bad, the Ugly

Current Gainful Employment regulations require programs at for-profit institutions and certain career and technical programs at all other schools to meet certain debt-to-earnings ratios of their graduates or face the loss of eligibility to participate in federal financial aid programs. This week, critical conversations about higher education accountability will be occurring when federal negotiators and U.S. Department of Education (ED) officials continue deliberations on re-regulating Gainful Employment. In advance of the upcoming meeting, last week ED released a “white paper”- a set of proposals to restructure the current Gainful Employment rule.*

So, how would ED’s proposed changes to Gainful Employment rules affect higher education accountability? Will it help or hurt students? Here is the good, the bad, and the ugly in ED’s proposal:

The Good.

Currently, gainful employment regulations require only programs at for-profit institutions and certain programs at non-profit institutions to report on graduates’ debt and earnings. ED’s proposal would require ALL programs at ALL institutions to report debt to earnings ratios of their graduates on a program-by-program basis. ED’s proposal represents a sea change in federal policy, and if this proposal becomes reality, students at ALL institutions will have more information about their higher education options than ever before in our nation’s history.

For example, students would then be able to compare similar programs at different institutions, where one program at an institution may produce high-earning graduates and others may struggle to equip students with the skills they need to earn a competitive salary. While earnings are not the only goal of higher education, it is common sense that students should be able to know and compare the likelihood that they will have the ability to successfully repay the debt incurred for a degree or credential at any particular program.

The Bad.

ED’s proposal would remove a current requirement for institutions to provide information on the debt to earnings ratio of a program directly to students and verify they received the communication. Today’s students deserve to have clear and accurate communication from required colleges. This proposal could possibly shortchange students at a time when they are demanding more accountability and greater outcomes.

The Ugly.

Students should not be able to continue to use federal financial aid at programs that saddle graduates with debt and don’t provide them the ability to earn a sufficient salary to pay it off. While perhaps not the perfect measure, the current Gainful Employment rule provides a much-needed backstop to ensure certain low-performing programs can’t continue to receive federal student aid if they continuously produce poor-quality outcomes. Unfortunately, ED’s proposal removes the federal financial aid penalty, which takes the teeth and accountability out of the regulation. This recommendation is likely to be the focus of much discussion by negotiators and advocates, whose concerns about an accountability rollback are well-grounded.

While ED’s proposal to eliminate sanctions would equate to an accountability rollback, the recommendation to expand program-level reporting would provide critical information to prospective students, families, taxpayers, and policymakers. This additional data may especially be useful to policymakers looking to evaluate the effectiveness of programs as Congress begins to tackle reauthorization of the Higher Education Act. Higher Learning Advocates hopes ED reverses courses on sanctions elimination, but maintains the wider and more useful reporting of earnings and debt levels by all programs, as this would be a much-needed data improvement.

*Editor’s note: For more on the history of the Gainful Employment rule, check out this EdSurge commentary by Allison Griffin and David DeSchryver of Whiteboard Advisors.