ED releases new gainful employment rule


The Biden administration on Wednesday late afternoon released final regulations to protect college students against certificate programs that leave them with unaffordable debt or no improvement to their earnings. The regulations also aim to provide students with more information to make decisions on enrolling in programs.

Editor’s note: This article presents a general overview of the news regulations. The American Association of Community Colleges will provide a more in-depth analysis in the coming days.

The revamped Gainful Employment (GE) rule will apply to certificate programs at all higher education institutions, as well as degree programs at private for-profit colleges. The goal is to shield students from career training programs that leave graduates with unaffordable loan payments or earnings no better than what someone with a high school diploma earns in their state, according to an Education Department (ED) fact sheet.

The GE framework will go into effect on July 1, 2024, with the first official metrics published in early 2025. The first year that programs may become ineligible to participate in the federal student aid program is 2026.

The Obama administration implemented the initial GE rule in 2014. The Trump administration later rescinded it.

The measure

To retain their Title IV eligibility, institutions must pass two separate metrics: a debt-to-earning rate and a new earnings premium test, which will measure whether the typical graduate from a program who received federal aid is earning at least as much as a typical high school graduate in the workforce in their state between the ages of 25 and 34. This is equal to roughly $25,000 nationally but varies across states, ED said.

“The earnings premium (EP) captures the extent to which postsecondary programs enhance a student’s earnings potential relative to not pursuing a college credential at all,” according to the fact sheet. “The vast majority of students cite improved earnings or job prospects as among the most important reasons they choose whether and where to attend college, and the earnings premium measures whether programs are meeting that basic expectation.”

ED anticipates that about 1,700 programs that enroll nearly 700,000 students per year will fail at least one of the two metrics in a single year. Nearly 90% of students in failing GE programs attend for-profit institutions, the department noted. According to ED’s estimates, most community colleges do not have certificate programs that would fail either the debt-to-earnings metrics or the new earnings metric. Of two-year public institutions, 93% have zero enrollment in programs that would fail the GE accountability metrics.

Some changes

ED did make a few changes in its rule based on public comments to its proposed rules released in May.

“We exempt institutions from all reporting requirements and coverage of the rule with no programs large enough to calculate the metrics underlying the GE program accountability framework,” ED said, noting this will alleviate reporting burdens for nearly 700 small institutions.

The new rules released Wednesday also include a new Financial Value Transparency (FVT) framework to provide students with information about the cost of certain postsecondary programs and potential earnings.

About the Author

Matthew Dembicki
Matthew Dembicki edits Community College Daily and serves as associate vice president of communications for the American Association of Community Colleges.
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