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U.S. Department of Education, Higher Education Experts Debate “Gainful Employment”

Today the U.S. Department of Education sat down with higher education experts to continue debating “Gainful Employment,” a rule that looks at the successes and failings of career education programs.

The Education Trust’s Lynn Jennings answers important questions about the rule:

1. What is Gainful Employment?

Gainful employment is short-hand for a provision in the Higher Education Act that requires that all career education programs receiving federal student aid dollars prepare their students for employment in a recognized occupation. The actual term “gainful employment,” however, has never been defined. This means that although the law requires this focus on preparation, the Department of Education has never been able to effectively enforce the law. And yet, it is precisely this preparation for a recognized occupation that is the reason these programs are allowed to receive taxpayer dollars. That’s why the Department is in the process of working to create a meaningful definition of “gainful employment” that it can use to hold programs accountable for student outcomes that warrant the millions of taxpayer dollars programs receive.

2. Does this regulation target for-profit colleges?

No. Community colleges and even some traditional, four-year institutions that offer career education programs will be regulated under the Department’s gainful employment rule. It is true, however, that for-profit institutions have so many career education programs that this rule is likely to impact them greatly.

And there’s a reason why regulating for-profit programs is important. They use deceptive marketing to get students to enroll. Students often can’t find a job after they leave. Disadvantaged students are preyed upon. Yet, these schools receive large amounts of taxpayer dollars. (In the 2010-11 academic year alone, for-profit colleges received $32 billion from the federal government. And they play a dangerous role in feeding the current student debt crises, which has climbed to a frightening 1.2 trillion dollars. For example, for-profit colleges enroll only about 11 percent of all U.S. college students, but they account for nearly half of all student loan defaults. 

When schools consume that much taxpayer money and students default at rates that high, it is reasonable for the federal government to look at the programs and ask the question, what are we getting in return for our investment?

3. Why is the Department looking specifically at student outcomes?

Students who enter and pay for a career education program are seeking training that prepares them for a specific career path. Yet, far too many students leave these programs with enormous amounts of debt and no meaningful credential or preparation. This disconnect hurts students, but it also hurts taxpayers, and our economy. 

To try and alleviate this disconnect and ensure that students get the education they pay for, the Department is focusing on student outcomes. That focus is shining most brightly on for-profit programs because they have done a particular disservice to students, especially low-income students and students of color. Currently, 18 percent of African American and 12 percent of Latino students begin their college career at a for-profit school.  And a full 25 percent of federal Pell Grant funding (and corresponding students) attend for-profit institutions. With our most disadvantaged students attending these institutions, the Department has a responsibility to ensure that the taxpayer dollars it distributes are used well and serve the students they are intended to assist in completing college.

4. Won't denying these programs access to federal student aid dollars ultimately hurt low-income students and students of color?

No. Poorly run, predatory programs hurt students. Such programs leave students underprepared for the work they thought they were being trained for and cause tremendous financial harm. A well-run program that provides the training its students expect and deserve will have no problem satisfying the Department’s proposed accountability criteria. In short, the Department’s regulatory action aims to protect students from the harm of ineffective and predatory programs, and taxpayer dollars from bad investments.

5. What is going to happen next?    

This week the Department convened its last meeting with stakeholders — representatives from higher education, education and consumer rights advocates, students, and academics — to develop a definition and standards for “gainful employment.” The Department has been listening intently to the stakeholders’ input and is trying to get consensus on the right measurements to use. If the stakeholders and Department cannot come to consensus, then the Department will propose its own rule on how to define and measure the term. Once the proposed rule is made public, there will be a 30-day comment period during which anyone can provide his or her thoughts on the Department’s proposal. The Department must then take all of those comments under consideration before it issues a final rule on what constitutes “gainful employment in a recognized occupation.”

6. What do you hope will happen?

I hope we will have a strong rule that truly holds career education programs accountable for providing students a high-quality education that leaves them prepared for a career that provides a family-supporting wage. A solid rule would be a win-win for students who are currently being hit twice — a credential that does not give them the skills they paid for and outrageous amounts of student debt that restrict or delay their life choices. A strong rule would also be good for taxpayers because they will know that their investment in higher education is not being wasted on programs with little to no educational value.