Department of Education Rulemaking to Define ‘Gainful Employment’

Published: March 12, 2014

With America’s student debt now more than $1 trillion and still growing, many borrowers face the likelihood of delaying their ability to begin their own households, buy a home or a vehicle. Further, in a tight job market, many new graduates are financially challenged to begin repayment even with their newly-acquired marketable skills.

For consumers enrolled in predatory career education programs – offered by for-profit colleges – onerous debt can be incurred without accompanying skills or license to begin a new career. Consumers may also be subject to a range of deceptive and high-pressure sales tactics to induce them to enroll and take out federal and private loans for these programs.

To address these concerns, the Department of Education is currently engaged in rulemaking to define ‘gainful employment’ at career education programs, including those at for-profit colleges. The goal is to ensure that program attendees are not saddled with loans they cannot repay. A strong rule could help rein in some of the worst performing programs that leave students with high indebtedness and few employment prospects.

A coalition of over 50 organizations with diverse memberships and interests are united in advocating for Department of Education rulemaking that addresses predatory career education programs. On February 4, this coalition detailed their shared hopes for reforms in a letter to President Obama. Key among those recommendations was including graduates and non-graduates in the metrics and improved debt-to-earnings standards. Additionally the coalition called for a process to deny federal financial aid eligibility to programs that fail to enable students to sit for relevant licensing examinations or fulfill other prerequisites for chosen occupations.

CRL offered the Department of Education several recommendations related to its gainful employment rulemaking. Specific concerns were expressed for repayment rates and industry practices. Citing applicable case law and related regulatory actions by other federal agencies, CRL called for repayment rates that would apply to all students, regardless of whether they matriculated or not. Lastly, CRL urged an accountability metric to ensure that federal financial aid was being used for gainful employment.

To learn more about gainful employment and the Department of Education, visit:
https://www2.ed.gov/policy/highered/reg/hearulemaking/2012/gainfulemployment.html