College & Workforce Readiness

Final Gainful-Employment Regs Out Today From Ed. Department

By Caralee J. Adams — June 02, 2011 1 min read
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Students considering a for-profit college will now have a better picture of the value of their investment before enrolling with the release today of the Obama administration’s final “gainful employment” regulations.

In a statement from the U.S.Department of Education, it was announced that career colleges will risk losing access to federal student aid if they do not comply with the new standards, which will be phased in over the next four years.

The goal is to provide students with information about the prospect for employment following graduation, so they don’t fall into the trap that so many have of getting into massive student-loan debt and not able to get the jobs they hoped for with their degrees or certificates.

Under the regulations introduced today, a program would be considered to lead to gainful employment if it meets at least one of the following:

-At least 35 percent of former students are repaying their loans (defined as reducing the loan balance by at least $1);

-The estimated annual loan payment of a typical graduate does not exceed 30 percent of his or her discretionary income;


-The estimated annual loan payment of a typical graduate does not exceed 12 percent of his or her total earnings.

The initial proposed rules were introduced last July. Considerable public debate followed, with for-profit colleges represented by the Association of Private Sector Colleges and Universities.

In a statement released yesterday, the APSCU said:"We remain very concerned that the gainful-employment regulation, while reflecting the fact that the department has listened to the sector and made changes to its initial proposal, is still using the same ill-advised metric approach to this matter and is clearly outside of its statutory authority.”

UPDATE 11:25 a.m.:
The National Black Chamber of Commerce has come out with a statement in opposition to the new gainful employment regulations claiming they will unfairly harm minority students.

The Leadership Conference on Civil and Human Rights, which represents 200 national organizations promoting civil and human rights, issued a statement in support of the new rule today, noting is was “an important and necessary step for protecting students and taxpayers from being ripped off by unscrupulous career education programs.”

A version of this news article first appeared in the College Bound blog.