Wednesday, April 14, 2010

Gainful Employment Update

by Daniel L. Bennett

I've written in the past (here, here) about the potential negative implications of the Department of Education's proposal to define gainful employment - a regulation that requires for-profit colleges to place their students in career fields related to their program of study. On March 22, 18 Congressional members sent a letter to ED Secretary Arne Duncan, urging him to reconsider. Apparently the message that the proposal is a disaster waiting to happen is started to resonate at the ED. Yesterday, there were reports from Investor's Business Daily that:
The Education Dept. has proposed exemptions to its so-called "gainful employment rule" that aims to limit student loans so they don't greatly exceed projected salaries. The exemption would apply to programs with a graduation rate of more than 50% and a placement rate over 70%.
and the Wall Street Journal reported:
The draft, apparently sent from the DOE to the Office of Management and Budget for review, isn't a public document but analysts at Credit Suisse and Signal Hill reported it included an exemption for institutions with a 50% completion rate and, of those who finished, 70% job-placement rate. That would reintroduce an exemption that had appeared in earlier drafts before being cut, the analysts said, and lower the completion rate from the previous 70% threshold.
However, according to a story from Inside Higher Ed:
the department's proposed regulations would leave intact language -- on which federal negotiators failed to reach agreement in February -- that would require that debt repayments of recent graduates of for-profit vocational programs be no more than 8 percent of the graduates' annual salaries.

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