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.