The U.S. Department of Education’s negotiated rulemaking committee is expected on Monday to discuss the highly controversial topic of gainful employment regulations.
The regulations, finalized in 2014 under the Obama administration, were created to ensure that programs resulted in good outcomes for students by sanctioning for-profit and certificate programs that left students with excessive student loan debt relative to earnings after graduating. Critics said the regulations unfairly targeted the for-profit higher-ed sector, and some argued that the reporting requirements were too burdensome for schools. Former Education Secretary Betsy DeVos rescinded the regulations in 2019. Now, the Biden administration is giving gainful employment another look and higher-ed experts and analysts are measuring the pros and cons of such regulations.
Andrew Gillen, senior policy analyst for Next Generation Texas, for example, recommends instituting more accountability across all academic programs, regardless of a college’s tax status. Going to college is a big investment, after all, and programs should produce good results for students, Gillen said. The debate over reform is split among those who want increased accountability for all higher-ed institutions and those who believe that for-profit colleges need more oversight than other sectors. Gillen's research, which published in a new report Monday, found that for-profit colleges shouldn’t be the only ones held to performance standards — applying the regulations almost exclusively to for-profit programs caught only 11% of the programs that leave students with excessive loan debt, he said. He argues that many nonprofit programs also leave students strapped with debt and often in low-salaried jobs.
"We don't have a problematic sector, we have problematic programs and they are spread throughout higher education," Gillen said in an interview.
Student advocacy groups agree that more accountability is needed in higher ed. For-profit schools, for their part, want the regulations enforced evenly across all higher-ed sectors. In a statement to The Business Journals, Nicholas Kent, senior vice president of policy and regulatory affairs of the for-profit college trade group CECU, said that the proprietary sector "fully supports accountability and transparency rules that protect all students and taxpayers from programs that leave graduates with unmanageable debt levels relative to their income."
"The ongoing rulemaking is an opportunity for the Biden administration to develop common-sense regulations that focus not on an institution’s tax status or the types of programs it offers, but whether students receive a good return on their investment," Kent said. "Resurrecting the gainful employment regulations, which would fail to protect over 75 percent of students enrolled in postsecondary education, would be a missed opportunity for this administration to protect millions of degree-seeking students attending public and nonprofit institutions.”
Not all agree. Analysts at the Brookings Institution and House Education and Labor Committee Chair Bobby Scott have questioned for-profit institutions' practices and have called for more oversight.
Initially passed in 1965, the Higher Education Act includes a requirement that certain college programs “prepare students for gainful employment in a recognized occupation” to be eligible for federal financial aid, Gillen wrote. “Gainful employment,” though, was not really defined until 2011 when the Obama administration released a first set of regulations, which were thrown out by the courts and then re-released in 2014. Programs were then tested under two debt-to-earnings measures and received a “pass” or “fail” grade or fell in a probationary category. Programs that failed for two out of three years or that did not pass for four consecutive years lost eligibility to participate in federal financial aid programs, Gillen said. The idea was to reduce the amount of financial aid distributed to low-performing programs.
There was only one year of data released before the regulations were rescinded under the Trump administration, so no program’s financial aid eligibility was terminated. Many higher-ed organizations advocated for reform rather than doing away with the program at the time. About 8% of the programs failed and 98% of the failures were concentrated among for-profit colleges. Gillen said that the data is misleading, though, because few nonprofit programs were included in the regulations (only non-degree certificate programs).
“This figure has led to the erroneous impression that college programs that leave their students with excessive student loan debt are almost exclusively found at for-profit universities,” Gillen wrote.
Gillen said that the program had two positive aspects that could be expanded upon to improve the higher-ed sector today. First, the gainful employment requirement for the first time held specific programs accountable for student outcomes, rather than penalizing the entire school, Gillen said.
“The bachelor's degree in theology could be sanctioned, whereas the bachelor's degree in nursing would be fine,” Gillen said in an interview. “So, that was a really big improvement because if you don't do that, you essentially let low-performing programs at good institutions escape accountability, while at the same time you punish good programs at lower performing institutions.”
In addition, the regulations marked the first time that the federal government considered graduates’ earnings relative to their student debt as an accountability metric.
“Earnings, of course, are not everything when it comes to college, but 90% of students go to college to get a better job, to earn more money or something career-related,” Gillen said. “So, it is a very important outcome for most students and needs to be in our accountability toolbox.”
However, the regulations were “selectively applied,” Gillen said, and many saw gainful employment as a way for the government to punish for-profit colleges and drive some out of business.
“There were a lot of logical inconsistencies,” Gillen said. “You could have a bachelor's of nursing program at a for-profit that was subject to the regulations and a bachelor’s of nursing at a public university would not be. It was really this selective targeting that was an issue. It also was used to make the case for shutting down the whole for-profit sector.”
