One Year Later, “Gainful Employment” Still Looks Too Weak

About a year ago, the Department of Education released its highly-anticipated “Gainful Employment” rules, which were meant to solve the problem of students spending a lot of money on job-preparedness programs that didn’t actually prepare them for jobs. The basic idea was that if too many of a school’s graduates were left unable to pay back their loans, the school would stop being eligible for federal loans.

Unfortunately, the rule that ultimately came down from the department was heavily watered down compared to earlier proposals, thanks to intense lobbying from the for-profit industry. One criticism of the final rule is that in order to lose funding, programs will have to fail to meet three student-loan-related benchmarks for three years in a row, starting in 2013. That means the earliest a program can lose funding is 2015.

So we’ll have to wait until then to see the first actual results of the gainful employment regulations. But this week, the Department of Education released the relevant data for this year, for informational purposes only. The results are striking: 193 programs around the country are not meeting any of the loan-repayment standards, all of them at for-profit schools. That represents about 5 percent of programs that the department looked at; officials had previously said they expected the number to be closer to 8 percent (The Chronicle has a very good tool to let you look through the specific data).

193 programs is a lot, but in all likelihood, far fewer than that will end up losing funding. A program will only run afoul of the regulations if it keeps those numbers too high for three years in any four-year period. Many programs will no doubt be able to bring their numbers up just enough to continue qualifying for federal funds, either in 2014 or 2015. And any schools which meet the regulations now are “safe” for at least another three years.

So in the end, I think this year’s data shows that critics of the for-profit industry were right to be concerned last year. The gainful employment rules still look like they will end up affecting very few schools, and thus, protecting far fewer students than some had originally hoped.

Your comments are welcome. They must be relevant to the topic at hand and must not contain advertisements, degrade others, or violate laws or considerations of privacy. We encourage the use of your real name, but do not prohibit pseudonyms as long as you don’t impersonate a real person.