After years of discussion, the Biden Administration’s gainful employment rule is out. The rule is a resurrection of an Obama-era policy that specifically targeted private, for-profit schools. The new approach doesn’t target for-profit schools, but most of the weight of the rule will likely fall on them.
This time around, the gainful employment rule (and its consequences) will also apply to public and private universities and community colleges. The gainful employment rule seeks to eliminate both predatory lending among for-profit educational institutions, and educational programs that don’t result in gainful employment. The Biden Administration defines gainful employment as employment that enables graduates to afford their educational debt payments.
Schools also face a different set of consequences. During the Obama administration, failure to meet the gainful employment standards was essentially a death sentence for the offending school. In the GE reboot, the US Department of Education makes the assessment of – and applies the penalties – directly to programs that don’t pass muster.
A school could have 10 programs that meet the Department of Education standards, and one that does not. Under the new rule, only the offending program will lose its federal financial aid privileges. Under those circumstances, schools with sub-standard programs will likely simply cancel the problem program. The test will measure the program over a period of 2-3 years, and apply sanctions only when the program fails 2 out of 3 consecutive years.
Of particular interest to the Biden Administration are certificate programs. Pre-adoption tests of the rule found that 50% of all certificate programs would fail the debt-to-earnings test. More to the point one out of five certificate programs offered by community colleges would also fail this test.
Gainful employment disclosures may be painful
At WCC, that could pose a peculiar problem. WCC hosts the WTMC high school program. Students there must earn an associate degree or certificate to earn their high school diploma. If 20% of WCC’s certificate programs didn’t pass the sniff test, what would be the consequences to WTMC students enrolled in them? Worse than not being able to finish a certificate, these students might not be able to graduate from high school. Without a high school diploma, these students may not be able to transfer to a four-year university either.
WTMC aside, the loss of 20% of the copious number of certificate programs would impact a large number of students. To avoid this, it is time for WCC to take a hard look at the employment outcomes for their graduates and develop strategies to increase the market value of its low-value programs.
Photo Credit: Oregon Department of Transportation, via Flickr
