Reinstatement of the Department of Education’s Gainful Employment rules aim to reduce the number of failing for-profit educational programs. However, proposed new earnings metrics may catch publicly funded community college certificate programs. Failing programs would no longer be eligible to receive federal financial aid.
For-profit colleges have been under fire for their high costs, lacking accreditation, and non-transferrable credits. Despite these clear disadvantages, students have flocked to these institutions for technical and vocational education opportunities.
In part, that’s because publicly funded community colleges have stopped investing in occupational and technical education. Citing everything from high cost to low enrollment, community colleges have done their level best to eliminate career and technical education programs. That was the opening that private, for-profit schools needed to step in and fill a void.
In doing so, these schools created a financial aid nightmare for students, many of whom ended up owing tens of thousands of dollars for essentially worthless degrees. The Obama administration implemented “Gainful Employment” rules that required schools to demonstrate that their graduates were gainfully employed after completing an educational program. The purpose of the “debt-to-earnings” rule was to document the students’ abilities to earn enough to repay their student loans. Failure to meet this requirement would render schools ineligible to participate in Title IV financial aid programs. Seemingly overnight, some of the largest for-profit schools in the country closed their doors for good.
The Trump administration eliminated Gainful Employment requirements, and this enabled for-profit schools to flourish once more. Recently, the Biden administration signaled that it intends to re-implement the Gainful Employment requirements with some tweaks. The Gainful Employment reboot would target individual academic programs, rather than entire schools. It will also change the yardstick that defines Gainful Employment.
Gainful employment measures will change
A recent study by The Institute for College Access and Success predicts that about 600 programs offered by for-profit schools would fail the existing debt-to-earnings standard of the Gainful Employment rules. However, the new rules include a comparison of earnings by program graduates to those of high school graduates. In other words, the new metrics measure income gains attributable to a particular program of study.
Using the high-school-earnings measure, the number of programs that would fail the high school earnings test would more than double, to about 1,300 at for-profit schools.
So, that begs the question: how many programs would fail at publicly funded community colleges? Glad you asked. Under the debt-to-earnings standard, about a dozen programs would fail at publicly funded community colleges. Using the new high-school-earnings standard instead, sixteen times the number of programs fail the Gainful Employment test.
It is easy to point out the glaring failures of private, for-profit colleges. But the new Gainful Employment standards will reveal some uncomfortable truths about programs at publicly funded community colleges.
The study found that half of all certificate programs failed the new high-school-earnings test. Specifically, one out of every five certificate programs offered at publicly funded community colleges would not pass the earnings test. (Side note: Washtenaw Community College issues more certificates than any other community college in Michigan. It issues so many certificates that the Department of Education now classifies it as a “certificate school.”)
The new Gainful Employment rules are coming.
Photo Credit: Lance Robotson , via Flickr