U.S. Department of Education Plans to Roll Back Gainful Employment Rule

U.S. Department of Education Plans to Roll Back Gainful Employment Rule

On August 10th, the U.S. Department of Education (ED) released a proposed regulation that would repeal Obama’s administration’s gainful employment rule (GE).  The regulation would have withheld federal funding from vocational programs that left graduates struggling to repay student loan debt.  ED has released a notice on its website that details the rollback of GE and provides a 30-day period for public comment.

The regulations, which were effective on July 1, 2015, sought to determine whether an academic program properly prepared students for “gainful employment in a recognized occupation” by implementing a debt-to-earnings accountability metric. Programs that failed to meet the defined standards for consecutive years would be ineligible for Title IV student aid. While no community college programs were found to be failing under the debt-to-earnings metric, 787 programs at proprietary institutions were marked as failing in 2015. The GE rule also includes certain reporting and disclosure requirements on performance and outcomes, such as costs, earnings, debt, and completion rates. Those reporting requirements (which had already been temporarily suspended by ED) are also slated to be repealed.

As a replacement, ED proposes expanding data on the ‘College Scorecard’ website, to include programmatic level data, though the scorecard website is not required by any law or regulation. That means the Trump administration’s promise to expand the data published on it isn’t binding.  ED mentioned the following reasons for repealing GE, including, findings that the debt-to-earnings measurement was inappropriate for determining Title IV eligibility; inconsistencies in reporting on job placement rates; the burden of certain disclosures; and the disparate impact the GE regulation has had on certain academic programs. The Trump administration contends that eliminating the Obama-era “gainful employment” regulation will allow the Education Department to treat colleges more “fairly.”

The notice also includes a cost estimate for the repeal of GE. The Office of Management and Budget (OMB) estimates that millions of dollars would be saved annually from a reduction in reporting requirements. This includes an estimated $174 million in savings by institutions. The notice also delineates the net cost to the Pell Grant program and the Direct Loan program. Current Pell Grant and loan cost estimates include the assumption that many academic programs will be ineligible for Title IV aid over the next decade under the GE accountability standards. With the repeal or the GE rule, OMB estimates that the cost of the Pell Grant program will increase $4.5 billion over the next decade, and the cost of the Direct Loan program will increase $848 million over the same time period.

Senate Health, Education, Labor, and Pensions (HELP) Committee Chairman Lamar Alexander (R-TN) praised Ed Secretary Betsy DeVos for ending a regulation that targeted for-profit schools and released a statement concluding that the proposal by the Department of Education gives Congress the opportunity to improve accountability at colleges.  In contrast, U.S. Senator Patty Murray (D-WA), ranking member of the Senate HELP Committee, released a statement on the Department of Education’s proposal to eliminate the gainful employment” rule and believes that for-profit colleges will be the beneficiaries.  Rep. Bobby Scott (D-VA), ranking member on House Education and the Workforce Committee, said that the Trump administration is “violating its duty to faithfully execute the laws passed by Congress” by repealing the Obama-era regulation without any proposed replacement. He believes that while the Trump administration can eliminate the Obama-era rule that set clear standards for enforcement, it cannot discard the legal requirement for schools to provide their students with a worthwhile education.

The official notice will be published in the Federal Register soon.


Should you have any questions regarding the Gainful Employment repeal issue, please do not hesitate to contact me at 202-596-8384 rhamm@hammconsulting.com.