New regulations promise to help students avoid programs that leave them with ‘poor career prospects’

The Department of Education has released gainful employment regulations that officials say will hold higher education institutions accountable and protect students from enrolling in expensive career-focused programs likely to saddle them with student debt, The Chronicle of Higher Education reports. The regulations will go into effect in July 2024, and the Department of Education will publish related gainful employment data beginning in 2025, according to Inside Higher Ed and Higher Ed Dive. Experts say the regulations will help ensure students don’t pay thousands of dollars for programs that don’t provide a return on their investment.

“We are fixing a broken system and making sure that students know, before they take out loans, when college programs have a history of leaving graduates with high debts, low earnings, and poor career prospects,” U.S. Secretary of Education Miguel Cardona said in a press release. “These protections are about ensuring career college programs live up to higher education’s promise as a pathway to better a life,” the U.S. Department of Education Under Secretary James Kvaal affirmed.

Financial and employment transparency

In May, the Biden Administration released a draft of the regulations, extending Obama-era affordability protections originally released in 2014. Those protections were eventually revoked by the Trump administration. Under the “gainful employment” rule, the new regulations are intended to protect approximately 700,000 students a year from enrolling in an estimated 1,700 low-performing career and technical programs that leave students with unaffordable loan payments and earnings that don’t surpass those of workers in their state without a postsecondary credential. The gainful employment rules apply to private for-profit colleges and certificate programs at all types of higher education institutions.

The regulations also prioritize the financial transparency needed to assess a program’s value, offering detailed information about net costs, earnings outcomes, borrowing amounts, and sources of financial aid for all for-profit institutions, as well as for-profit and nonprofit certificate and graduate programs. Unaffordable debt is most common for students enrolled in certificate and graduate programs, the Department of Education says. The proposed regulations initially required all undergraduate and graduate programs at private nonprofit and public colleges to submit information on student debt, but the final rules exempt undergraduate programs.

To receive federal student aid, programs at private for-profit institutions and certification programs at all types of institutions must show that the typical graduate spends no more than 8% of their annual income or 20% of their discretionary income on paying their student loans each year. Institutions must submit this information every year, and starting in 2026, they will lose access to federal aid if they fail to meet one or both of these standards for two out of three consecutive years. 

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