The Biden administration is cracking down on college programs that don’t adequately prepare graduates for gainful employment. On Wednesday, the U.S. Education Department announced new federal regulations that aim to hold for-profit colleges accountable for student outcomes.
“Higher education is supposed to be an invaluable investment in your future. There is nothing valuable about being ripped off or sold on a worthless degree,” Education Secretary Miguel Cardona said at a press briefing announcing the final rules.
The purpose of the gainful employment rule is to protect students from investing poorly in non-degree, certificate programmes and for-profit universities. Programmes may lose their access to federal funding if graduates don’t receive enough compensation or if their salaries are insufficient to cover their student loan installments.
“Much too frequently, parents and students make decisions without having a clear idea of which schools are the best value for their money,” according to Cardona. “This regulation would ensure that students are aware that they are about to enrol in programmes that are known to leave graduates with unmanageable debt and unfavourable career prospects.”
Programmes will need to show that graduates can pay off their student loans and earn more money than an adult in their state who did not attend college starting on July 1, 2024, the first day of classes. Before taking out federal student loans, students will receive a notice if a programme violates either of those benchmarks. If a program fails the same metric twice in a three-year period, it will lose eligibility to collect federal student aid money from students. 2026 is the first year that a programme may experience this.
Carolyn Fast, the director of higher education at The Century Foundation, states that “today’s action… is the strongest action ever taken by an administration to hold low-quality programmes accountable.” Fast took part in the regulatory process as well. “It directs students towards programmes with high value and holds institutions responsible for providing students with a quality education and preparing them for secure careers in the future.”
According to data from the Education Department, over 1,700 programmes are expected to fall short of the requirements outlined in the regulation (PDF). Few non-degree programmes would fail, despite the fact that many nonprofit public and private universities offer them, according to the government. Instead, many of the failing courses would be offered by for-profit universities.
Bachelor’s degrees and the majority of graduate programmes offered by conventional public and nonprofit universities are exempt from the legislation, which only applies to for-profit institutions. The rule’s opponents claim that this is unjust.
“The Department has hurriedly implemented and weaponized a final Gainful Employment rule against for-profit institutions, ignoring crucial issues once again,” stated Jason Altmire, president of Career Education Colleges and Universities, a national organisation that advocates for for-profit colleges.
Under the Obama administration, gainful employment became a federal regulation for the first time in 2014. Legal objections were raised against it, and after the Trump administration assumed power, former Education Secretary Betsy Devos significantly postponed and ultimately eliminated the rule.
With an amended proposal that drew thousands of comments, the Biden administration revived the rule this spring. Many of the submissions came from associations with the cosmetology sector, including educational institutions that have historically had trouble maintaining favourable debt-to-earnings ratios.
The new rule may encounter political obstacles due to its timeliness: Between now and 2026, a number of things may occur, such as a Republican regaining the White House, that would prevent the first programmes from being eligible to receive federal student aid.
