Return to the Latest

The Gainful Employment Rule Empowers Students – Why Are the Dept. of Education and GOP Lawmakers Trying to Kill It?

Over the past six months, the Department of Education and GOP lawmakers have declared all-out war on the Gainful Employment (GE) Rule.  The rule was finalized in 2015 and requires that all programs offered at for-profit institutions and non-degree programs at non-profit or public institutions lead to gainful employment. This is measured by comparing graduates of each program’s median student debt and median earnings.

Last summer, the Department took steps to undermine the GE rule, by calling for a new negotiated rulemaking period and delaying the compliance deadline for Gainful Employment by one year. In December 2017, the House Education & Workforce Committee passed the PROSPER Act. The bill would kill the Gainful Employment (GE) Rule and prevent future administrations from regulating career and technical programs and cutting off federal funds for low-quality programs. Now just last week, the Department further weakened the GE rule. Under newly revised disclosure rules, institutions are no longer required to report median earnings data of their graduates.

In addition to protecting students (and taxpayer dollars) from these programs, the GE Rule, and the data it collected, informed consumers of the debt and income of thousands of career and technical programs. Without the GE Rule, these bad actors will continue to prey on students, and students will not be empowered with key information to make better decisions.

So why are the Department of Education, through a negotiated rulemaking process already under way, and GOP lawmakers, in their new Higher Education Act reauthorization plan, trying to kill it?

Gainful Employment Data Empowers Consumers to Examine Their Options

The Gainful Employment Rule is an important bulwark against predatory colleges and also provides information which creates better and more informed consumers. In October, eighteen state Attorneys General filed suit against the Department of Education for refusing to enforce the Gainful Employment Rule. The states’ lawsuit explicitly notes the importance of Gainful Employment data as a source of consumer information. They argue that GE provides students with “accurate information” so that they “fully understand the financial implications of choosing to attend” a given school or program. The states also argue that delays in implementing GE deprive students of “adequate information” which may influence their choice to attend a school with better outcomes.

Senator Dick Durbin noted the importance of these data in a recent letter to Secretary DeVos. Despite the renegotiation process, Sen. Durbin notes, the Department is still obligated to collect and release a second round of data. Failing to do so puts hundreds of thousands of students and millions of taxpayer dollars at risk.

As an example, consider a prospective student in Austin, Texas, who decided to pursue a professional certificate to be a pharmacy technician (Table 1). She narrows her decision to three schools in her area that offer that program: Austin Community College, Southern Careers Institute, and Le Cordon Bleu College of Culinary Arts. Thanks to the Gainful Employment Rule, she has the opportunity to examine the overall performance of each program. She can see the average debt load of students in each program, the median annual earnings of students in each program, and whether the program passed or failed the rule.

A graduate of Le Cordon Bleu’s pharmacy technician program could expect annual earnings of $15,793. That is barely more than the federal minimum wage of $7.25 per hour, in exchange for over $15,000 in student loan debt. Had that same student gone to school only 10 miles away at Austin Community College, she could expect to graduate with no debt and earn significantly more than their for-profit attending peers.

 Table 1 – Debt and Earnings by School

 School Name

School Type

Program Name

Total Average Debt

Median Annual Earnings

Pass/Fail

Austin Community  College

Public, 2-3 years

Pharmacy Technician/Assistant

$0

$25,857

Pass

Southern Careers    Institute

Proprietary, less than 2 years

Pharmacy Technician/Assistant

$6,890

$19,940

Pass

 Le Cordon Bleu College of Culinary Arts

Proprietary, 2-3 years

Pharmacy Technician/Assistant

$15,206

$15,793

Fail

Young Invincibles’ analysis of 2015 Gainful Employment data from the Department of Education’s Office of  Federal Student Aid

Our student can see that Austin Community College’s pharmacy technician program has far better outcomes than the for-profit institutions. She can avoid making a costly and life-altering mistake because this data is collected and made available.

The Gainful Employment data empowers this student to make a better decision. Though the rule only cuts off funding after the damage has been done, it can act as a spotlight and force companies and colleges to be transparent to their students. We shouldn’t be surprised that hundreds of for-profit college campuses, including the entire Le Cordon Bleu chain, have closed their doors rather than face the data and the loss of their Title IV funding.

Gainful Employment Data Empowers Students to Maximize Their Chances for Success

When the Gainful Employment Rule was first introduced, some advocates were concerned that debt-to-earnings would appear artificially high for community colleges due to the relatively few students who take out loans, that the difference between academic and vocational programs is not always clear, and that the rule would fail to account for students who transfer from a 2-year university into a 4-year university and thus appear to have no income. These concerns appear misplaced. For-profit schools make up 66 percent of the regulated programs (Figure 1) but account for 98 percent of the failed programs (Figure 2) and 94 percent of near-failing zone programs. Community colleges make up 25 percent of the regulated programs yet have no failing programs and only 1 percent of near-failing zone programs.

Figure 1 – Programs Regulated under GE by School Type

Figure 2 – Programs Failing under GE by School Type

Students can also rely on Gainful Employment data to determine which types of programs will set them up for success or failure. The programs with the highest failure rate are: visual and performing arts (48 percent), communications technologies (35 percent), and legal professions and studies (23 percent). That’s not to say that students should forego enrolling in these programs or at these particular types of schools. A prospective visual arts student may decide to conduct a deeper search to find a program with lower costs and higher earnings potential. Conversely, every transportation, psychology, and agriculture program measured under the rule, across institutions, received a passing grade. With access to the data, students can see which programs to be weary of and which have better outcomes.

Young Invincibles is engaging young adults to support the GE Rule. On December 4th, YI teamed up with Higher Ed, Not Debt to drop off over 2,000 petition signatures at the Department of Education in support of the Rule. The fight is far from over though, as the PROSPER Act has moved out of the House and the Gainful Employment Rule negotiated rulemaking is underway.