The “gainful employment” definition was established in regulations developed to stop program abuse occurring largely in the career college sector.
Department officials were concerned that a significant number of gainful employment programs were not providing students the skills needed to gain employment in the occupation for which a program was supposedly designed. Further, there was concern that the jobs students got were low-paying, and thus not worth the expense of the education, leaving many of these students with debt on which they often defaulted. Thus, the Gainful Employment regulations are to ensure that students don’t take on large amounts of debt for training programs that lead to jobs with earnings too low for them to repay their loans.
For a gainful employment program to continue to be eligible to participate in the federal student aid programs, graduates must attain a prescribed level of financial success. In short, the estimated annual loan payment of a typical graduate must not exceed 20 percent of his or her discretionary income, or 8 percent of his or her total earnings.
This is a laudable goal, but the experience to date suggests the regulations create an unnecessary burden when applied to useful and legitimate certificate programs at public and nonprofit colleges – including those that serve students with bachelor's and advanced degrees.