Gainful Employment

The “gainful employment” definition was established in regulations to stop program abuse occurring largely in the career college sector. 

The Obama Administration was 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 were designed 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 eight percent of his or her total earnings.

This is a laudable goal, but the regulations are also complex and create a reporting burden for useful and legitimate certificate programs at all institutions – including those that serve students with bachelor's and advanced degrees.

The Department of Education announced in June 2017, that it will be renegotiating the gainful employment final regulations. Public hearings will begin in July 2017, and the negotiated rulemaking sessions will likely be scheduled in November or December 2017. It is unclear what changes to the underlying rule may be proposed by the Department.

About

Certificate programs at private, nonprofit and public institutions, and nearly all for-profit degree and certificate programs must prepare students for “gainful employment in a recognized occupation” in order for those students to be eligible for federal student aid.  Any institution with a gainful employment program must provide a significant amount of information about its student body to the Department of Education and make disclosures about the success of its programs to the public.

Although the regulations were intended to combat fraud and abuse, they also have had the unfortunate effect of imposing significant burdens on legitimate programs. 

 

History

The Higher Education Act has long permitted the use of federal student aid funds for non-degree programs “of training to prepare students for gainful employment in a recognized occupation.”  However, the term “gainful employment” was not defined in statute or regulations until the Department of Education initiated a negotiated rulemaking process in 2009 to do so.  The negotiators did not reach consensus on the issue, meaning the Department was not bound by any agreements reached during the negotiations.

In 2010, the Department proposed two sets of regulations: one dealt with the disclosure of information by institutions about their gainful employment programs; and the second dealt with student outcomes intended to establish whether or not students were gainfully employed after leaving their training programs.  The disclosure requirements went into effect on July 1, 2011, and remain in place.  However, most of the requirements related to student outcomes were overturned in a lawsuit brought by the Association of Private Sector Colleges and Universities.

The Department initiated a second round of negotiated rulemaking in 2013, and the negotiators once again failed to reach consensus.  A new set of regulations on student outcomes was published in December 2014 and the regulations were again challenged in court.  The regulations were upheld and went into effect on July 1, 2015.  Secretary DeVos has announced that the final regulations will be renegotiated in late 2017. The negotiated rulemaking process will likely occur over the course of several months, after which the Department can release a revised final rule.

What You Can Do

  • Identify all certificate programs on your campus that are considered to be gainful employment programs.  These include non-degree programs that provide a certificate, as well as graduate-level certificate programs.
  • Be sure to certify gainful employment programs as an addendum to your program participation agreement, and update any changes.
  • Ensure that student aid coding and coding for gainful employment programs are correct and consistent.
  • Meet annual October 1 deadlines for reporting required data (See 34 CFR 668.411) to the Department of Education.

Resources

NAICU Contact

Tim Powers: Tim@NAICU.edu 
Top