Gainful Employment

While many of us working in higher education may not have heard of "gainful employment" prior to the summer of 2010, "gainful employment" is not a new term coined by the current administration. In fact, the Higher Education Act of 1965 first began using the term "gainful employment" when allowing financial aid programs to be extended to for-profit institutions and certificate programs at public institutions. In an effort to further define and measure gainful employment, in the summer of 2010 the Department of Education released an initial proposal of gainful employment regulations, which was followed by a year of great debate amongst leaders of higher education, advocacy groups, and politicians.

The federal government released the final rules of Gainful Employment in June of 2011. According to the federal government, by collecting data from institutions of higher learning gainful employment regulations will be a tool used to measure the "value" of an academic program. While gainful employment regulations are mostly targeted at for-profit colleges and universities, certificate and vocational programs being offered at nonprofit institutions must also comply. Overall, in determining whether or not particular programs are eligible to continue receiving and disbursing federal financial aid to students, gainful employment regulations tie federal student loans to student debt-to-income ratio as well as the loan repayment rates. Institutions of higher learning will be forced to report data to the federal government that evaluates whether or not students are taking out loan debt that can be paid off (in prescribed amount of time set by the gainful employment regulations) once they are finished with their program and earning an income.

The final gainful employment regulations published in July 2011 were considerably edited from the initial proposals. While many feel the final version does not go far enough to protect students from getting into debt they cannot repay, others claim that gainful employment is targeting low income students who would not otherwise be able to attain a degree/certificate. Both arguments have significant support from opposing lawmakers and civil liberty groups. However, those who oppose the new gainful employment regulations have remained fairly quiet since the final rules published were a much softer blow than the original proposal.

While I do agree that gainful employment regulations will target programs sought after by low income and minority students, I would argue that these are specifically the students we should be paying greater attention to in an effort to be sure they can be successful after they leave higher education. Students should be able to select their programs of interest, but it does not mean that institutions should participate in, and in some cases advocate for, students going into large amounts of debt (that they have no chance of being able to successfully pay off) in order to earn a degree or certificate. This especially occurs at for-profit colleges who have had a historically higher default rate than public or nonprofit colleges and universities. Now for-profit colleges/universities will be forced to collect and report data demonstrating that students are borrowing more than they will earn. Perhaps for-profit institutions will reevaluate their tuition prices and set them at more reasonable rates so that students do not have to borrow more than they can repay.

Administrators who work for public and nonprofit institutions who will be effected by gainful employment because they offer certificate or vocational programs, will now be forced to evaluate their programs and ensure they are achieving successby looking closely at their retention and graduation rates, working closer with industry partners to assist graduates with entering the labor market, and determining whether or not their program(s) are still valid and whether or not the college/university should continue to offer them to students. Certificates and vocational programs are created for the purpose of getting graduates into the workforce or giving them the upgraded skills they need to be successful in their current position, which means that students should only be borrowing reasonable amounts of loans in order to quickly earn their certificate or degree.

Overall, I do feel that gainful employment regulations are a step in the right direction. However, as an administrator who has been involved with the implementation of gainful employment reporting, I do see some major gaps with the current data being collected and reported to the feds. As with many regulations that come down from the federal and state government, I think the overall policy making and the practical side of reporting do not always match up. Some of the questions I have regarding how "value" will be measured with the current reporting structure includes:

1) How do we determine whether or not a graduate went into the field of work they studied? If they did not enter that field, is that the responsibility of the college/university?
2) Is the student not repaying their loans because they are not making enough money or because they are not fiscally responsible?
3) Is the student making more money than they would have had they not gained any education and if so, how is that measured?

There are several unanswered questions about the new regulations and the impacts will not be felt at colleges or universities for a few years. However, it is hopeful that these new regulations will help colleges and universities better educate students about debt and determine whether or not programs should be eligible for federal student loans.