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Program Integrity: Gainful Employment rule (2015)

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The Program Integrity: Gainful Employment rule is a significant rule issued by the U.S. Department of Education effective July 1, 2015, that amended department regulations concerning institutional eligibility under the Higher Education Act of 1965 and the Student Assistance General Provisions. The rule aimed to improve the quality of gainful employment programs at eligible institutions by implementing accountability and transparency frameworks. The Trump administration rescinded the rule and subsequent gainful employment regulations in 2019 based on the argument that the regulations were flawed and inconsistent with other factors and requirements for student loan repayment programs.[1][2]

HIGHLIGHTS
  • Name: Program Integrity: Gainful Employment
  • Code of Federal Regulations: 34 CFR Parts 600 and 668
  • Agency: Office of Postsecondary Education, Department of Education
  • Type of significant rule: Economically significant rule

    • Timeline

    The following timeline details key rulemaking activity:

    Background

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    President Lyndon Johnson (D) signed the Higher Education Act (HEA) into law on November 8, 1965, in an effort to strengthen educational resources and financial assistance for college students by increasing federal grants to universities, creating low-interest student loans, and issuing scholarships. Title IV of the HEA established standards for offering financial assistance to college students, which governed Student Assistance General Provisions regulations.[5]

    Under the HEA, eligible institutions are required "to provide training that prepares students for gainful employment in a recognized occupation," according to the rule. The Department of Education argued that institutions were not meeting this statutory requirement, which was leading students to default on their student loan debt. The department outlined concerns regarding the gainful employment programs in effect:

    “ (1) Do not train students in the skills they need to obtain and maintain jobs in the occupation for which the program purports to provide training, (2) provide training for an occupation for which low wages do not justify program costs, and (3) are experiencing a high number of withdrawals or “churn” because relatively large numbers of students enroll but few, or none, complete the program, which can often lead to default. We are also concerned about the growing evidence, from Federal and State investigations and qui tam lawsuits, that many GE programs are engaging in aggressive and deceptive marketing and recruiting practices. As a result of these practices, prospective students and their families are potentially being pressured and misled into critical decisions regarding their educational investments that are against their interests.[1][6] ”

    In response to the concerns, the Department of Education issued a proposed rule on March 25, 2014, in an effort to improve the quality of gainful employment programs at eligible institutions for HEA program funds by implementing new accountability and transparency frameworks.[1]

    The rule was rescinded by the Trump administration on July 1, 2019, because the department argued that the gainful employment regulations "rely on a debt-to-earnings (D/E) rates formula that is fundamentally flawed and inconsistent with the requirements of currently available student loan repayment programs, fails to properly account for factors other than institutional or program quality that directly influence student earnings and other outcomes, fails to provide transparency regarding program-level debt and earnings outcomes for all academic programs, and wrongfully targets some academic programs and institutions while ignoring other programs that may result in lesser outcomes and higher student debt," according to the rule.[2]

    Summary of the rule

    The following is a summary of the rule from the rule's entry in the Federal Register:

    “ The Secretary amends regulations on institutional eligibility under the Higher Education Act of 1965, as amended (HEA), and the Student Assistance General Provisions to establish measures for determining whether certain postsecondary educational programs prepare students for gainful employment in a recognized occupation, and the conditions under which these educational programs remain eligible under the Federal Student Aid programs authorized under title IV of the HEA (title IV, HEA programs).[1][6] ”

    Summary of provisions

    The following is a summary of the provisions from the rule's entry in the Federal Register:[4]

    “ The proposed regulations would—
    • Define what it means for a program to provide training that prepares students for gainful employment in a recognized occupation.
    • Create a process by which an institution establishes the eligibility of a GE program by certifying that the GE program satisfies applicable accrediting and licensing requirements for the occupations for which the program purports to prepare students.
    • Establish an accountability framework, in which two complementary yet independent measures—the D/E rates measure and the pCDR measure—would be used to determine whether a GE program remains eligible for title IV, HEA program funds.
    • Establish the process by which a GE program would be evaluated and the standards by which the program would be assessed, under the accountability framework using—

    ○ The D/E rates measure to evaluate the amount of debt students completing a GE program incurred in the program in comparison to their discretionary and annual earnings after completing the program.

    ○ The pCDR measure to evaluate the default rate of former students enrolled in a GE program, regardless of whether they completed the program.

    • Require institutions with GE programs that could become ineligible in an immediately succeeding year to provide a written warning to students and prospective students of the potential loss of ineligibility and the implications.
    • Provide that, for a GE program that loses eligibility for title IV, HEA program funds, as well as any program that is not passing the D/E rates measure and the pCDR measure and that is discontinued by the institution, the loss of eligibility is for three calendar years.
    • Require institutions to report relevant information related to its GE programs to the Secretary.
    • Require an institution to disclose, including to students and prospective students, relevant information about its GE programs through a disclosure template developed by the Secretary.[6]
    		 ”

    Significant impact

    See also: Significant regulatory action

    The Office of Management and Budget (OMB) deemed this rule economically significant pursuant to Executive Order 12866. An agency rule can be deemed a significant rule if it has had or might have a large impact on the economy, environment, public health, or state or local governments. The term was defined by E.O. 12866, which was issued in 1993 by President Bill Clinton.[1]

    Text of the rule

    The full text of the rule is available below:[1]

    See also

    External links

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 Federal Register, "Program Integrity: Gainful Employment," October 31, 2014
    2. ↑ 2.0 2.1 2.2 Federal Register, "Program Integrity: Gainful Employment," July 1, 2019
    3. ↑ Federal Register, "Program Integrity: Gainful Employment; Correction," December 4, 2014
    4. ↑ 4.0 4.1 4.2 Federal Register, "Program Integrity: Gainful Employment," March 25, 2014
    5. ↑ Federal Student Aid, "Gainful Employment Information," accessed May 2, 2023
    6. ↑ 6.0 6.1 6.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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