More than 800 programs failed the U.S. Department of Education’s accountability standards for its new gainful-employment rule, and risk losing federal student-aid funds, the department announced on Monday, and about 98 percent of those programs were offered by for-profit institutions.
Monday’s announcement represented the first time the department had measured career-training programs against the debt-to-earnings benchmarks set out in the new rule. It’s unclear whether the Trump administration will continue to enforce the regulation.
Institutions that ran afoul of the rule fit into two categories:
- Over 800 programs failed the standards by having graduates with annual loan payments that exceeded 12 percent of their total earnings or 30 percent of their discretionary income.
- Some 1,239 programs received a “zone” rating, a slightly lower level of concern, meaning their graduates’ annual loan payments were 20 to 30 percent of discretionary income or 8 to 12 percent of total earnings.
Programs that fail in two of three consecutive years or are given “zone” ratings for four consecutive years are ineligible to receive Title IV student-aid funds, according to department guidelines.
The specifics of gainful employment were long debated after the department introduced the rule, in 2011, but in 2014 regulations were made final. According to the rule, a program passes if the estimated annual loan payments of graduates do not exceed 8 percent of total earnings or 20 percent of discretionary income.
For-profit colleges largely lobbied against the gainful-employment regulations.
Correction (1/10/2017, 12:47 p.m.): A link in this post to the Education Department’s website was originally described incorrectly. The website lists all institutions subject to the gainful-employment standards, not just those that failed the standards. The post has been updated to reflect this correction.Return to Top