Education Dept. Proposes Tossing Gainful-Employment Rule, Which Took Aim at For-Profit Colleges

The U.S. Department of Education has officially proposed repealing the gainful-employment rule, a policy that punished higher-education programs whose graduates accumulated excessive student-loan debt, according to a notice of proposed rulemaking released Friday.

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The rule, first proposed by the Obama administration in 2011, would have penalized programs if their graduates had student-loan payments that exceeded a specific percentage of their incomes. It was controversial from Day 1, especially among for-profit colleges, who pointed to analyses arguing that the sector would be disproportionately affected.

The rule has had a checkered history. In 2012, part of the rule was scrapped by a federal judge. The rule was later revised and took effect in 2014, but that change was put on hold last year by the Trump administration’s education secretary, Betsy DeVos.

Last month, The New York Times and The Wall Street Journal reported that DeVos, who has led the department’s rollbacks of other Obama-era regulations that aimed to protect consumers who felt defrauded by for-profit colleges, would scrap the rule. (Experts had speculated that she would merely weaken it.)

Now, in lieu of the rule, the department proposes to update its College Scorecard, or a similar online tool, to display program-level metrics on student outcomes to students and families. (The scorecard, intended as a public-facing accountability tool, does not currently publish that data.) Adding to the scorecard “would improve transparency and inform student enrollment decisions through a market based accountability system,” according to the notice.

In the notice of its intent to scrap the rule, the department cited research results that “undermine the validity” of comparing students’ loan debt to their earnings as a means to determine whether institutions are eligible to receive federal funding under Title IV.

“The Department has determined that in order to adequately inform student enrollment choices and create a framework that enables students, parents, and the public to hold institutions of higher education accountable, program-level outcomes data should be made available for all Title IV-participating programs,” reads the notice.

The department’s proposed change is now open for public comment for 30 days.