Skip to content
ADVERTISEMENT
Sign In
  • Sections
    • News
    • Advice
    • The Review
  • Topics
    • Data
    • Diversity, Equity, & Inclusion
    • Finance & Operations
    • International
    • Leadership & Governance
    • Teaching & Learning
    • Scholarship & Research
    • Student Success
    • Technology
    • Transitions
    • The Workplace
  • Magazine
    • Current Issue
    • Special Issues
    • Podcast: College Matters from The Chronicle
  • Newsletters
  • Events
    • Virtual Events
    • Chronicle On-The-Road
    • Professional Development
  • Ask Chron
  • Store
    • Featured Products
    • Reports
    • Data
    • Collections
    • Back Issues
  • Jobs
    • Find a Job
    • Post a Job
    • Professional Development
    • Career Resources
    • Virtual Career Fair
  • More
  • Sections
    • News
    • Advice
    • The Review
  • Topics
    • Data
    • Diversity, Equity, & Inclusion
    • Finance & Operations
    • International
    • Leadership & Governance
    • Teaching & Learning
    • Scholarship & Research
    • Student Success
    • Technology
    • Transitions
    • The Workplace
  • Magazine
    • Current Issue
    • Special Issues
    • Podcast: College Matters from The Chronicle
  • Newsletters
  • Events
    • Virtual Events
    • Chronicle On-The-Road
    • Professional Development
  • Ask Chron
  • Store
    • Featured Products
    • Reports
    • Data
    • Collections
    • Back Issues
  • Jobs
    • Find a Job
    • Post a Job
    • Professional Development
    • Career Resources
    • Virtual Career Fair
    Upcoming Events:
    College Advising
    Serving Higher Ed
    Chronicle Festival 2025
Sign In
Gainful Employment

Revised ‘Gainful Employment’ Rule Breaks Little New Ground

By Kelly Field March 14, 2014
The goal of the new proposal “is not program elimination,” Secretary of Education Arne Duncan told reporters, “but making sure taxpayer dollars are used wisely.”
The goal of the new proposal “is not program elimination,” Secretary of Education Arne Duncan told reporters, “but making sure taxpayer dollars are used wisely.”Chip Somodevilla, Getty Images
Washington

The Education Department released a revised “gainful employment” rule late Thursday, a little less than two years after a federal judge threw out the original measure, calling portions of it “arbitrary.”

The new proposal hews closely to a draft version rejected by a rule-making committee in December, judging for-profit and vocational programs based on their graduates’ debt levels and their borrowers’ default rates. The cutoffs for programs to pass and fail the rule are unchanged from the draft proposal, as are the associated penalties.

To continue reading for FREE, please sign in.

Sign In

Or subscribe now to read with unlimited access for as low as $10/month.

Don’t have an account? Sign up now.

A free account provides you access to a limited number of free articles each month, plus newsletters, job postings, salary data, and exclusive store discounts.

Sign Up

The Education Department released a revised “gainful employment” rule late Thursday, a little less than two years after a federal judge threw out the original measure, calling portions of it “arbitrary.”

The new proposal hews closely to a draft version rejected by a rule-making committee in December, judging for-profit and vocational programs based on their graduates’ debt levels and their borrowers’ default rates. The cutoffs for programs to pass and fail the rule are unchanged from the draft proposal, as are the associated penalties.

After the revised rule is published in the Federal Register, the public will have 60 days to comment on it. The department will consider that feedback before publishing a final rule in the following months.

Debt-to-Earnings Measures

Under the new proposal, programs would fail if their graduates’ student-loan debt payments exceeded 12 percent of their incomes and 30 percent of their discretionary incomes, the same ratios as in the original rule and the draft considered by negotiators this past fall.

As in the draft, programs whose graduates have debt-to-income ratios of 8 to 12 percent or debt-to-discretionary-income ratios of 20 to 30 percent would fall in “the zone,” and would have to warn students that they might become ineligible for aid.

Programs that failed both debt-to-income tests twice in any three-year period or were in the zone for four consecutive years would be ineligible for federal student aid.

However, the department did make a couple of key concessions to for-profit institutions in the latest rule, exempting programs with 30 or fewer borrowers, rather than 10, and extending the assumed repayment period to 15 years for bachelor’s and master’s degrees and 20 years for doctoral programs. The combined changes bring the rule back in line with the 2011 version.

Cohort Default Rates

But the new rule differs from the original in one key respect: Rather than evaluating programs based on loan-repayment rates, it would judge them based on programmatic cohort default rates. That change was made in response to the court’s finding in 2012 that the department had shown no reasoned basis for its repayment rate, James R. Kvaal, deputy director of the White House’s Domestic Policy Council, said in a conference call with reporters on Thursday.

Mr. Kvaal said the Obama administration was confident that the new standard could survive a legal challenge because the programmatic cohort default rate mirrors the well-established institutional one. In keeping with the institutional cohort default rate, it would cut off aid to programs whose borrower default rates exceeded 30 percent for three consecutive years.

Roughly 8,000 programs would be subject to the metrics, including vocational programs at public and private institutions and all programs at for-profit colleges. Together, those programs receive roughly $26-billion in federal loans and $10-billion in federal grants per year.

ADVERTISEMENT

In December the department estimated that a full 13 percent of programs subject to its latest draft proposal at that time would fail the proposal’s two-part test, while 7 percent more would fall into the zone that would trigger warnings to students.

It’s unclear how the department’s concessions would affect those numbers, but Secretary of Education Arne Duncan told reporters on Thursday that a “one-year snapshot” suggests that 20 percent of programs would fail and 10 percent would be in the danger zone. He hastened to add that those were “very rough numbers” and promised that institutions would be given “time to improve.”

“The goal is not program elimination,” he said, “but making sure taxpayer dollars are used wisely.”

For-Profit Group’s Response

For-profit colleges wasted no time in criticizing the rule. In a news release issued Thursday evening, their main trade group, the Association of Private Sector Colleges and Universities, warned that the rule would “deny millions of students the opportunity for higher earnings.”

ADVERTISEMENT

“The government should be in the business of protecting opportunity, not restricting it,” said Steve Gunderson, the group’s president.

Mr. Gunderson called the department’s rule-making sessions this past fall a “sham,” saying the series of meetings with negotiators had been held “with the sole goal of reaching a predetermined conclusion.”

We welcome your thoughts and questions about this article. Please email the editors or submit a letter for publication.
Tags
Law & Policy
Share
  • Twitter
  • LinkedIn
  • Facebook
  • Email
About the Author
Kelly Field
Kelly Field joined The Chronicle of Higher Education in 2004 and covered federal higher-education policy. She continues to write for The Chronicle on a freelance basis.
ADVERTISEMENT
ADVERTISEMENT

More News

Joan Wong for The Chronicle
Productivity Measures
A 4/4 Teaching Load Becomes Law at Most of Wisconsin’s Public Universities
Illustration showing a letter from the South Carolina Secretary of State over a photo of the Bob Jones University campus.
Missing Files
Apparent Paperwork Error Threatens Bob Jones U.'s Legal Standing in South Carolina
Pro-Palestinian student protesters demonstrate outside Barnard College in New York on February 27, 2025, the morning after pro-Palestinian student protesters stormed a Barnard College building to protest the expulsion last month of two students who interrupted a university class on Israel. (Photo by TIMOTHY A. CLARY / AFP) (Photo by TIMOTHY A. CLARY/AFP via Getty Images)
Campus Activism
A College Vows to Stop Engaging With Some Student Activists to Settle a Lawsuit Brought by Jewish Students
LeeNIHGhosting-0709
Stuck in limbo
The Scientists Who Got Ghosted by the NIH

From The Review

Vector illustration of a suited man with a pair of scissors for a tie and an American flag button on his lapel.
The Review | Opinion
A Damaging Endowment Tax Crosses the Finish Line
By Phillip Levine
University of Virginia President Jim Ryan keeps his emotions in check during a news conference, Monday, Nov. 14, 2022 in Charlottesville. Va. Authorities say three people have been killed and two others were wounded in a shooting at the University of Virginia and a student is in custody. (AP Photo/Steve Helber)
The Review | Opinion
Jim Ryan’s Resignation Is a Warning
By Robert Zaretsky
Photo-based illustration depicting a close-up image of a mouth of a young woman with the letter A over the lips and grades in the background
The Review | Opinion
When Students Want You to Change Their Grades
By James K. Beggan

Upcoming Events

07-31-Turbulent-Workday_assets v2_Plain.png
Keeping Your Institution Moving Forward in Turbulent Times
Ascendium_Housing_Plain.png
What It Really Takes to Serve Students’ Basic Needs: Housing
Lead With Insight
  • Explore Content
    • Latest News
    • Newsletters
    • Letters
    • Free Reports and Guides
    • Professional Development
    • Events
    • Chronicle Store
    • Chronicle Intelligence
    • Jobs in Higher Education
    • Post a Job
  • Know The Chronicle
    • About Us
    • Vision, Mission, Values
    • DEI at The Chronicle
    • Write for Us
    • Work at The Chronicle
    • Our Reporting Process
    • Advertise With Us
    • Brand Studio
    • Accessibility Statement
  • Account and Access
    • Manage Your Account
    • Manage Newsletters
    • Individual Subscriptions
    • Group and Institutional Access
    • Subscription & Account FAQ
  • Get Support
    • Contact Us
    • Reprints & Permissions
    • User Agreement
    • Terms and Conditions
    • Privacy Policy
    • California Privacy Policy
    • Do Not Sell My Personal Information
1255 23rd Street, N.W. Washington, D.C. 20037
© 2025 The Chronicle of Higher Education
The Chronicle of Higher Education is academe’s most trusted resource for independent journalism, career development, and forward-looking intelligence. Our readers lead, teach, learn, and innovate with insights from The Chronicle.
Follow Us
  • twitter
  • instagram
  • youtube
  • facebook
  • linkedin