What You Should Know This Week

“Gainful Employment.” Each week, Educating Modern Learners will pick one interesting current event – whether it’s news about education, technology, politics, business, science, or culture – and help put it in context for school leaders, explaining why the news matters and how it might affect teaching and learning (in the short or in the long run). This week (the week of October 27), Audrey Watters looks at the U.S. Department of Education’s new “gainful employment” rules, meant to ensure that universities provide their students with a solid enough education so they can pay their student loans back.


The U.S. Department of Education has released the latest (and for the Obama Administration, probably the final) version of its “gainful employment” rules. These rules are designed to make sure that colleges and universities provide students with an adequate enough education so that they can afford to pay back any student loans after they graduate.

The rules apply to career training programs, the vast majority of which are run by for-profit colleges. The Department of Education estimates that the new rules will affect about 1400 of these programs, which serve about 800,000 students. Failure to meet the new “gainful employment”  guidelines could mean that these colleges lose their Title IV eligibility — that is, their students would not be eligible for federal financial aid.

The rules, not surprisingly, have been quite controversial — as The Chronicle of Higher Education describes it (with links), “the subject of years of intense debate, revision, and litigation.” First proposed in 2010, a federal judge ruled in 2012 that the Department of Education could not justify some of the measurements, and it was back to the drawing board. And an opportunity for more lobbying. Lots more lobbying.

The new rules change how “gainful employment” is measured, scrapping one of the two metrics it had previously assessed. “Gainful employment” will no longer look at schools’ student loan default rates and instead focusing on students’ “debt-to-earnings ratio.”

This change was something pushed for by community colleges, according to The Chronicle, “which had urged the department to scrap the default-rate metric. But student and consumer advocates say the change weakens the rule, allowing programs to saddle some students with unmanageable debt. And for-profit colleges say it does nothing to fix a proposal they say is ‘fundamentally flawed.’”

These regulations are meant to shut down some of the worst offenders in the for-profit education industry, which according to Vox, the industry may already be on the decline:

Even without the new regulations, the for-profit college sector is faltering. Enrollments boomed in the first decade of the 2000s. The share of all college students studying at for-profit colleges tripled.

Now, though, enrollments at four-year for-profit colleges are down 17 percent since 2011. One publicly traded for-profit college chain, Corinthian Colleges, essentially went out of business earlier this year. Another, Education Management Corporation, which owns the Art Institutes chain as well as other colleges, just announced it will return to being privately held. And for-profit Grand Canyon University, also publicly traded, is exploring a move to nonprofit status.

Despite these troubles, it’s not quite right to see for-profit education as on its way out, as more and more for-profits are springing up globally.

And in the US, it’s not clear yet if the new rules will be enforced or if there will be legal challenges. Of course, the upcoming elections — next month and in 2016 — might again reshape the higher education landscape. As PhD candidate Tressie McMillan Cottom, whose work addresses for-profit education, notes,

In the end, Gainful is a regulatory rule. It’s about counting and measuring and less so intervening or addressing. It can look good politically even when its construed as the Administration caving. I mean, they gave it a shot, guise! Thus, it becomes a narrative that obscures the ways that power could be enacted, possibly with more and better effects for students as opposed to business and markets.

But then we’re back to politics and, again, I’m not a politician.

 Image credits: Benson Kalahar

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Will Richardson

Co-founder of Modernlearners.com and Change School. Author, speaker, instigator, surfcaster, husband, and father to two amazing young adults.

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