In the coming days, the U.S. Department of Education is expected to release a new version of a Gainful Employment (GE) rule, putting the regulations on track to take effect in July 2024. Altogether, this rule marks the strongest step taken to date to protect students and taxpayers from investing in low-quality programs that result in rampant debt and low earnings.
Some groups, including the for-profit college lobby, have raised concerns about the unintended consequences of the rules, arguing that they may constrict access, especially for under-served groups, or hold programs to unfair earnings standards. But the facts tell a different story. The Century Foundation’s analysis shows that the new GE rule benefits both students and taxpayers.
Fact #1: The GE rule will improve earnings by directing students to non-failing programs.
The rule will raise the annual earnings of the typical financial aid recipient by $3,400 by directing students toward high-value programs. In several states, this average boost in annual earnings will be more than $5,000. Looking strictly at students who would transfer out of programs that fail the GE rule, their annual earnings on average will increase by 45 percent, from $21,600 to $31,500—a nearly $10,000 annual boost.
Fact #2: The GE rule will result in more manageable debt burdens for students who receive federal aid.
The annual debt payments for the typical federal financial aid recipient will fall from 4.3 percent of their annual income to 3.7 percent. Looking strictly at students who would transfer out of programs that fail the GE rule, their annual debt payments will fall from 7.8 percent to 3.7 percent of their annual income.
Fact #3: Students in programs that fail the GE rule have access to nearby, higher-value programs.
The typical student who is enrolled in or considering a program that will lose federal financial aid eligibility due to failing the GE rule has an alternative program in the same discipline within 5.1 miles. If the student considers other disciplines within the same field of study, the average distance drops to 2.7 miles.
Fact #4: Enrollment in certificate programs that fail the new GE metric is concentrated in the for-profit sector.
Only 4.3 percent of enrollment in public certificate programs are in ones that fail the GE rule, while 50 percent of enrollment in for-profit programs are in failing programs.
Fact #5: Student success correlates with GE-rule-passing programs.
Student debt is 22 percent lower among students in programs that pass the GE rule than in programs that fail, and students at passing BA programs have 31 percent higher earnings than those at failing BA programs.
For more information on the Gainful Employment rule, see The Century Foundation report “For-Profit Colleges Say the Gainful Employment Rule Will Kill Access. Don’t Believe Them.” Also see the Department of Education’s Notice of Proposed Rulemaking on Gainful Employment.
For additional exploration of how the Gainful Employment Rule will affect programs across different sectors and geographies, The Century Foundation has created a GE Explorer Tool, where users can create maps, charts, and tables using data filtered by state, field of study, credential level, and more.