If you’re new to higher education or perhaps even if you’re not but worked at a non-profit institution offering only degree programs, you may not be familiar with Gainful Employment rules. The first was implemented in 2014 and required for-profit institutions and any other institution offering non-degree programs, like certificate programs, to disclose salary and student loan indebtedness data on an annual basis so the Department of Education (ED) could calculate a debt-to-income ratio for the program. Programs with high ratios ran the risk of losing Title IV financial aid eligibility. This version of the rule was rescinded in 2019.
Fast forward to September 2023…ED announced a new, expanded version of the Gainful Employment rule that will become effective on July 1, 2024. The new rules require for-profit institutions and all non-degree programs to disclose data to determine whether graduates are earning enough to repay the amount of federal loans they borrowed to attend and data to determine if graduates of the program have a higher median income than other adults in the state with no higher education credential. Programs that do not meet the standard in two out of three years risk losing the ability to participate in federal financial aid programs. In 2026, students opting to enroll in a high debt/low earning program will need to sign a disclosure acknowledging they are aware of the cost and risk.
In addition, there will be a reporting responsibility for all types of institutions and programs including private non-profits, public institutions, and graduate programs. Data regarding tuition and other expenses as well as average indebtedness will need to be disclosed to ED, and will be published online for consumers to consider before choosing a college. ED will begin publishing data in 2025. Under this part of the rule there is no standard or penalty, it’s strictly a reporting requirement.
ED is reporting that if the new Gainful Employment rule was in effect today, 1,700 institutions serving 700,000 students would not meet the standards laid out in the first part that applies to for-profit and non-degree programs. Supporters feel both parts of this rule will go a long way toward alleviating the student loan crunch so many graduates experience today. The new rule allows students and their parents to make informed decisions by knowing what their earning potential may be versus the cost of the program. ED also hopes to change the growing opinion that it is not worth it to go to college due to the high cost and need to borrow.
The new rules will not be implemented without some push-back. The associations that represent for-profit and career schools have charged ED with singling out their institutions. while Additionally, all institutions will have yet another reporting requirement to add to what is already considered to be burdensome. There is also the danger of being put out of business altogether, either by not meeting the for-profit/non-degree standards or by losing enrollment to other colleges that appear to be a ‘better value.’
Detailed reporting instructions have not been made available yet, but it is not too early to start thinking about how to gather the information needed to meet the requirements. As always, ind if you need help with this planning support or actual implementation when the time comes, don’t forget that the Higher Education Assistance Group’s regulatory experts are just an email away at firstname.lastname@example.org.