Department of Education Proposed Rules for Postsecondary Education Programs that Prepare Students for Gainful Employment in a Recognized Occupation

David P. Smole
Specialist in Education Policy

Among the types of postsecondary education programs eligible for participation in the federal student aid programs authorized under Title IV of the Higher Education Act of 1965, as amended (HEA), are those that, as a condition for eligibility, must prepare students for gainful employment in recognized occupations. These programs are offered by public and private nonprofit institutions of higher education and postsecondary vocational institutions, and by for-profit, proprietary institutions of higher education. A large proportion of these programs, however, are offered by proprietary institutions of higher education. 

The U.S. Department of Education has issued proposed rules on programs that must prepare students for gainful employment in an attempt to address concerns about the quality of the programs and the amount of student loan debt that students who attend such programs incur. The proposed rules would apply to certificate and other non-degree programs offered by public and private nonprofit institutions of higher education and postsecondary vocational institutions, and to nearly all programs offered by proprietary institutions. 

The proposed rules establish a series of reporting and disclosure requirements and a set of three performance measures tied to student loans. The performance measures appear to be designed to assess program effectiveness on the basis that if a program's students have sufficient earnings from employment to be able to repay their student loans, the program has prepared its students for gainful employment. A loan repayment rate measure would assess how effectively program attendees repay the student loans they borrow to attend these programs. Two debt-to-earnings measures would assess the relationship between the student loan debt of program completers and their earnings. A more stringent and a less stringent performance threshold would be established for each of the three measures. 

Programs that meet the more stringent performance threshold for at least one of the three measures would remain fully eligible to participate in HEA, Title IV programs. Programs that do not meet the more stringent threshold for any of the measures but do meet the less stringent performance threshold for at least one of the measures would remain eligible to participate in HEA, Title IV programs, but they would become subject to sanctions, including having their enrollment of students who receive Title IV federal student aid restricted. Programs that do not meet at least the less stringent criteria on any of the three measures would lose their Title IV eligibility. 

This report explains and provides observations on the Department of Education's proposed rules on gainful employment. .


Date of Report: September 9, 2010
Number of Pages: 23
Order Number: R41397
Price: $29.95

Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports

Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.