DeVos Rescinds Gainful Employment Rule

The U.S. Department of Education is moving forward with plans to eliminate regulations put in place by the Obama administration to protect students from predatory colleges and universities.

• By Sara Friedman
• 07/02/19

Education Secretary DeVos is taking the next step to dismantle an Obama-era policy that was designed to crack down on for-profit colleges. In 2014, the U.S. Department of Education instituted a rule known as gainful employment that would cut off federal funding for vocational programs at for-profit colleges and non-degree programs at community colleges that do not meet minimum thresholds related to debt-to-income rates of their graduates.

DeVos is arguing that the debt-to-income formula currently used by ED is "fundamentally flawed and inconsistent with the requirements of currently available student loan programs," according to a rule published Monday in the Federal Register. Updates to the College Scorecard announced in May are designed to bring more transparency to non-degree-granting institutions and student loan debt.

ED estimated that the repeal of the rule would cost $6.2 billion over 10 years in payments for Pell Grants and student loans to support institutions that would have previously been cut off from federal aid. Before any schools lost funding, DeVos was able to delay certain provisions of the rule in 2017 and ED has not been able to enforce the rule because the Social Security Administration has not supplied graduate earnings data in months.

Due to tens of thousands of public comments on a proposal to repeal gainful employment, ED was unable to meet the deadline to repeal the rule last November, which means that the policy will not be rescinded until 2020.

Congressional Democrats expressed their dismay over the repeal. Sen. Patty Murray (D-Wash.), the ranking member of the Senate Health, Education, Labor and Pensions Committee, said the repeal will continue to send students to predatory career training programs that should have been closed.

"Instead of protecting students from predatory career training programs and giving them the information they need to make informed decisions about their education and employment opportunities, Secretary DeVos' repeal of the gainful employment rule is a gift to predatory programs and for-profit colleges that want to take unsuspecting students for a ride," said Murray. "If Secretary DeVos had students' best interests at heart, she would withdraw this repeal immediately and reinstate the common-sense and effective consumer protections put in place by the Obama Administration."

Rep. Bobby Scott (D-Va.), chairman of the House Education and Labor Committee, said the gainful employment repeal underscores the need for Congress to reauthorize the Higher Education Act with provisions that protect students from low-quality for-profit schools.

"The decision to eliminate clear enforcement standards does not absolve schools of their legal obligation to provide students a worthwhile education that leads to gainful employment. But by eliminating this rule without enforcing any alternative standard, the Education Department is giving low-quality, for-profit colleges a free pass to charge high tuition for worthless credentials that leave students with insurmountable debt," said Scott.

The gainful employment repeal comes at a time when ED is considering a proposal to loosen federal standards for college accreditors. 

Steve Gunderson, president and CEO of industry group Career Education Colleges and Universities, said ED's decision on gainful employment will bring "full transparency" to the entire education system. "Instead of picking and choosing winners and losers in higher education, the Department will make available, in a student-friendly and transparent manner, key data points at a program level for all programs at all schools," he said.

The justification of the gainful employment rule repeal can be found in the Federal Register.