U.S. Department of Education Proposes Stricter Gainful Employment Rule

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U.S. Department of Education Proposes Stricter Gainful Employment Rule

The Higher Education Act of 1965 (HEA) requires most programs at private for-profit colleges and certain non-degree certificate programs at public and private non-profit colleges to provide “a program of training to prepare students for gainful employment in a recognized profession.”

The U.S. Department of Education released an 841-page Notice of Proposed Rulemaking (NPRM) on March 14, 2014, that proposes a much stricter definition of gainful employment than the 2011 final rule, which was partially overturned by the U.S. District Court for the District of Columbia in 2012. If the March 14, 2014, NPRM becomes final, 42% of programs at for-profit colleges will be failing or in the zone, when weighted by program enrollment. This includes more than one-third of Certificate programs, three-quarters of Associate degree programs, one-fifth of Bachelor’s degree programs and one-third of professional degree programs.

More than 1.1 million students are enrolled in programs that will lose eligibility for Title IV federal student aid under the proposed regulations. Undoubtedly, the for-profit postsecondary industry will file one or more lawsuits to try to block the new regulations when they become final. But, by proposing a set of rules that are significantly harsher than the previous final rule, as opposed to just fixing the problems in the previous final rule, the U.S. Department of Education has increased the likelihood that this litigation will once again successfully block the final rule.

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