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Gainful Employment

Background

To remain eligible for Title IV student aid program funds unde​r the Higher Education Act, vocational programs of training at non-profit and for-profit institutions are required by statute to prepare students for gainful employment in a recognized occupation. Examples of these programs include training in auto mechanics, cosmetology, culinary arts, and heavy equipment operation.

 To address growing concerns and evidence that many gainful employment programs may be engaging in unscrupulous​ practices, the Department of Education established negotiated rulemaking sessions in 2009-10 aimed at improving program integrity regulations around several issues. The Department initially published final regulations on gainful employment in October 2010 (effective July 2011), however certain parts of the regulations were struck down in 2012 (APSCU v. Duncan). The disclosure requirements from the initial rule remain in effect and institutions must be in compliance.
 
Final Rule
 
After another round of negotiated rulemaking sessions on gainful employment (September-December 2013), the U.S. Department of Education released final ​regulations October 31, 2014 (become effective July 1, 2015). 
  • To pass the debt-to-earnings rates measure, the GE program must have a discretionary income rate less than or equal to 20 percent OR an annual earnings rate less than or equal to 8 percent. 
  • The regulations also establish a zone for GE programs that have a discretionary income rate greater than 20 percent and less than or equal to 30 percent or an annual earnings rate greater than 8 percent and less than or equal to 12 percent. 
  • GE programs with a discretionary income rate over 30 percent and an annual earnings rate over 12 percent will fail the D/E rates measure. 
  • Under the regulations, a GE program becomes ineligible for title IV, HEA program funds, if it fails the debt-to-earnings rates measure for two out of three consecutive years, or has a combination of debt-to-earnings rates that are in the zone or failing for four consecutive years. 
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