The measure is expected to protect approximately 700,000 students annually, according to Education Secretary Miguel Cardona. “There is nothing valuable about being ripped off or sold on a worthless degree,” he added.
According to a new rule being completed by the Biden administration, college programs that frequently leave graduates with poor pay or unsustainable loans would no longer be eligible to receive federal funding. The majority of for-profit institutions and traditional universities’ certificate programs are covered by the policy.
It’s a step toward accountability for the American higher education system, according to the Education Department. Gainful employment is the term for the rule, which reinstates an Obama-era regulation that the Trump administration had scrapped. It was first proposed in May.
The agency revealed on Wednesday that the last rule would be released on October 10.
“A higher education is seen as a priceless investment in one’s future. Being conned or sold a worthless degree is not valuable, Education Secretary Miguel Cardona stated during a press conference.
An association of for-profit colleges criticized the policy as an unfair attack and argued that all schools should be treated equally under any law. The rule is applicable to all for-profit college programs, but not to traditional college bachelor’s degrees or the majority of graduate programs.
Jason Altmire, president and chief executive officer of Career Education Colleges and Universities, said: “Once again, the Department has hurried the process, ignoring crucial considerations, to hurriedly impose and weaponize a final Gainful Employment rule against for-profit institutions.
The rule will go into force in July 2024, and no program will run out of government funding before 2026.
To ascertain whether college programs are assisting pupils, the rule will subject them to two examinations.
The first test will look at how much debt graduates of a program have compared to their income. Programs will be considered successful if the average annual loan payments made by program graduates are less than 8% of their gross income or 20% of their discretionary income.
If at least half of a program’s alumni earn more than working adults in their state with only a high school education, it will pass a second test.
Programs that do not pass either test must inform students that they risk losing their government funding. Federal help will be withheld from those who fail the same test twice in any three-year period. That effectively puts many programs to death.
Advocates for borrowers praised it as a much-needed safeguard.
“The finalized Gainful Employment rule is a major step towards enacting more front-end protections to ensure students aren’t being taken advantage of by predatory schools and programs,” declared Aaron Ament, president of Student Defense.
Despite harsh condemnation from Republicans and the for-profit industry, the final rule only slightly altered the first draft.
According to some for-profit colleges, the law unfairly penalizes institutions that accept a lot of students who might experience wage discrimination in the job, like women of color. If the graduates of certain institutions continuously receive wages below average, those programs may be in danger. It might threaten programs in places with limited other options, according to other for-profit universities.
According to an examination of the proposal by the Associated Press, beauty school programs would be particularly heavily hit. Nearly two-thirds of cosmetology credentials, along with more than a third of similar programs in massage therapy and dental support services, might fail the test and lose federal funding.
According to the Education Department, the regulation will shield around 700,000 students annually from enrolling in one of the almost 1,700 underperforming programs.
A other section of the rule will make available updated data that will show students the actual cost of programs at all different kinds of universities. The Education Department will release information that breaks down the costs that students incur for various programs, including as tuition, fees, and books, as well as their degree-related earnings.
According to James Kvaal, undersecretary of education, “these rules will stop taxpayer dollars from going to schools that continually burden students with unaffordable debt.” Separately, we’re making sure all pupils have more knowledge to make wise decisions.