Secretary of Education Seeks to Rescind Obama-Era Gainful Employment Regulations

By Alexis Gabrielson and Jennifer Ives

On August 14, 2018, Secretary of Education Betsy DeVos announced a Notice of Proposed Rulemaking (NPRM) that seeks to rescind the Obama-era Gainful Employment (GE) regulations applicable to for-profit educational institutions.

The GE regulations took away for-profit educational institutions’ eligibility for federally guaranteed student loans if graduates did not earn a sufficient income after graduation to pay back their loans. Specifically, the GE regulations established Debt-to-Earnings (D/E) rates based on the typical loan debt and earnings of a program’s former students who completed the program, and are meant to determine whether a gainful employment program prepares students for gainful employment in a recognized occupation. For-profit educational institutions whose program completers have annual loan payments greater than 12 percent of total earnings and greater than 30 percent of discretionary income are currently ineligible for funding under the Higher Education Act Title IV student assistance programs.

The NPRM would remove these GE regulations, including the D/E rates calculations and associated funding sanctions. It would also remove the reporting, disclosure and certification requirements applicable to GE programs.

In addition, the NPRM seeks public comment on whether the Department of Education should amend section 668 of title 34 of the Code of Federal Regulations (CFR) to require, as a condition of eligibility for federally guaranteed student loans, that all educational institutions (for-profit and not-for-profit) publicly disclose whether they meet the requirements for state licensure, price of attendance, completion and withdrawal rates, program size, and/or any other items currently required under the GE disclosure regulations. Comments must be received on or before September 13, 2018, and may be submitted at the website.

For more information on the Gainful Employment regulations, please contact Nicole Faulkner, Alexis Gabrielson, Jennifer Ives, or the Stinson Leonard Street contact with whom you regularly work.

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