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In the News: Gainful Employment

Discussions surrounding gainful employment have been ongoing for almost a year. This issue is directly related to online education and recent updates have gotten a lot of media coverage. My plan with this post is to offer you a summary of events, increase your awareness of all sides of the debate, and help you track continued coverage of this issue as it moves forward.

What is Gainful Employment?

Gainful employment is referred to in the Higher Education Act of 1965. This Act includes rules under which a vocational or career program can receive federal student aid. One of these conditions is the prevision of "an eligible program of training to prepare students for gainful employment in a recognized occupation." The term gainful employment was not clearly defined. The U.S. Department of Education (USDOE) is now trying to develop a definition and put it into place to further structure how federal financial aid funds are used.

The USDOE's efforts have drawn a lot of attention, both in agreement and opposition, as officials have drafted and proposed versions of a new rule to address gainful employment. While most parties are in agreement that measurement of the value of an academic or vocational program is worthwhile, deciding how to conduct the measurements, and what the measurements should be based on, is complicated.

One of the main concerns is how gainful employment of an individual would be measured. The current proposal includes a combination of students' income-to-debt ratio and the amount of time it takes for students to pay back their loans. This is of particular concern to for-profit institutions whose students are more likely to default. Opponents of the rule challenge the use of these two measures alone when there are multiple variables potentially involved in student success.

Another concern is related to the USDOE's determination of the need for the rule. The USDOE has been questioned about their research methodology, the validity of outside reports that were considered, and the ability of the organization to monitor and potentially enforce the rule if and when it is approved. While the rule has moved forward for review, the call for continued investigation continues.

Why is Gainful Employment important and how will it affect online education?

There is a lot at stake for everyone involved in the debate surrounding the proposed Gainful Employment rule. The rule does not affect student eligibility for federal student aid, but would affect which programs could accept federal student aid. It's also important to note that these impacts may affect traditional programs as well as online, for-profits and non-profit institutions alike.

Should the Gainful Employment rule go into effect, there are implications for both students and institutions. The final recommendation was not made public, but the following effects may be possible:


  • Students with federal funding, enrolled in programs that are affected, may have to consider other options if their federal aid no longer applies to the program.
  • Prospective students who are eligible for and planning on federal financial aid will face different decisions about which institutions and programs to consider in pursuit of their educational and career goals.


  • Institutions not meeting the rule's criteria could lose funding, forcing tough budget decisions.
  • New regulations may directly influence which programs they decide to offer or continue offering, and at what levels (certificates, undergraduate, graduate).

What may ultimately result is more transparency of institutions and programs from the student's perspective. The effects may include greater access to graduation rates, employment rates, and other data from all higher education institutions. This information may prove helpful as prospective students conduct their research and make informed decisions about program enrollment. 

Who is involved in the discussions and debates surrounding Gainful Employment?

There are multiple groups with an interest in the Gainful Employment rule. Many have spoken out publicly and compiled independent reports in an effort to influence government decisions about the rule. These groups include: legislators, organizations, higher education institutions, and students. 

Senators Tom Harkin and Dick Durbin have conducted hearings about the issue and released statements supporting the proposed regulation. Other legislators are also actively involved in debating this issue. A group of 118 legislators have requested additional investigation related to Gainful Employment before a rule is established.

Several organizations have also issued statements regarding the proposed rule. These organizations often represent a specific group of people with an interest in the outcome, as lobbyists contacting Congress with questions and requests for more information.

  • The Leadership Conference on Civil and Human Rights is in favor of approving the Gainful Employment rule as a way to protect students from higher education institutions that do not meet student career needs and expectations as advertised. 
  • The National Black Chamber of Commerce and the Hispanic Leadership Fund has requested further investigation and research on the proposed legislation's potential affect on minority students specifically. There is a concern that the Gainful Employment rule would significantly impact student choices and ability to pursue higher education.
  • The Coalition for Educational Success has also called for additional investigation due to recent reports of issues with stock trading of for-profit higher education companies and how this may be related to the proposition of the Gainful Employment rule.
  • Career Education Colleges and Universities (CECU) sees the Gainful Employment rule as unwarranted government oversight of the higher education industry, and a rule that is particularly focused on for-profit institutions.
  • The United States Student Association has asked for further consideration of the rule by the USDOE and all parties. This group is requesting a system of communication with students with alerts about the potential ramifications of loan default.

When will the changes take place?

Earlier this month, the USDOE sent final recommendations for the Gainful Employment rule to the Office of Management and Budget, the White House's budget office. What happens next? After this review and approval it can be published in the Federal Register. The rule is anticipated to go into effect by July 2012

Stay Informed

Discussion and debate of the Gainful Employment rule are ongoing. Continue to monitor progress through the USDOE Gainful Employment information page, as well as through media outlets covering the issue from all sides.