In a new article at the Pope Center, writer Jenna Ashley Robinson examines new regulations from the Department of Education which are being unfairly applied.

Gainful Employment for Thee, Not Me

The U.S. Department of Education released its latest draft of new gainful employment regulations on March 14. Gainful employment is the term used for the department’s standards for vocational programs at for-profit institutions and community colleges. Under the new rules, schools at which a large percentage of students fail to find jobs after graduation will become ineligible for federal funds.

The rules, however, would exclude most programs at four-year non-profit institutions. Only vocational programs leading to certificates at such schools are included. The paralegal and nutrition certificate programs of Meredith College (Raleigh, N.C.) are an example.

Using the latest Department of Education data, New America Foundation, a non-profit organization that focuses on public policy issues, calculated what the new regulations would mean for 7,934 for-profit and community college programs. If the regulations were applied today, they found that 5,969 of the programs measured would pass, 665 would be in the “zone” of concern, and 1,300 (16 percent) would fail. (See a more detailed breakdown here.)

The new standards are intended to root out bad programs that fail their students on at least one of two measures.

First, in order for a program to pass, its graduates must have an annual debt-to-earnings ratio at or below 8 percent or a discretionary rate at or below 20 percent. That means that a recent graduate making $35,000 per year must have student loan payments of less than either $233 per month or less than 20 percent of his or her government-calculated “discretionary” income.

Second, the school’s cohort default rate—which follows graduates and non-graduates for three years after entering repayment—must be below 30 percent. In other words, a program or school would lose eligibility for federal funds if its graduates’ average student debt exceeded a certain percent of their income or if 30 percent or more of its former students defaulted on their student loans within three years.