As widely reported in the press, the Department of Education has released a final rule on gainful employment programs. ED will only judge programs on their graduates' debt-to-earnings ratios, which must be less than or equal to 8 percent of income and 20 percent of discretionary income to pass. Programs that post income and discretionary income percentages between 8 and 12 or 20 and 30, respectively, will be considered in a warning zone, and programs with percentages higher than 12 and 30, respectively, will fail.
The final rules do offer limited opportunities for program improvement, as federal student aid eligibility will only be affected if a program fails two years in a three-year period or does not pass (i.e., fails or is in the zone) for four consecutive years. Approximately 1,400 programs are expected to fail when the rule is first implemented, according to estimates from ED.
"These regulations are a necessary step to ensure that colleges accepting federal funds protect students, cut costs and improve outcomes," Secretary of Education Arne Duncan said in a press release. "We will continue to take action as needed."
Check back in with Today's News Monday for a summary of the final rule.
Publication Date: 10/31/2014