2011 Gainful Employment
Overview
The accountability and transparency measures established in the 2011 gainful employment rules applied to all non degree programs at public and private nonprofit institutions of higher education, as well as to nearly all degree and non degree programs offered by proprietary institutions.
The regulations established three measures by which programs would be judged as to whether they provided quality education and training to their students that led to employment with sufficient earnings to allow students to repay their student loan debts. The rules included three standards by which program eligibility would be determined:
- Annual loan repayment rate, which assesses whether the FFEL and Direct Loan debt incurred by a particular cohort of borrowers to attend the program is being repaid at a rate that implies gainful employment. The repayment rate must be at least 35%.
- Discretionary income threshold, which determines whether the annual repayment required on loan debt attributable to the academic program by those who completed the program is reasonable compared to their discretionary income. The program's annual loan payment may be no greater than 30% of discretionary income.
- Actual earnings threshold, which establishes whether the annual repayment required on loan debt attributable to the academic program by those who completed the program is reasonable when compared to their actual annual earnings. The program's annual loan payment may be no greater than 12% of annual earnings.
A program that failed all of the minimum standards for a single fiscal year was considered a failing program, retaining that status until it either passed the minimum standards for each of the three following fiscal years or was determined to be an ineligible program within the four-fiscal period. Once a program failed to meet any of the minimum standards for three out of the four most recent fiscal years, the program became an ineligible program.
The 2011 rules faced legal challenges which resulted in a federal judge striking down—just one day before the rule was set to become effective—the debt-to-income (discretionary earnings and actual earnings thresholds) and annual loan repayment rate metrics (and, consequently, ED’s ability to enforce those metrics) on the basis that ED had failed to provide sufficient evidence to justify its repayment rate metric. The associated reporting requirements were also invalidated, but disclosure requirements were left intact.
NASFAA Summary of Final Rules
- All Non-Degree and Certificate Programs Are Subject to Gainful Employment Rules
- Gainful Employment Summary Part 1 of 3: Repayment Rate
- Gainful Employment Summary Part 2 of 3: Debt-to-Earnings Measures
- Gainful Employment Summary Part 3 of 3: Penalties
Department of Education Resources
- Negotiated Rulemaking Committees; Establishment
- Office of Postsecondary Education; Notice of Negotiated Rulemaking for Programs Authorized Under Title IV of the Higher Education Act of 1965, as Amended
- Proposed Rules- Program Integrity: Gainful Employment
- Public Meeting Sessions Announced: Program Integrity: Gainful Employment
- Final Rules: Program Integrity- Gainful Employment: Secretary’s Approval of New Programs
- Proposed Rule: Program Integrity Issues
- Final Rule: Program Integrity Issues
- Program Integrity: Gainful Employment (GEN-11-10) Subject: Implementation of Regulatory Requirements Related to Gainful Employment Programs
- Final Rule: Program Integrity: Gainful Employment-Debt Measures
- Proposed Rules: Application and Approval Process for New Programs
- Program Integrity: Gainful Employment-Debt Measures; Correction
NASFAA Public Comments
- NASFAA Responds to Gainful Employment NPRM
- NASFAA President Testifies at Gainful Employment Hearing
- NASFAA Supports NPRM Changing Requirements on New Gainful Employment Programs