EMBARGOED UNTIL 12:01 AM ET ON THURSDAY, OCT. 30, 2014

FACT SHEET ON FINAL GAINFUL EMPLOYMENT REGULATIONS

Details of the final regulations and its impact

The final regulations, which will publish in tomorrow’s Federal Register, apply to all 

sectors of higher education as required by the Higher Education Act of 1965 (as 

amended). In order to receive federal student aid, the law requires that most for-profit 

programs, regardless of credential level, and most non-degree programs at non-profit and 

public institutions, including community colleges, prepare students for “gainful 

employment in a recognized occupation.” These regulations set the standards for “gainful 

employment” programs to remain eligible to accept federal student aid grants and loans. 

The framework of the final regulations has two components: accountability and 

transparency. The accountability component distinguishes programs that provide 

affordable training that leads to well-paying jobs from those programs that leave students 

with poor earnings prospects and high amounts of debt, while the transparency element 

requires institutions to provide key information for consumers.

Accountability

Certifications: Institutions must certify that each of their gainful employment programs 

meet state and federal licensure, certification, and accreditation requirements.

Metric: To maintain title IV eligibility, gainful employment programs will be required to 

meet minimum standards for the debt vs earnings of their graduates.

Pass Programs whose graduates have annual loan payments less than 8% 

of total earnings OR less than 20% of discretionary earnings.

Zone

Programs whose graduates have annual loan payments between 8% 

and 12% of total earnings OR between 20% and 30% of discretionary 

earnings.

Fail

Programs whose graduates have annual loan payments greater than 

12% of total earnings AND greater than 30% of discretionary 

earnings. 

Ineligible Programs that fail in 2 out of any 3 consecutive years OR are in the 

zone for 4 consecutive years.

Transparency

Disclosures: Institutions will be required to make public disclosures regarding the 

performance and outcomes of their gainful employment programs. The disclosures will 

include information such as costs, earnings, debt and completion rates.

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EMBARGOED UNTIL 12:01 AM ET ON THURSDAY, OCT. 30, 2014

Based on public feedback, the Department made one key change in the final regulations 

compared to the proposed regulations published in March by removing the program

cohort default rate as an accountability metric, creating more streamlined regulations. 

The regulations announced today will become effective on July 1, 2015. Institutions will 

have the opportunity to make immediate changes to make lasting improvements to their 

programs and avoid ineligibility. The first several years will include a transition period 

that will take into account any immediate steps by institutions to reduce costs and debt.

Available data indicate the vast majority of gainful employment programs captured by 

the rule – including those at for-profit institutions – will pass the accountability metric, 

but about 1,400 would not. The Department estimates that about 840,000 students are 

currently enrolled in programs that would not pass – and of those students, 99 percent of 

them are in programs at for-profit institutions. These programs are likely leaving students 

with debt they cannot afford to repay.

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