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Fact Sheet: Holding Colleges Accountable for Delivering Financial Value for Students

Proposed rules would establish a strong Gainful Employment framework and improve 

transparency for all postsecondary students

The Biden-Harris Administration understands that the education and training provided by the 

nation’s colleges and universities play a crucial role in building the skills needed for tomorrow’s 

jobs and in promoting upward mobility. However, too many postsecondary programs are 

saddling students with more debt than they can afford to repay or are leaving their graduates in 

low-wage jobs. That’s why the Department of Education (Department) is proposing a package 

of regulations that would establish the strongest framework ever for protecting students and 

taxpayers. These changes are part of the Administration’s ongoing commitment to fixing a 

broken student loan system and to delivering on the Administration’s promise to ensure quality 

and accountability in postsecondary education. 

The Department’s proposed gainful employment (GE) rule would cut off Federal aid to career

training programs that consistently leave graduates with unaffordable debts or low earnings. 

The proposal would also require institutions of higher education (institutions) to provide

warnings to students attending programs that are at risk of losing access to aid due to failing GE 

metrics. 

The Department’s proposal would drive improvements in value at career training programs, 

annually benefitting hundreds of thousands of students. Each year, over 700,000 federallyaided students enroll in one of the 1,800 career training programs where the typical graduate 

leaves with unaffordable debt or earns less than a high school graduate in the same State. But 

these students do not need to settle for programs with sub-standard outcomes: Colleges can 

reform those programs to deliver better value to students, and if they cannot, the vast majority 

of students who enroll in a failing GE program already have better options available to them in 

a similar field nearby or, in many cases, at the same institution. On average, these alternative 

options leave graduates with 43% higher earnings and 21% less debt. 

The proposed rules would also increase transparency on student debt, college costs, and postgraduation earnings for students attending all types of undergraduate and graduate programs. 

The draft rules would require students to acknowledge they have seen key borrowing and 

earnings information before receiving Federal funds to enroll in programs that typically leave 

graduates with unaffordable debt. 

This fact sheet covers the provisions related to GE and greater transparency for all programs

that are part of a larger of Notice of Proposed Rule Making (NPRM). A separate fact sheet 

covering the parts of the NPRM related to financial responsibility, administrative capability, 

certification procedures, and ability to benefit can be found here.
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Gainful Employment 

Protecting students and taxpayers by stopping Federal student aid from flowing to career 

training programs that lead to unaffordable debts or low earnings

For most students, postsecondary education is a transformative and worthwhile investment 

that can lead to higher rates of employment, better wages, and meaningful careers. Career 

training programs (i.e., non-degree programs at all institutions and degree programs at forprofit colleges) play an important role in the postsecondary education system, serving many 

first-generation and lower income students and providing ladders to upward economic 

mobility. However, many other career training programs consistently leave graduates with high 

debt compared to their earnings or with wages that are no greater than what they could have 

expected if they had not enrolled in postsecondary education at all. The proposed regulations 

would specify that these poorly performing career training programs do not satisfy the 

statutory eligibility requirements in the Higher Education Act (HEA) that require such programs 

to prepare students for gainful employment in a recognized occupation.

The proposed GE rule would protect students by establishing two independent metrics that 

determine whether a career training program meets the statutory requirement to prepare 

students for gainful employment in a recognized occupation:

• A debt-to-earnings ratio that compares the median earnings of graduates who received 

Federal financial aid to the median annual payments on loan debt borrowed for the 

program. To pass, a program must either show that debt payments are no more than 

8% of annual earnings or 20% of discretionary earnings, which is defined as annual 

earnings minus 150% of the Federal poverty guideline for a single individual (about 

$21,870 in 2023). Programs that do not meet the debt-to-earnings standards are 

considered “high-debt-burden.”

• A new earnings premium test that measures whether the typical graduate from a 

program that received Federal aid is earning at least as much as a typical high school 

graduate in the labor force (i.e., either working or unemployed) in their State between 

the ages of 25 and 34. This is equal to roughly $25,000 nationally but varies across 

States. Programs that have typical earnings lower than the median high school graduate 

are considered “low-earnings.”

Programs that fail either or both metrics in a single year would be required to provide warnings 

to students that the programs could be at risk of losing eligibility for Federal aid in subsequent 

years. Programs that fail the same metric in two of three consecutive years would have their 

eligibility to participate in Federal aid programs revoked. 

The GE protections are critical. Borrowers who attended programs with high debt burdens are 

25% more likely to default and struggle to repay their loans. This damages students’ financial 

health and leaves taxpayers on the hook.
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The new earnings premium tests whether career training programs are meeting a minimal 

expectation that students' investment of time and money will help them achieve their goals. 

The overwhelming majority of students say that getting a better job and improving their 

earnings are among the most important reasons for pursuing postsecondary credentials. 

Similarly, the HEA lays out the expectation that postsecondary education should be providing 

opportunities beyond those available to high school graduates by generally requiring that

students must already have a high school diploma or its recognized equivalent to access Federal 

aid. The earnings premium metric recognizes that programs are not meeting these goals if they 

are producing graduates whose earnings are below those of a typical high school graduate in 

their State who never went to college. The Department understands the benefits of an 

education are multifaceted and cannot be boiled down only to what graduates earn. For career 

training programs, however, setting a minimum level of performance on post-graduation 

earnings ensures programs are not negatively affecting students’ economic wellbeing. 

Estimated effects of the proposed GE rule

Out of approximately 32,000 GE programs in total, about 1,800 are projected to fail at least one 

of the two financial-value metrics.1 The Department estimates that this proposed rule would 

protect more than 703,000 students per year from attending these failing career training 

programs. These students constitute about 24% of those receiving federal student aid to enroll 

in GE programs annually. Of those attending failing programs:

• about 278,000 attend GE programs that have high debt burdens but typical earnings 

above those of high school graduates;

• about 308,000 students attend programs that lead to low earnings but do not produce 

high debt burdens; and

• about 118,000 are in GE programs that result in high debt burdens and low earnings.

Programs that generate unaffordable debts or low earnings are concentrated among career 

training programs. These GE programs enroll only 15% of all Federally-aided students, but 

account for 45% of all enrollment in programs with unaffordable debt or low earnings. 

The share of enrollment in programs that fail one or both of the GE metrics is higher at forprofit institutions, where virtually all programs are covered by the accountability provisions. 

More than half (58%) of for-profit institutions have at least one program that does not meet 

one of these standards. By contrast, the Department estimates that 93% of public institutions 

1 With data currently available, the Department is not able to compute metrics for many programs due to data 

limitations described in the Regulatory Impact Analysis and privacy disclosure rules. We estimate that 83% of GE 

enrollment would be in programs that have sufficient numbers of completers to have metrics computed using

either a two-year or four-year cohort, as described in the NPRM. 
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and 97% of private, non-profit institutions have no high-debt-burden or low-earning GE 

programs, despite the fact that two-thirds of these institutions offer at least one GE program.

Protecting at-risk students

The proposed GE rule is essential for protecting underserved students who stand to gain the 

most from a postsecondary credential. These students rely heavily on Pell Grants and student 

loans and are often targeted by institutions with subpar student outcomes. In some instances, 

institutions offering poorly performing programs have blamed their outcomes on the 

demographics of the students they enroll. However, an analysis included as part of the 

proposed rule shows that differences across institutions and field of study account for a large 

proportion of the differences in outcomes across programs, and once these factors are 

controlled for, student demographics explain relatively little of whether a program passes or 

fails a GE measure.

For example, data included as part of the proposed rule show that cosmetology and massage 

certificate programs fail the GE metrics at relatively high rates, but a number of other programs

such as practical nursing and dental support enroll women and minority students at similar 

rates but have much better outcomes. And among these are many programs enrolling students 

that come from the lowest income families that produce consistently better debt and earnings 

outcomes. The Department estimates that institutions with better outcomes, including 

Historically Black Colleges and Universities and community colleges, are likely to gain 

enrollment because of the proposed rule, as they will attract students that otherwise would 

have attended failing programs.

Increased Transparency for Students and Families 

Providing improved transparency about the financial value of postsecondary programs across 

all sectors

The proposed rule also includes provisions that would create a new disclosure website hosted 

by the Department to provide students and families with better information about the financial 

value of undergraduate and graduate programs across all sectors of higher education. This 

would include new information on program costs (including tuition and fees, books, and 

supplies), non-Federal grant aid, loan burden (including both private and Federal loans), 

earnings of completers, any applicable occupational and licensing requirements, and licensure 

success exam passage rates (where relevant). This reporting will, for the first time, allow the 

Department to give students and families a personalized estimate of what they’ll pay out-ofpocket to earn credentials in specific postsecondary programs, along with key information on 

the debt and earnings outcomes of program graduates. 
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While providing accurate information is fundamental, it will only be helpful to the extent that

students and their families see it. The proposed rule requires institutions to provide a link to 

the disclosure website described above, and also requires that students acknowledge having 

seen this information prior to Federal financial aid being disbursed if they are enrolled in or 

planning to enroll in a program that consistently leaves students with unaffordable debt.