Gainful Employment 

Adam Looney 

University of Utah 
 

 

 

 

 

 

 

 

 

 

The Role of Accountability Policy

in Postsecondary Education 

1. Education can be a vehicle for economic 

opportunity. 

2. But many programs and institutions leave 

their students worse off. 

3. Poor student outcomes are primarily caused 

by low-quality institutions and programs; 

the problem is the school, not the students. 

4. Federal accountability policies are an 

effective way of improving student 

outcomes by shifting enrollment to better 

programs. 

5. Rules based on appropriate and robust 

measures of student outcomes, like debtservice-to-earnings or student earnings, 

would improve outcomes for students and 

taxpayers. 
 

 

2014 Gainful Employment rule 

0 

10,000 

20,000 

30,000 

40,000 

50,000 

60,000 

70,000 

Median Debt 

Debt-to-Annual Income Threshold 

Debt-to-Discretionary Income Threshold 

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 

Note: Assumes 10-year amortization period and 3 percent interest rate. A program 

needed to pass either threshold. Program Earnings 
 

 

 

 

 

 

Advantages, disadvantages, and 

uncertainties of the 2014 rule 

• Programs with low earnings and low median 

debt may pass a D/E rule, but still impose large 

costs. 

• Median vs. average debt; opportunity costs of 

enrollment at low-quality program; direct costs of 

time and money of students; costs of grant aid for 

state and federal taxpayers. 

• Completers versus non-completers. 

• Role of unreported income. 

• Interaction with state licensing rules. 

• 3-year reporting timeframe. 
2014 Gainful Employment rule + Earnings Threshold 

Debt 

70,000 

60,000 

50,000 

40,000 

30,000 

20,000 

10,000 

0 

Earnings 

Debt-to-Annual Income Threshold 

Earnings Threshold 

Debt-to-Discretionary Income Threshold 

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 
 

 

 

 

 

 

 

 

 

 

 

 

Scope of the rule and who is affected 

Which Programs Fail Under Alternative GE Rules? 

All Programs % of Programs % of Degrees 

Total 

Programs 

Degrees 

Completed GE Programs 

Fail 2014 

Rule 

Fail 2014 + 

$20,000 

Threshold 

Fail 2014 

Rule 

Fail 2014 + 

$20,000 

Threshold 

Fail 2014 

Rule 

Fail 2014 + 

$20,000 

Threshold 

All Programs 

Private, Not-For-Profit 2 To 3 Years 

Private, Not-For-Profit 4 Years Or More 

Private, Not-For-Profit Less Than 2 Years 

Proprietary 2 To 3 Years 

Proprietary 4 Years Or More 

Proprietary Less Than 2 Years 

Public 2 To 3 Years 

Public 4 Years Or More 

Public Less Than 2 Years 

218,077 

879 

70,957 

216 

4,205 

5,692 

4,073 

58,999 

71,071 

1,985 

5,052,702 

30,777 

1,133,930 

13,535 

174,836 

339,158 

186,595 

1,179,098 

1,963,325 

31,448 

8,637 

173 

212 

78 

2,042 

2,174 

1,460 

1,898 

302 

293 

2,149 

49 

35 

9 

720 

1,001 

320 

9 

2 

3 

3,779 

73 

73 

39 

1,104 

1,101 

982 

345 

26 

35 

1.0% 

5.6% 

0.0% 

4.2% 

17.1% 

17.6% 

7.9% 

0.0% 

0.0% 

0.2% 

1.7% 

8.3% 

0.1% 

18.1% 

26.3% 

19.3% 

24.1% 

0.6% 

0.0% 

1.8% 

3.8% 

20.6% 

0.3% 

10.6% 

30.8% 

28.3% 

15.7% 

0.0% 

0.0% 

0.2% 

5.5% 

29.7% 

0.6% 

29.2% 

49.5% 

30.2% 

31.8% 

0.7% 

0.0% 

2.5% 

HBCUs 4,320 51,614 24 - 7 0.0% 0.2% 

Source: 2017 Release of 2015 GE Data and IPEDS 
 

 

 

Which Programs are more likely to fail? 

• Programs with very low 

earnings. 

Programs that fail 2014 + $20k Threshold with Most Students 

Program Name Credential Level 

Cosmetology/Cosmetologist Undergrad Certificate $ 

Average 

Earnings 

16,297 

• Not “public service” sectors 

like teaching, social work. 

Medical/Clinical Assistant 

Medical/Clinical Assistant 

Massage Therapy/Therapeutic Massage 

Dental Assisting/Assistant 

Culinary Arts/Chef Training 

Undergrad Certificate

Associates Degree

Undergrad Certificate

Undergrad Certificate

Associates Degree

 $ 

$ 

$ 

$ 

$ 

20,397 

23,175 

19,766 

21,860 

28,040 

• Most institutions with failing 

programs also have passing 

GE programs, so students 

often have better options. 

Medical Insurance Coding Specialist/Coder 

Business Administration And Management 

Computer Systems Networking 

Medical Insurance Specialist/Medical Biller 

Barbering/Barber 

Medical Office Assistant/Specialist 

Automobile/Automotive Mechanics 

Medical Administrative/Executive Assistant 

Aesthetician/Esthetician And Skin Care Specialist 

Undergrad Certificate

Associates Degree

Associates Degree

Undergrad Certificate

Undergrad Certificate

Associates Degree

Undergrad Certificate

Undergrad Certificate

Undergrad Certificate

 $ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

22,715 

35,059 

36,834 

22,151 

11,995 

24,078 

30,748 

17,535 

19,775 

Medical Office Assistant/Specialist Undergrad Certificate $ 19,935 

Health Information/Medical Records Associates Degree $ 25,257 

Criminal Justice/Law Enforcement Administration Bachelors Degree $ 38,028 

Criminal Justice/Law Enforcement Administration Associates Degree $ 25,423 

Motorcycle Maintenance And Repair Undergrad Certificate $ 30,080 
 

 

 

 

 

 

 

 

 

 

References 

1 Education can be a vehicle for economic opportunity. 

Council of Economic Advisers. 2016. “Investing in Higher Education: Benefits, Challenges, And The State of Student Debt.” 

https://obamawhitehouse.archives.gov/sites/default/files/page/files/20160718_cea_student_debt.pdf 

Carnevale, A., S. Rose, and B. Cheah. (2011). “The College Payoff.” https://cew.georgetown.edu/cew-reports/the-college-payoff/ 

Haskins, Ron. 2008. “Education and Economic Mobility.” Economic Mobility Project: An Initiative of The Pew Charitable Trusts. The Pew Charitable Trusts, 

Philadelphia, PA. https://www.brookings.edu/wp-content/uploads/2016/07/02_economic_mobility_sawhill_ch8.pdf 

Chetty Raj, Friedman John N., Saez Emmanuel, Turner Nicholas, Yagan Danny, “Mobility Report Cards: The Role of Colleges in Intergenerational Mobility,” Stanford 

University Working Paper, 2017. http://www.equality-of-opportunity.org/college/ 

2 But many programs and institutions leave their students worse off. 

Cellini, Stephanie Riegg and Nicholas Turner (2018). “Gainfully Employed? Assessing the Employment and Earnings of For-Profit College Students Using Administrative 

Data.” The Journal of Human Resources. http://jhr.uwpress.org/content/early/2018/01/31/jhr.54.2.1016.8302R1.abstract 

Summary:https://www.brookings.edu/blog/brown-center-chalkboard/2018/02/09/gainfully-employed-new-evidence-on-the-earnings-employment-and-debt-of-forprofit-certificate-students/ 

Wessel, David. (2015). “How to find out what graduates of that cosmetology program actually make.” Brookings Up Front Blog. The Brookings Institution. 

https://www.brookings.edu/blog/up-front/2015/06/25/how-to-find-out-what-graduates-of-that-cosmetology-program-actually-make/ 

Miller, Ben. (2017.) “Who Are Student Loan Defaulters?” The Center for American Progress. https://www.americanprogress.org/issues/educationpostsecondary/reports/2017/12/14/444011/student-loan-defaulters/ 

Scott-Clayton, Judith (2018). “The looming student loan default crisis is worse than we thought.” Brookings Evidence Speaks Reports, 2(34). 

https://www.brookings.edu/research/the-looming-student-loan-default-crisis-is-worse-than-we-thought/ 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3 Poor student outcomes are primarily caused by low-quality institutions and programs. The problem is the school, not the students. 

• Armona, Louis, Rajashri Chakrabarti, and Michael Lovenheim (2018). “How Does For-Profit College Attendance Affect Student Loans, Defaults, and Earnings?” 

Federal Reserve Bank of New York. https://www.newyorkfed.org/research/staff_reports/sr811.html 

• Cellini, Stephanie Riegg and Cory Koedel (2017), “The Case for Limiting Federal Student Aid to For-Profit Colleges,” Journal of Policy Analysis and Management: 

Point/Counterpoint, 36(4): 934-942. https://onlinelibrary.wiley.com/doi/full/10.1002/pam.22008 

• Cellini, Stephanie Riegg and Rajeev Darolia (2016). “Different degrees of debt: Student borrowing in the for-profit, nonprofit, and public sectors.” Brown Center on 

Education Policy at Brookings. https://www.brookings.edu/research/different-degrees-of-debt-studentborrowing-in-the-for-profit-nonprofit-and-public-sectors/ 

• Chakrabarti, Rajashri, Nicole Gorton, Michelle Jiang, and Wilbert van der Klaauw, (2017a ). “Who Is More Likely to Default on Student Loans?” Federal Reserve Bank 

of New York Liberty Street Economics (blog), November 20, 2017, http://libertystreeteconomics.newyorkfed.org/2017/11/who-is-more-likely-to-default-onstudentloans.html 

• Chou, Tiffany, Adam Looney, and Tara Watson. (2017.) “Measuring Loan Outcomes at Postsecondary Institutions: Cohort Repayment Rates as an Indicator of 

Student Success and Institutional Accountability” 2017. (with Tiffany Chou and Tara Watson.) NBER Working Paper 23118. 

• Chetty Raj, Friedman John N., Saez Emmanuel, Turner Nicholas, Yagan Danny, “Mobility Report Cards: The Role of Colleges in Intergenerational Mobility,” Stanford 

University Working Paper, 2017. http://www.equality-of-opportunity.org/college/ 

• Goodman, Joshua, Michael Hurwitz, and Jonathan Smith. 2015, February. “College Access, Initial College Choice and Degree Completion.” Working Paper 20996, 

National Bureau of Economic Research, Cambridge, MA. https://scholar.harvard.edu/files/joshuagoodman/files/jole_preprint.pdf 

• Hoxby, Caroline. (2015). “Computing the Value-Added of American Postsecondary Institutions.” IRS-SOI Working Paper. https://www.irs.gov/pub/irssoi/15rpcompvalueaddpostsecondary.pdf 

• Deming, David J., Noam Yuchtman, Amira Abulafi, Claudia Goldin, and Lawrence F. Katz (2016). “The Value of Postsecondary Credentials in the Labor Market: An 

Experimental Study.”American Economic Review. 106(3): 778-806.https://scholar.harvard.edu/files/ddeming/files/dyagk_audit_final_aer.pdf 

• Darolia, Rajeev, Cory Koedel, Paco Martorell, Katie Wilson, and Francisco Perez-Arce (2014). “Do Employers Prefer Workers Who Attend For-Profit Colleges? 

Evidence from a Field Experiment.” Rand Working Paper. https://www.rand.org/pubs/working_papers/WR1054.html 
 

 

 

 

 

 

 

 

 

 

 

 

4 Federal accountability policies are an effective way of improving student outcomes. 

• Looney, Adam and Constantine Yannelis (2015). “A Crisis in Student Loans? How Changes in the Characteristics of Borrowers and in the Institutions They Attended 

Contributed to Rising Loan Defaults.” Brookings Papers on Economic Activity. https://www.brookings.edu/bpeaarticles/a-crisis-in-student-loans-how-changes-in- the-characteristics-of-borrowers-and-in-theinstitutions-they-attended-contributed-to-rising-loan-defaults/. 

• Looney, Adam and Constantine Yannelis 2022. “The Consequences of Student Loan Credit Expansions: Evidence from Three Decades of Default Cycles.” Journal of 

Financial Economics. 

• Cellini, Stephanie R., Rajeev Darolia, and Lesley J. Turner. 2020. "Where Do Students Go When For-Profit Colleges Lose Federal Aid?" American Economic Journal: 

Economic Policy, 12 (2): 46-83. https://pubs.aeaweb.org/doi/pdfplus/10.1257/pol.20180265 Summary: https://www.brookings.edu/blog/brown-center- chalkboard/2017/01/06/the-government-is-sanctioning-for-profit-colleges-what-happens-to-the-students/ 

• Darolia, Rajeev. (2019). “What Happens to Students When the Federal Government Sanctions Colleges?” Thirdway. https://www.thirdway.org/report/what- happens-to-students-when-the-federal-government-sanctions-colleges 

• Whitman, David (2017a). “Truman, Eisenhower, and the First GI Bill Scandal.” The Century Foundation. https://tcf.org/content/report/truman-eisenhower-first-gi- bill-scandal/ 

• Whitman, David (2017b). “Vietnam Vets and a New Student Loan Program Bring New College Scams.” The Century Foundation. 

https://tcf.org/content/report/vietnam-vets-new-student-loanprogram-bring-new-college-scams/ 

5 Rules based on appropriate and robust measures of student outcomes, like the 2014 Gainful Employment rule, would improve outcomes for students and 

taxpayers. 

• Chou, Tiffany, Adam Looney, and Tara Watson (2017). “Measuring Loan Outcomes at Postsecondary Institutions: Cohort Repayment Rates as an Indicator of 

Student Success and Institutional Accountability.” NBER Working Paper 23118. https://www.nber.org/system/files/working_papers/w23118/w23118.pdf 

• Cellini, Stephanie R. and Kathryn J. Blanchard. (2022). “Using a High School Earnings Benchmark to Measure College Student Success Implications for Accountability 

and Equity.” The Postsecondary Equity and Economics Research Project. https://www.peerresearchproject.org/peer/research/body/2022.1.18-PEER- HSEarnings.pdf 

• Matsudaira, Jordan D. and Lesley J. Turner (2020). “Towards a framework for accountability for federal financial assistance programs in postsecondary education.” 

The Brookings Institution. https://www.brookings.edu/wp-content/uploads/2020/11/20210603-Mats-Turner.pdf 

• Webber, Douglas. (2021). “When Do Students and Taxpayers See a Return? Optimal Accountability Thresholds in Higher Education?” The Postsecondary Equity and 

Economics Research Project. https://www.peerresearchproject.org/peer/research/body/2022.1.12-Webber-Paper.pdf 
 

 

 

 

 

 

 

 

 

 

References: Advantages, disadvantages, and uncertainties of the 2014 rule 

Advantages and disadvantages of alternative accountability metrics: 

• Matsudaira, Jordan D. and Lesley J. Turner (2020). “Towards a framework for accountability for federal financial assistance programs in postsecondary education.” 

The Brookings Institution. https://www.brookings.edu/wp-content/uploads/2020/11/20210603-Mats-Turner.pdf 

The prevalence and implications of underreported income: 

• Cellini, Stephanie R. and Kathryn J. Blanchard. (2022). “Hair and Taxes: Cosmetology Programs, Accountability Policy, and the Problem of Underreported Income.” 

The Postsecondary Equity and Economics Research Project. https://www.peerresearchproject.org/peer/research/body/PEER_HairTaxes-Final.pdf 

The interaction of occupational licensing regulations and gainful employment program enrollment and debt. 

• Acevedo, Nicolas, Stephanie R. Cellini, and Kathryn J. Blanchard. (Forthcoming). “Occupational Licensing and Student Outcomes Forthcoming” 

• Bae, Kihwan and Edward Timmons (2021). “On Borrowed Time: How Occupational Licensing Affects Student Loan Debt.” The Knee Center for Occupational 

Licensing. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3815308 

Is a 3-year outcome-measurement window sufficient for accountability policy? 

• Chou, Tiffany, Adam Looney, and Tara Watson (2017). “Measuring Loan Outcomes at Postsecondary Institutions: Cohort Repayment Rates as an Indicator of 

Student Success and Institutional Accountability.” NBER Working Paper 23118. https://www.nber.org/system/files/working_papers/w23118/w23118.pdf 

• Matsudaira, Jordan D. and Lesley J. Turner (2020). “Towards a framework for accountability for federal financial assistance programs in postsecondary education.” 

The Brookings Institution. https://www.brookings.edu/wp-content/uploads/2020/11/20210603-Mats-Turner.pdf