UNITED STATES DEPARTMENT OF EDUCATION 

OFFICE OF POSTSECONDARY EDUCATION

Issue Paper 3: Gainful Employment

Session 1: January 18-21, 2022

Issue: Gainful Employment

Statutory cites: §101(b)(1), 102(b)(1)(A)(i), and 102(c)(1)(A) of the Higher Education Act of 1965, 

as amended

Regulatory cites: 34 CFR Subpart Q

Summary of issues: 

The Higher Education Act (HEA) requires some programs and institutions (generally all programs at 

proprietary institutions and any non-degree programs at public or private nonprofit institutions) to 

“prepare students for gainful employment in a recognized occupation” to access Title IV federal financial 

aid. However, for many years the standards by which institutions could demonstrate compliance with 

those requirements were largely undefined. In 2011, the Department of Education (Department) 

conducted a rulemaking and issued a regulation that established such standards for gainful employment 

(GE) programs, based in part on the debt that graduates incurred in attending the program, relative to 

the earnings they received after completion. The regulation was reissued in 2014 following a court 

challenge, based on a similar debt-to-earnings structure for GE programs. When the data were first 

released in January 2017, over 800 programs, collectively enrolling hundreds of thousands of students, 

did not pass the GE standards. 

In summer 2019, the Department rescinded the 2014 rule nearly in its entirety. However, the 

Department remains concerned about the prevalence of programs that fail to help students obtain 

sufficiently remunerative employment to justify the investment of their time and resources, and often 

leave students too deeply in debt relative to their earnings to afford to repay. 

A growing body of academic research has identified persistent problems in GE programs (defined by the 

HEA as certificate programs and degree programs at proprietary institutions), including poor labor 

market outcomes, high levels of borrowing, and low loan repayment rates. For example, research has 

found that some postsecondary certificates have very low or even negative labor market returns for 

their graduates. This finding is echoed in the most recent College Scorecard data, which show that 

roughly 19 percent of undergraduate certificate programs have median earnings among working 

graduates that are less than 150 percent of the poverty line. Multiple studies show that for-profit 

college students, in particular, see much lower employment and earnings gains than students in 

programs at non-profit colleges.

Additionally, the most recently available data published via the College Scorecard show that the median 

cumulative loan debt of students in many programs is high relative to the amounts that students earn, 

especially in programs offered by proprietary institutions. For example, median cumulative borrowing 

levels exceed median annual earnings at about 12 percent of undergraduate degree programs (among 

those where data are available), or 9 percent among public and nonprofit undergraduate degree 

programs. Among programs at proprietary schools, however, the analogous figures are 28 percent for 
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associate’s and 42 percent for bachelor’s degree programs. Multiple studies have found that, accounting 

for differences in student characteristics, borrower outcomes like repayment rates and the likelihood of 

default are worse in the proprietary sector. Finally, research indicates that federal accountability efforts 

can be effective in driving improved student outcomes, particularly for students at (or who would have 

attended) for-profit colleges.

We seek feedback on the overall state of the GE sector of higher education, including the greatest 

problems that students who enroll in GE programs currently face. We also seek feedback on the 

appropriate framework for the GE standards, including the metrics that should be utilized to assess 

programmatic outcomes; the sanctions that should be applied; and the reporting requirements that 

should be instituted to assess GE programs. Finally, we request feedback on the need for improved 

consumer information about the outcomes of institutions of higher education, as well as GE programs’ 

failure to meet required standards, so that prospective and enrolled students are aware of those 

outcomes and the potential for loss of eligibility of federal financial aid.

Discussion Questions: 

The Department is interested in reestablishing criteria to define how an applicable program can 

demonstrate it prepares students for “gainful employment in a recognized occupation,” as required by 

the statute. The Department seeks to promulgate regulations that promote better labor market 

outcomes, create value for students’ investments in higher education, protect students from acquiring 

debts they cannot afford to repay, and safeguard the interests of taxpayers. 

1) What metric(s), and what threshold(s) (pass/fail cutoff points) in those metric(s), best 

distinguish between programs that prepare students for gainful employment versus those that 

do not, including at different credential levels? For instance, we seek feedback on the use of 

repayment rates; debt-to-earnings rates; earnings thresholds; and other measures.

a. Should the Department include non-completers in any of the metrics? How would the 

Department assign non-completers to programs and what metrics would be most suitable?

2) How should the Department address programs with low earnings outcomes, even when they 

might have relatively low median debt levels (and thus may have passed the 2014 gainful 

employment rule)?

3) What are the benefits of using a combination of metrics versus a single metric in considering

whether a program prepares students for gainful employment in a recognized 

occupation? What are the pros and cons of using multiple metrics versus a single metric for this 

purpose?

4) What are the benefits of allowing institutions multiple consecutive years of failing a metric 

based on post-college earnings? What are the risks of allowing multiple consecutive 

years? What factors should the Department consider in specifying how passing and failing 

metrics in consecutive years are related to the trigger of sanctions?

5) How should the Department balance the burden of institutional reporting requirements with 

collecting data as detailed as was required under the 2014 gainful employment metric? For 

instance:
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a. The cap of median debt at the tuition, fees, books, and supplies of the student required 

institutions to report that figure for each student. What was the benefit of the inclusion 

of that cap?

b. The inclusion of institutional and private loan debt required institutions to report 

additional debt amounts for each student. What was the benefit of the inclusion of 

those types of loan debt?

c. If the Department did not include the additional reporting of institutional and private 

loan debt, might institutions have an incentive to increase non-Federal borrowing? How 

might the Department mitigate such concerns?

6) How should the Department address the presence of income that is unreported to the IRS?

7) How should the Department address programs that are too small (i.e., that have too few 

students complete the program in a given year) to have their program debt or earnings 

information disclosed?

8) What metrics are most important to be disclosed to prospective and enrolled students? What 

are the best formats for those disclosures?

9) How should the Department ensure that institutions are not simply shutting down old programs 

and starting up new, similar programs to avoid the consequences of a GE rule?